By Heekyong Yang and Joyce Lee
SEOUL (Reuters) – Shares of SK Innovation and LG Chem in South Korea jumped on Monday after battery makers agreed on a $ 2 billion ($ 1.8 billion) dispute over EV battery technology, which analysts say released them has to keep abreast of developments from customers such as Volkswagen.
LG Energy Solution, a wholly owned subsidiary of LG Chem, and SK Innovation also agreed on Sunday to drop all lawsuits in the United States and South Korea and not sue each other for ten years, after the nuclear dispute over the EV plans of Ford Motor Co and Volkswagen AG.
SK Innovation’s shares rose 18.5%, while LG Chem’s shares rose 4.1%.
“This agreement has resolved uncertainties about the growth of the battery business and our pursuit of the US market,” said Kim Jun, CEO of SK Innovation, in a message to employees who saw Reuters. “This will enable us to expedite the construction of the plant in Georgia, USA, and to actively promote additional investment and cooperation in line with the development of the US and global electric vehicle industry.”
Ford said in a statement on Sunday that it was delighted that the battery manufacturers had settled their differences, and that the agreement would allow Ford to focus on delivering EVs to retail and fleet customers.
“The market views the deal in favor of SK because the settlement amount was less than expected. Some have even said it could cost up to 7 billion won,” said Samsung Securities analyst Cho Hyunryul.
“The agreement is positive for both companies’ share prices by resolving the matter for the future,” Cho added. “For SK, the value of its batteries was less reflected in its share price compared to competitors. However, this agreement with LG could be a lever.”
Shares in SK Innovation have fallen 19.7% since February, when the US International Trade Commission joined LG Chem on the trade secrets case, while LG Chem’s shares fell 15.4%.
However, analysts said that the company’s law-free future depends in part on how they reacted to Volkswagen’s decision last month to move most of its cars to a new unified prismatic battery and away from the pocket-style proposed by LG and SK was manufactured – although Volkswagen’s move does not mean that other car manufacturers will follow.
“Especially for SK, which is very dependent on bag-style batteries, the key is how it will get orders in the future. Although there are no public figures, it is known that SK is very dependent on Volkswagen for the battery cases. , “he said. Kang Dong-jin, analyst at Hyundai Motor Securities.
The broader market increased by 0.4%.
($ 1 = 1121.4100 won)
(Reporting by Heekyong Yang and Joyce Lee; additional reporting by Jihoon Lee; editing by Jacqueline Wong and Gerry Doyle)