WASHINGTON (Reuters) – South Korean battery maker LG Chem and rival SK Innovation Co have agreed to settle a trade dispute that threatened a major plant in Georgia and the electric vehicle plans of Ford Motor Co. and Volkswagen AG, three sources informed about the matter. said.
The Biden Administration, through the U.S. Trade Representative’s Office (USTR), faced a deadline on Sunday night to take the rare step of reversing a decision by the U.S. International Trade Commission unless the companies reached an agreement. The sources soon expected an announcement about the settlement of the battery manufacturer.
The deal is a victory for President Joe Biden, who has made increasing electric vehicles and U.S. battery production a top priority. The global automotive industry is rushing to develop EVs, and Biden has proposed spending $ 174 billion to increase EV sales and expand charging infrastructure.
The ITC found itself on the side of LG Chem in February after the company accused SK of abusing trade secrets related to EV battery technology and issuing a 10-year import ban, but it allowed SK to sell components for to introduce batteries for Ford’s EV F-150 program for four. years, and Volkswagen’s North American EVs for two years.
SK has promised to walk away from its $ 2.6 billion Georgia plant under construction if the ITC decision is not overturned.
The ITC also erred in calling SK “serious misconduct” and destroying SK documents ordered by company executives.
Ford, VW, LG and SK declined to comment.
Scott Keogh, CEO of Volkswagen of America, wrote in a LinkedIn post on Wednesday that if the ITC decision were to remain in place, it could “reduce US battery capacity and slow down the transition to electric vehicles.”
LG first filed a complaint against SK in 2019 and both parties hired numerous lawyers and consultants to lodge their case with the Biden administration.
The government has urged the two companies to try to reach a settlement, as have VW and Ford.
U.S. Trade Representative Katherine Tai was personally involved in the settlement talks and urged both companies to reach a decision, sources said. USTR declined to comment.
SK received proposed terms from LG in March, including financial compensation to address LG’s trade secret misappropriation, Reuters reported earlier, citing a person familiar with the situation.
Georgia is home to two newly elected Democratic U.S. senators who play a leading role in Biden’s slim congressional majority and have both spoken about the importance of securing the future of the Georgia plant.
LG’s battery unit LG Energy Solution is completing a manufacturing plant in Ohio with General Motors and is close to announcing plans to build a second $ 2.3 billion facility in Tennessee, sources told Reuters .
LG said it could handle the battery needs of carmakers if SK leaves its Georgia plant.
SK said LG could not handle the VW and Ford contracts, and that Chinese manufacturers could step in to meet demand.
Bloomberg reported the expected deal earlier Saturday.
Reporting by David Shepardson and Hyunjoo Jin; Edited by Daniel Wallis