The two "battery giants" fought for 3 years! After the settlement, a "conspiracy" kicked off again

The topic I want to talk about at the beginning today is the "settlement of the century" that shocked the world a few days ago - South Korea's two major battery giants SK Innovation and LG Energy Solution ended nearly three years of litigation, and at the critical moment of being on the verge of a breakup, they turned off the lights.

It didn’t take long for news of the settlement to spread around the world.

No one knows what kind of deal was reached in that small dark room.

Anyway, SK, which had always refused to admit that it had stolen LG's top-secret information, accepted a huge fine of 2 trillion won (1.8 billion US dollars), and LG, which had been holding on to its claims, also gave up its right to pursue the matter, which was equivalent to giving up the huge orders from Ford and Volkswagen in disguise.

The president really wanted to know who had such a powerful hand that could simultaneously hold down the two chaebol giants who could collapse half of Korea's sky with just a stomp of their feet.

What is the real purpose of the two companies' "mutual benefit from cooperation"?

The key information is complicated and yet it is difficult to hide, so if you want to understand it clearly, you have to start with the event itself.

01. The friction between giants is both internal competition and a story

In April 2019, LG Energy (LG Group) filed lawsuits simultaneously with the U.S. International Trade Commission (ITC) and the U.S. District Court for the District of Delaware, accusing SK of stealing trade secrets by poaching 76 core personnel engaged in its battery business and using this to obtain huge orders from Ford and Volkswagen.

As we all know, in addition to the slogan of freedom and human rights, the United States also has a well-known banner, which is respect for intellectual property rights.

Therefore, once LG’s lawsuit is established, SK will have committed a big taboo and will no longer have a place to stand!

But I believe that you can tell with your big toe that things are not that simple.

Everyone should be familiar with LG. Although it failed in the smartphone market, it has still left a mark on the public thanks to its home appliance advertisements that were once very popular in the Chinese market.

Many Chinese people may not be very familiar with SK Group, but they are not afraid of LG at all.

This multinational company, founded in 1953, started out in the textile industry, but has accumulated strong capital in energy, telecommunications, logistics, and heavy industry. Not only is it ranked fifth on the list of Korean chaebols (the top four are Samsung, Hyundai, LG, and Daewoo), its comprehensive strength in Korea is roughly equivalent to that of "Sinopec + China Mobile + JD.com + semiconductor giants + China Railway Construction Group + Sinopharm Group".

Cui Taiyuan when he was young, and his wife Lu Suying (daughter of former South Korean President Lu Taiyu)

From this, we can see the terrifying power of the chaebols.

Sure enough, such a case with sufficient evidence took nearly a year to be tried. I believe there must have been constant pressure from all parties. Fortunately, the ITC finally made a ruling in February last year: it was determined that SK had violated LG's trade secrets.

At this time, the winner immediately began to claim compensation, and LG opened its mouth wide and asked for trillions of won.

Even if we don't ignore the fact that the Korean won is worthless, the number of trillions of zeros is enough to make the president sigh, "too many to count."

But what did SK do?

He insisted that "I did nothing wrong" and refused to pay the fine! The big guys are the big guys, and they just deny the ITC's ruling.

You know, the full name of ITC starts with the word "United States". It is an International Trade Commission backed by a "world police"-level government. The boss said he would not pay attention to it, and he has not paid attention to it for a whole year!

That's right, from the ITC's verdict in February 2020 to February this year, for a full year, SK said, "I'm not wrong, I don't accept it, and no one can take a penny of fine from my pocket."

The United States, which has always been domineering, has actually started to act like a loving mother, pampering and indulging SK for a whole year, and has continued to strive for exemptions for SK - within 4 years, SK will be allowed to continue to supply batteries for Ford's electric version of the F-150 pickup truck; within 2 years, it can supply parts to Volkswagen.

You know, when the ITC imposed sanctions on Chinese companies, it did so without even blinking an eye.

It only took the ITC about 15 days from filing the case to the preliminary judgment to decide whether Chinese-made engines are subject to anti-dumping. This is just like supporting Japan's nuclear wastewater discharge. This country is full of double standards.

Of course, SK, like a spoiled child, refused to plead guilty!

