WASHINGTON (Reuters) – The US International Trade Commission (ITC) on Wednesday sided with South Korean chemical and electric vehicle (EV) manufacturer LG Chem Ltd, which accused its city rival SK Innovation Co Ltd of misappropriating trade secrets related to to EV battery technology.
The ITC said it issued a limited 10-year exclusion order prohibiting the importation into the United States of some lithium ion batteries by SK Innovation, but would allow SK to import components for the domestic production of lithium ion batteries, battery cells, battery modules, and battery packs for Ford Motor Co’s EV F-150 program for four years, and for Volkswagen of America’s MEB electric vehicle line for the North America region for two years.
The ITC added that SK Innovation can replace or repair its batteries in Kia vehicles sold to US consumers. The move could effectively ban the company from shipping EV batteries in the United States unless the company can purchase all necessary equipment there – one move is not feasible, according to analysts.
The ITC said the decision would allow automakers to switch to new suppliers for these programs.
LG Energy Solutions, the wholly owned subsidiary of LG Chem, praised the ruling.
“SKI’s total disregard for our warnings and intellectual property rights gave us no choice but to file this case,” Kim Jong-hyun, LG Energy Solution CEO, said in a statement. He said the company would “further strengthen intellectual property rights protection in the future.”
“SK Innovation must stop twisting litigation and humbly accept the ITC’s final decision and we urge (SK Innovation) to take active steps to close the lawsuit as soon as possible by making responsible proposals,” LG Energy Solution said in a separate statement.
SK Innovation said in a statement it regretted the ITC’s decision “but it is a relief that we will continue to supply Ford and Volkswagen.”
SK noted that there was a 60-day presidential review period during which President Joe Biden could decide to overturn the ruling. Biden has made electric vehicles a top priority and reducing vehicle emissions.
A White House spokesman declined to comment on the ruling.
LG Chem has spun off its battery business, rebranded as LG Energy Solution, a supplier of EV batteries for Tesla Inc and General Motors Co. It filed its US trade complaints against SK Innovation in April 2019 for its rival stolen trade secrets.
It tried to prevent SK from bringing batteries and components to the United States, as well as production systems needed for US production expected to start in 2022.
In February 2020, the ITC made a preliminary ruling in favor of LG Chem, which has since split off its battery business as LG Energy Solution.
SK Innovation is building two EV battery factories in Georgia to produce batteries for us in Volkswagen and Ford electric vehicles. LG Chem has set up an EV battery cell plant in Ohio with GM.
“With the ITC’s final ruling, SK Innovation is now facing scenarios that they would not be able to run their business in the United States, which will likely accelerate the settlement talks between LG and SK,” said Han Sang-won, an analyst at Daishin . Securities, adding that SK Innovation must settle the lawsuit to make its EV battery business work better.
Ford said the “ITC decision supports our plans to bring the all-electric Ford F-150 to market by mid-2022.”
“We will continue to analyze today’s US International Trade Commission ruling and its impact on Volkswagen. In any case, this statement does not change our commitment to produce electric vehicles in Chattanooga, TN by 2022, ”Volkswagen said in a statement.
Volkswagen and Ford previously warned that a US legal row between South Korean battery makers could disrupt the supply of key EV parts and cost the US jobs during the COVID-19 pandemic.
Reporting by David Shepardson in Washington and Heekyong Yang in Seoul; Editing by Chris Reese, David Gregorio and Gerry Doyle