SEOUL (Reuters) Shares in South Korean car battery manufacturer SK Innovation Co Ltd rose Monday after it buried the hatchet with LG Energy Solution, freeing both companies to expand in the United States, where electric cars are a priority. Biden.
SK Innovation agreed to pay its rival, a LG Chem Ltd unit, 2 trillion won ($ 1.8 billion) to drop all disputes into a bitter trade secret dispute. That was much less than expected, with some estimates putting the settlement costs at 7 trillion won.
Its shares shot up 15%, while LG Chem shares were also up 1%.
The feud threatened a $ 2.6 billion plant in Georgia that SK is building to supply Ford Motor Co and Volkswagen AG and is seen as key to the growing industry.
SK had vowed last month to walk away from the Georgia plant if a US International Trade Commission decision favoring LG Chem would not be quashed.
The settlement will “enable us to accelerate construction of the Georgia, US plant, and actively drive additional investment and collaboration in line with the development of the US and global electric vehicle (EV) industry,” said Kim Jun, CEO from SK Innovation. to employees seen by Reuters.
The US market is important to both companies as Chinese battery manufacturers such as Contemporary Amperex Technology Co Ltd (CATL) have no foothold. Korean companies have also found it difficult to gain ground in China – the world’s largest electric vehicle market – as Beijing has pushed policies to support domestic manufacturers.
“The US EV market is considered to be the place where South Korean electric vehicle manufacturers have the best chance for sustainable growth in the future,” said Kang Dong-jin, an analyst at Hyundai Motor Securities.
US President Joe Biden said in a statement that the settlement was “a victory for American workers and the American auto industry.” Both Ford and Volkswagen were also pleased with the agreement.
Volkswagen is a major customer of both Korean battery manufacturers and analysts who said their longer-term outlook will depend in part on how they respond to the German automaker’s decision last month to move most of its cars to a new unified prismatic battery and away from the pouch battery they specialize in.
SK’s main customers are Volkswagen and Hyundai Motor Co, while LG has a more diversified customer base, supplying these automakers as well as General Motors Co and Tesla Inc, analysts said.
LG has said it plans to invest more than $ 4.5 billion in the United States to meet growing demand for electric vehicles and is considering building a second battery joint venture in Tennessee with GM.
“We will play an active role in successfully expanding the battery and electric vehicle offering through bold and preventive investments,” Kim Jong-Hyun, president of LG Energy Solution said in a message to employees.
($ 1 = 1,124,5100 won)
Reporting by Heekyong Yang and Joyce Lee; Additional reporting by Jihoon Lee; Adaptation by Sayantani Ghosh and Edwina Gibbs