South Korean EV battery groups settle US dispute with high stakes

Two of South Korea’s largest conglomerates reached a last-minute settlement over a multi-billion dollar intellectual property dispute that threatened to disrupt Ford and Volkswagen’s plans to build electric vehicles in the US.

The battery-making deal between LG and SK comes after the U.S. International Trade Commission imposed a 10-year import ban on SK Innovation in February over allegations by its Korean rival of illegally acquiring sensitive technology.

SK will pay LG Won2tn ($ 1.8 billion) in cash and an ongoing royalty, the companies said in a joint statement on Sunday.

The deal marks a reprieve for Joe Biden, who had until Sunday night to decide whether to take a rare presidential lift of an ITC decision to avoid disruptions to the auto makers’ investment plans and protect the jobs of thousands of workers.

Raphael Warnock, the Democratic senator for Georgia who had lobbied the Biden government and businesses over the dispute, said the resolution “would help advance the local economy.”

“It has always been clear that the best way to protect trade workers – and the jobs that Georgians have been promised – is for the companies involved to negotiate a settlement in good faith,” he said.

As part of the deal, the companies also agreed to drop all pending litigation and pledged not to file lawsuits against each other on this matter for the next 10 years.

The ITC ruling had allowed a grace period to give companies time to switch suppliers. But the industry had argued that the import ban would complicate automakers’ plans to market both electric and hybrid vehicles and ultimately delay the industry’s transition to eco-friendly vehicles.

German VW and US-based Ford are each contracted to purchase batteries from SKI’s new electric vehicle battery plant in Georgia, where the Korean group has invested $ 2.6 billion. The plant is being touted as the largest investment in the Southern state’s history, expected to provide 2,600 jobs and clean energy for 330,000 vehicles per year, including Ford’s all-electric F-150 truck.

The settlement also marks the latest turn in a year-long battle between two highly competitive South Korean chaebol that had become a shame for the Seoul government.

LG’s battery unit – formerly part of LG Chem but has since spun off into LG Energy Solution – accused SKI of improperly entering into lucrative contracts with the car manufacturers on the basis of stolen technology.

The ITC lawsuit was launched after unsuccessful attempts at local courts.

SKI has disputed the allegations and lobbied the White House to lift the ban.

LG, for its part, last month announced investment plans of $ 4.5 billion in the US by 2025, creating more than 10,000 jobs, in an effort to allay fears of disruptions over the import ban on SKI.

The ITC has also accused Ford of pursuing its deals with SK, despite evidence that it misappropriated trade secrets.

The South Korean Ministry of Commerce welcomed the decision on Sunday.

Senior officials in Seoul, including Chung Sye-kyun, the country’s prime minister, have been pushing companies to reach an agreement for months. In March, however, the two sides seemed far apart on a possible settlement figure, with LG executives saying the gap was nearly $ 1 billion.

Additional reporting by Song Jung-a, Kiran Stacey and Peggy Hollinger

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