In 2019, LG Chem accused SK Innovation of stealing trade secrets after VW chose its competitor as a North American battery supplier.
In February of this year, the US International Trade Commission (ITC) ruled in favor of LG Energy Solution, a battery manufacturer that has since sprung from LG Chem. The commission banned SKI from importing spare parts into the country for ten years. The only exceptions were imported components for the Ford F-150 electric truck and Volkswagen’s electric program for North America, but they were also for four years and two years in a row.
An agreement was reached at the last minute
There were two options to replace the ITC decision, two automakers and extensive electrification plans for the Biden administration, one was an agreement and the other was to override the president’s decision.
On April 11, after lengthy negotiations, the two Korean suppliers reached an agreement just hours before the deadline for the presidential intervention.
SKI will pay a total of $ 1.8 billion to LG Chem-owned LG Energy Solution. Of this amount, 450-450 million will be paid in royalties this year and in 2022, with the other half spread over at least six years. SKI told Reuters that the payments are not expected to have a material impact on its financial results.
The two companies also agreed to drop the lawsuit in the United States and South Korea and not sue each other for the next ten years.
Jobs were also at stake
In addition to the US government, Volkswagen and Ford, the agreement also came as good news for the state of Georgia. SKI is building a new battery plant in the southeast state for $ 2.6 billion, which, however, would not be complete without settling or bypassing the ITC decision.
The largest investment in the state’s history will be made in trade, 110 kilometers northeast of Atlanta, directly creating 2,600 new jobs.