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SK Innovation was handed another defeat in the electric vehicle
(EV) battery manufacturer's heated trade secrets dispute with South
Korean rival LG Chem, but hopes President Joe Biden will come to
its rescue after a 10 February US International Trade Commission
(ITC) ruling.
"We will do our best to correct the decision through the
Presidential Review," it said.
SK Innovation is pinning its hopes on Biden's prerogative to
nullify rulings by the ITC. The South Korean company is dangling a
carrot of 6,000 jobs in Georgia in front of a politician whose
plans to combat climate change and rebuild following the COVID-19
pandemic with a promised 100,000 green jobs owe a great deal to
support from the Peach State, especially in the US Senate.
In March 2019, SK Innovation broke ground in Georgia on a
factory to manufacture 9.8 gigawatthours of batteries a year
(GWh/year) for EVs, and the same year announced plans for a second
even bigger plant in the state.
SK Innovation said in a statement late 10 February the plants
would not go ahead if aid was not forthcoming from the White House.
It warned: "The damage will not be limited to SK, but will … affect
the entire Georgian economy and society as well."
The White House did not respond to an IHS Markit request for
comment 11 February.
The ITC decision, which followed a petition from LG Chem citing
Section 337 of the Tariff Act of 1930 related to the company's
Holland, Michigan, facility, banned SK Innovation from exporting
various lithium-ion batteries and components to the US for 10
years.
That decision was the latest ratcheting up of a row that began
in 2017 when LG Chem accused former employees of breaching
noncompete contracts after joining SK Innovation. LG Chem prevailed
in domestic South Korean courts. But when the spat came to US
shores and courtrooms, it added a dimension of intellectual
property "misappropriation."
Impact on Ford, VW
In its latest ruling, the ITC did allow two of SK Innovation's
top customers in the US some breathing room. It gave Ford four
years to find a new domestic supplier and German automaker
Volkswagen (VW) two years to do the same for its US operations.
SK's batteries are set to support Ford's plans to produce an
electric version of its best-selling F-150 truck in addition to
supplying VW's planned EV plant in Chattanooga, Tennessee.
Both Ford and VW said 11 February that the ruling had not
affected their plans, although neither would say where they planned
to source the batteries they will need if President Biden fails to
aid SK Innovation.
"This decision does not change our commitment to produce EVs in
Chattanooga … in 2022," a spokesman for VW said.
A Ford representative told IHS Markit the ITC decision supported
the company's plans to bring an all-electric F-150 to market in
mid-2022. "Providing this zero-emissions, purpose-built truck for
our customers is an important part of our plan to lead the electric
vehicle revolution and is a top priority for the company," the
spokeswoman said.
But Ford CEO Jim Farley went on Twitter later 11 February to urge the rival battery
suppliers to come to a "voluntary settlement," which he said would
be "ultimately in the best interest of US manufacturers and
workers."
Ford supported SK Innovation in its fight at the ITC, arguing
that battery suppliers must be selected at least four years before
the launch of a product, and that batteries are developed for
specific vehicles. "EV batteries cannot be manufactured in
isolation but are an integral aspect of the design plan for the
electric vehicle and its other components," the automaker said in a
filing with the ITC.
The supply chain for EVs, especially in the US, is having enough
difficulties even without the decision.
According to IHS Markit Senior Analyst Chloe Holzinger, there
has been far less public funding for lithium-ion battery cell
manufacturing in the US, compared with Europe and China. "Increased
localized cell production would certainly help support the growing
US electric vehicle industry," said Holzinger, whose research
focuses on battery and energy storage. As an example, she cited
Swedish battery manufacturer Northvolt securing $2.73 billion in
fresh funding from European governments, banks, and equity
financiers.
"Even before the current global pandemic, the lithium-ion
battery value chain was already starting to localize as governments
sought to increase local production and reduce dependencies on
foreign manufacturing, while companies sought to reduce logistics
expenses by building facilities closer to their customers," added
Holzinger.
SK Innovation's ability to do so is now in "jeopardy" due to the
ITC decision, said Holzinger. The company's first plant was
supposed to be operational by the end of 2021 with an annual
production capacity of 9.8 GWh, which Holzinger said would make it
one of the top three lithium-ion battery cell manufacturing
facilities in the US, alongside the Tesla Gigafactory in Nevada and
LG Chem's factory in Michigan.
Ball in Biden's court
So that leaves the ball in President Biden's court, although he
won't be the first major politician to try to tackle the
conflagration between SK Innovation and LG Chem. Only last week,
South Korean Prime Minister Chung Sye-kyun made a last-minute
attempt to convince the companies to sort out their differences by
appealing to national pride, according to local media.
"The future of the so-called K-battery industry will be immense,
so I hope the two companies stop fighting over small issues but
strive toward the global market by resolving the problem
pre-emptively," Chung said in a televised debate 4 February.
"I have reached out to the top executives at both companies,
calling them and meeting them, to urge them to resolve the issue.
US politicians are also urging for it to be resolved. It's really
embarrassing," he said, adding the dispute would only benefit
Chinese and Japanese battery makers.
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