Battery supplier SK Innovation loses lawsuit, faces 10-year ban in the US
Latest update time：2021-09-05 16:25
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The dispute between South Korea's two largest battery giants has come to an end.
Author | Yu Kuai
Recently, Bloomberg reported that the US International Trade Commission (USTC) made a final ruling on the trade secret theft case between LG Chem and SK Innovation: LG Chem won the case.
At the same time, the USITC issued a 10-year restrictive exclusion order against SK Innovation covering certain lithium-ion batteries, battery cells, battery modules, battery packs and assemblies, and the production of such products in the country.
This ruling effectively blocks SK Innovation's path forward in the U.S. electric vehicle battery market, bringing the dispute between South Korea's two largest automotive battery giants to an end.
According to foreign media reports, in the Seoul market, SK Innovation recorded its biggest drop in nearly a year.
The dispute between South Korea's two largest automotive battery giants began two years ago.
In April 2019, LG Chem filed a lawsuit with the ITC and the U.S. court, accusing SK Innovation of systematically and systematically stealing trade secrets by hiring its former engineers, and demanding that SK be prohibited from producing battery cells and importing parts needed to produce battery cells in the United States. However, SK denied any wrongdoing.
The US International Trade Commission then launched a 20-month investigation into the dispute between the two Korean conglomerates.
In February 2020, the U.S. International Trade Commission made a preliminary ruling in favor of LG Chem and then conducted a further comprehensive review of the case.
In August of the same year, a South Korean court also ruled on the dispute between the two parties. In South Korea, SK Innovation lost the case again, and the Seoul court also ruled in favor of LG Chem. SK Innovation said it would appeal.
In 2020, Volkswagen and Ford jointly appealed to the ITC several times to allow SK Innovation to produce batteries at its planned Georgia plant. Volkswagen is worried that if the case is not resolved, the battery supply will face a "catastrophic interruption."
The resistance from Volkswagen and Ford did not have a disruptive impact on the case.
Last Wednesday, the U.S. International Commission issued a final ruling in the case, which included a 10-year ban on SK Innovation from importing certain lithium-ion cells, battery cells, battery modules, battery packs and assemblies into the United States and manufacturing such products in the United States.
In this ruling, considering that SK Innovation has signed contracts with Ford and Volkswagen to provide power batteries for their electric vehicles, the committee has set aside a grace period to allow SK Innovation to continue supplying Ford electric vehicles for four years and Volkswagen's MEB platform North American electric vehicles for two years, leaving a time window for the two automakers to find new power battery manufacturers.
In addition, the ITC also allows SK Innovation to continue importing battery components for repairs of Kia models that have already been purchased by American consumers.
In response to the ruling of the U.S. International Trade Commission, SK Innovation also issued a statement, hoping that the Biden administration would veto the import ban in the name of public policy, and argued that its efforts in electric vehicle batteries are key to Biden's green energy agenda.
SK Innovation noted that the ruling is subject to a 60-day presidential review period, during which President Biden, who has made electric vehicles and reducing vehicle emissions a top priority, could decide to overturn it.
SK said in a separate statement: "We take seriously the commercial and operational implications of this ruling on the future of our electric vehicle battery facilities." The organization also believes that "this ruling may have a serious adverse impact on President Biden's policies to combat climate change and expand the electrification of the U.S. automobile fleet in the coming years."
In the statement, SK Innovation said it may consider appealing the ITC's ruling after a thorough review. The company also said it is willing to negotiate as long as the conditions are reasonable.
SK Innovation, a subsidiary of South Korea's largest oil refiner SK Energy, is a latecomer to a market dominated by local rivals LG Chem and Samsung. SK Innovation currently has an annual global production capacity of about 40GWh and aims to increase its capacity to about 125GWh by 2025.
SK Innovation currently produces electric vehicle batteries only in South Korea, and plans to start mass production in its factories in Hungary and the United States in 2020 and 2022 respectively. If the ban is established, it will have a significant impact on it.
LG Energy, which was formed in December after LG Chem spun off its battery business into a new entity and is seeking an initial public offering, has a plant in Holland, Michigan, and is also planning a battery plant in Ohio for GM vehicles.
The two South Korean companies are competing openly and secretly for a larger share of the battery market.
It is reported that after the US ruling, SK Innovation fell 9.6% in early trading, the largest intraday drop since March 2020. As of 9:15 am Seoul time today, the stock fell 6.6% to 277,000 won. LG Chem, the parent company of LG Energy, rose 5.2%.
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