What will happen to battery plants under construction in Georgia and supply deals with Volkswagen and Ford?
The U.S. International Trade Commission (ITC) announced today a verdict in the court clash between two South Korean EV battery manufacturers: LG Chem and SK Innovation.
The case started in Spring 2019, when LG Chem sued SK Innovation over alleged theft of commercial secrets. SK Innovation defends itself, but in the end, the ITC sided with LG Chem.
According to the announcement, SK Innovation EV battery business (importation, domestic production, and sale of batteries for electric vehicles) is banned in the U.S. for 10 years. However, to not harm its clients (that were hoping to avoid a “catastrophic supply disruption”), ITC allows the continuation of the Ford F-150 Electric program for 4 years, and Volkswagen ID.4 (MEB) program for 2 years, to give them time to find new suppliers.
In other words, it seems that SK Innovation will be able to complete its two battery plants (under construction) in Georgia to supply Ford and Volkswagen. But will it complete them?
Well, we are not sure what the options are for the following years until the ban ends. Maybe production of batteries for other markets/other applications or lease/sale of the plant to another manufacturer just to limit the losses? It’s hard to imagine that the brand new plants would stay idle for 8 and 6 years.
Anyway, there are not that many battery suppliers that are ready to provide the required volume of batteries so the race is on. LG Chem’s LG Energy Solution, CATL, Panasonic or maybe others have their chance.
We don’t know SK Innovation’s response just yet, but LG Energy Solution issued a press release announcing a bold win:
“LG Energy Solution Prevails Over SK Innovation in Final Trade Secret Theft Decision at International Trade Commission
SEOUL, South Korea–(BUSINESS WIRE)–LG Energy Solution, the global leader in pouch-type lithium-ion battery technology, prevailed Wednesday over SK Innovation and SK Battery America in a multi-billion dollar trade secret dispute at the U.S. International Trade Commission. Today’s Commission decision blocks the importation, domestic production, and sale of SK Innovation batteries for electric vehicles that unlawfully rely on LG Energy Solution’s trade secrets.
“SKI’s total disregard of our warnings and intellectual property rights gave us no choice but to file this case and we are grateful to the International Trade Commission for protecting our innovations and significant economic investments in the United States,” said Jong Hyun Kim, CEO of LG Energy Solution. “As a global leader and technology innovator, we will further strengthen the protection of intellectual property rights going forward.”
In April 2019, LG Chem and its US-based manufacturing unit filed a complaint with the International Trade Commission accusing SK Innovation and SK Battery America (“SKI”) of trade secret theft by hiring dozens of engineers, manufacturing, and critical business services staff. In December 2020, LG Chem spun off its electric battery division into a new wholly-owned subsidiary, LG Energy Solution, which now owns the trade secrets at dispute.
Citing a record that proved SKI extensively and intentionally destroyed evidence of its trade secret theft, an administrative law judge issued an initial determination that imposed a default judgment in favor of LG Chem in February 2020. That decision, which found SKI had acted in bad faith to hinder the court’s investigation and administration of justice, was upheld today by the full Commission.
The Commission’s final determination provides two significant remedies to SKI’s theft, including imposing a ten-year long exclusion order to stop any importation of batteries, battery cells, battery modules, battery packs. The Commission also imposed a complementary cease and desist order to prevent SKI from making or selling any such products in the US.
The Commission provided a limited exception to allow SKI to supply Ford with electric batteries for its EV F-150 pick-up trucks for four years and to Volkswagen for its MEB line for the North America Region for two years, after which the full force and effect of the exclusion and cease-and-desist orders will remain in place. The order also allows for the repair or replacement of batteries for Kia vehicles sold by the date of the order and originally equipped with SKI batteries, as agreed by LGES and the Commission staff.
Using LG Energy Solution’s stolen technology, SKI improperly secured lucrative contracts with US auto manufacturers, whose orders totaled in the billions, and negotiated historic subsidies and incentives from state and local governments to build a new manufacturing facility in Georgia. SKI’s new Georgia plant would have relied on LG Energy Solution’s stolen trade secrets, and the ITC’s ruling has definitively prohibited use of LG Energy Solution’s misappropriated technology.”
Sources:U.S. International Trade Commission,Reuters,LG Chem’s LG Energy Solution
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