However, this time the other end of the lever is a heavyweight player. LG is certainly unwilling to back down. After all, this involves supplying two giant automakers, Ford and Volkswagen, and a business worth tens of billions.

At this time, ITC finally tasted the bitterness of being crushed by chaebol giants in Korean politics for many years.

A collection of the bosses behind the Korean chaebols

So, in February this year, when the ITC was in a state of panic, suddenly a clever little brain came up with a brilliant idea: We are just an institution, why should we take the blame? Let the president worry about it!

Therefore, the ITC adopted the opinion of this unknown clever guy and officially ruled: the relevant companies are prohibited from importing SK batteries.

This move is obviously a fatal blow to SK. Even the Choi family bosses of SK may not have expected that one day the American dad would no longer love them and even use the big stick of banning imports from China to deal with them!

Of course, ITC still leaves room for maneuver: It’s not that Dad doesn’t love you, it’s that you should find Grandpa.

Because this ITC ruling has a 60-day presidential review period - that is to say, this time it is the turn of the nearly 80-year-old US President Biden to take the blame.

Not to mention that the ITC's move was really dishonest, just for Biden, getting involved in the story of the internal circulation of South Korean chaebols would be a disaster.

Because this fire has spread to the United States.

02. Biden: Sleeping is the nightmare of the plutocracy, waking up is the roar of a lion

Biden only has 60 days left.

On April 11, the time when the throat was stuck was obviously intended to make the old man fall.

Not only will LG not give up on abolishing the ban, it will also be a slap in the face of the government agency under its name. After all, the chairman of the ITC is appointed and dismissed by successive presidents.
 

No repeal of the ban?

SK "Nizi sneered" said he was very sad, so...

“The Commission’s order undermines the economic viability of SK’s investment in battery production in Georgia and will understandably and inevitably lead the company to abandon the project,” SK said in a filing.

"The company has been consulting with experts to discuss ways to move our battery business out of the United States," a SK Innovation spokesman said. "We are evaluating the possibility of moving U.S. battery production to Europe or China, which would cost us tens of billions of won," the spokesman added.

And on January 6 this year, SK also invested 1.6 trillion won (about 9.5 billion yuan) to acquire 9.9% of the shares of Plug Power, a giant in the US hydrogen energy industry, becoming its largest shareholder.

Transfer to China?

SK Group does not need the president to welcome it, as it knows this is a good deal.

LG is even more aware that the reason why it was able to win the crown of power battery installation capacity this year has a lot to do with building a factory in Nanjing, China and supplying Tesla China.

And if SK is forced to abandon its battery factory in Georgia, the United States, then this investment project, which is expected to cost US$5 billion and create 6,000 jobs, may really fall into China.

This is absolutely not okay!!

Georgia Senators Raphael Warnock and Jon Ossoff lobbied frantically for this reason, and the White House and the Office of the United States Trade Representative (USTR) finally could not sit still.

However, at this time, LG also showed its own cards:

LG is expanding its battery plant in Ohio with General Motors, and is also planning to build a new plant in Michigan.

In addition, LG also announced plans to invest USD 4.5 billion in the United States by 2025 and hire 10,000 workers to expand battery production capacity.

As if the excitement wasn't big enough, Volkswagen and Ford also want to get involved.

"If the ITC's decision remains in place, it could reduce U.S. battery production capacity and delay the transition to electric vehicles," said Volkswagen CEO Scott Keogh.

The president will translate for you: "Want to mess with my battery supplier? I'll delay the nationwide popularization of electric vehicles for you to see!"

After all, Biden just announced a massive $2.25 trillion infrastructure plan some time ago, which included radical promotion of electric vehicle policies and planned to invest nearly $200 billion, or 10%, in the electric vehicle field.

The president can understand that the old man does not want to lose to China in any aspect, but now he is facing pressure from the world's two largest power battery giants, plus the three major domestic giants Ford, General Motors and Volkswagen.

Even if Trump were in power, he would probably still post a tweet to curse people.

As a result, the government, sandwiched between the chaebol giants, was forced to start the life of a lobbyist.

It is said that government officials hold meetings with executives of the two companies and car companies almost every day. Data collected by a US nonprofit organization show that LG and SK spent more than $1 million on lobbying alone.