SK Innovation considers withdrawing business from the USA
SK Innovation is considering exiting its battery business in the US if President Joe Biden does not reverse the US Trade Commission’s ruling in the South Korean battery cell maker’s lawsuit in favour of SKI rival LG Chem by 11 April.
“We are exploring options to move our US battery production to Europe or China,” said a spokesperson for SK Innovation. The company had consulted with experts to discuss ways to pull its battery business out of the United States.
The background is that SK Innovation and LG Chem or its new battery division LG Energy Solution are involved in a legal dispute in the USA. The accusation was that employees that SK Innovation had poached from LG Chem had allegedly passed on LG Chem’s proprietary know-how for the development and production of batteries to SK Innovation. SK Innovation sued LG Chem a short time later for alleged patent infringements. LG Chem claimed, among other things, that SK Innovation had only won the contract to supply battery cells for Volkswagen’s MEB modular system because employees poached by LG Chem had disclosed said trade secrets.
The US Federal Trade Commission ruled in favour of LG in 2020, and recently in its final decision. And the ruling is a tough one: SK Innovation is banned from importing certain batteries and their components into the US for a period of ten years. However, there are temporary exceptions: SKI is allowed to temporarily import components for the US production of batteries for the electric Ford F-150 and Volkswagen’s MEB vehicles – for four years in the case of Ford and two years in the case of Volkswagen.
From SKI’s perspective, there are now essentially three options: an out-of-court settlement with LG, a reversal of the ruling by President Joe Biden, or – if the ruling is enforced – consideration of withdrawal from the US. Biden has a “presidential review period” limited to 60 days to overturn the decision. This ends on 11 April. SKI is trying to build pressure by threatening, among other things, to halt the construction of its $2.6 billion battery factory in the state of Georgia.
SKI now filed a motion with the US Trade Commission not to enforce the February decision, calling the decision “catastrophic”. The commission’s orders destroy the economic viability of SKI’s investment in battery production in Georgia and will rationally and inevitably lead to its abandonment, the news agency quotes from the papers.
After the ruling in February, Volkswagen responded with a request to extend the exemption for itself from two to at least four years. However, Volkswagen hopes that the two suppliers will settle the dispute out of court. A little later, it was reported that the US Trade Commission was also criticising Ford. The accusation was that the carmaker had continued to sign contracts with SKI even after evidence had emerged that the company had violated trade secrets of rival LG Chem. Ford, however, rejected the accusation.
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