UPDATE 2: SK Innovation EV Batteries Banned* For 10 Years By U.S. ITC

What will happen to battery plants under construction in Georgia and supply deals with Volkswagen and Ford?

This rendering shows the SK Battery America site in Georgia. SK Innovation has committed to investing $2.6 billion and creating 2,600 jobs to build two EV battery plants at the site northeast of Atlanta.

Mark Kane

By: Mark Kane

Feb 10, 2021 at 6:56pm ET

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The U.S. International Trade Commission (ITC) announced today a verdict in the court clash between two South Korean EV battery manufacturers: LG Chem and SK Innovation.

UPDATE: SK Innovation issued the following statement after the ITC issued its ruling in LG/SK EV battery case:

“SK Innovation will immediately enter into discussions with our customers, Ford Motor Company and Volkswagen, as a result of the ITC's decision. We have serious concerns about the commercial and operational implications of this decision for the future of our EV-battery facility in Commerce, Georgia, which is expected to employ 2,600 people when soon completed. We also believe that the ITC ruling could have a serious adverse impact on President Biden's policies to combat climate change and expand the electrification of the US auto fleet in coming years. We look forward to having detailed discussions with Biden administration officials charged with reviewing the ITC's ruling and carrying out the President's policies related to electric vehicles and the environment.”

UPDATE 2: SK Innovation released this additional statement this morning:

"Our facility in Commerce will add thousands of new jobs up and down the supply chain in the region. We are hopeful that the Biden administration will take seriously the negative economic and environmental impact of this decision and reverse it so that we can continue to operate. We know that EV battery production is increasingly viewed a part of the critical national security infrastructure and domestic production of these batteries is a top priority."

The case started in Spring 2019, when LG Chem sued SK Innovation over alleged theft of commercial secrets. SK Innovation defends itself, but in the end, the ITC sided with LG Chem.

According to the announcement, SK Innovation EV battery business (importation, domestic production, and sale of batteries for electric vehicles) is banned in the U.S. for 10 years. However, to not harm its clients (that were hoping to avoid a "catastrophic supply disruption"), ITC allows the continuation of the Ford F-150 Electric program for 4 years, and Volkswagen ID.4 (MEB) program for 2 years, to give them time to find new suppliers.

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In other words, it seems that SK Innovation will be able to complete its two battery plants (under construction) in Georgia to supply Ford and Volkswagen. But will it complete them?

Well, we are not sure what the options are for the following years until the ban ends. Maybe production of batteries for other markets/other applications or lease/sale of the plant to another manufacturer just to limit the losses? It's hard to imagine that the brand new plants would stay idle for 8 and 6 years.

Anyway, there are not that many battery suppliers that are ready to provide the required volume of batteries so the race is on. LG Chem's LG Energy Solution, CATL, Panasonic or maybe others have their chance.

What do you think?

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We don't know SK Innovation's response just yet, but LG Energy Solution issued a press release announcing a bold win:

"LG Energy Solution Prevails Over SK Innovation in Final Trade Secret Theft Decision at International Trade Commission

SEOUL, South Korea--(BUSINESS WIRE)--LG Energy Solution, the global leader in pouch-type lithium-ion battery technology, prevailed Wednesday over SK Innovation and SK Battery America in a multi-billion dollar trade secret dispute at the U.S. International Trade Commission. Today’s Commission decision blocks the importation, domestic production, and sale of SK Innovation batteries for electric vehicles that unlawfully rely on LG Energy Solution’s trade secrets.

"SKI’s total disregard of our warnings and intellectual property rights gave us no choice but to file this case and we are grateful to the International Trade Commission for protecting our innovations and significant economic investments in the United States," said Jong Hyun Kim, CEO of LG Energy Solution. “As a global leader and technology innovator, we will further strengthen the protection of intellectual property rights going forward.”

In April 2019, LG Chem and its US-based manufacturing unit filed a complaint with the International Trade Commission accusing SK Innovation and SK Battery America (“SKI”) of trade secret theft by hiring dozens of engineers, manufacturing, and critical business services staff. In December 2020, LG Chem spun off its electric battery division into a new wholly-owned subsidiary, LG Energy Solution, which now owns the trade secrets at dispute.

Citing a record that proved SKI extensively and intentionally destroyed evidence of its trade secret theft, an administrative law judge issued an initial determination that imposed a default judgment in favor of LG Chem in February 2020. That decision, which found SKI had acted in bad faith to hinder the court's investigation and administration of justice, was upheld today by the full Commission.

The Commission's final determination provides two significant remedies to SKI's theft, including imposing a ten-year long exclusion order to stop any importation of batteries, battery cells, battery modules, battery packs. The Commission also imposed a complementary cease and desist order to prevent SKI from making or selling any such products in the US.

The Commission provided a limited exception to allow SKI to supply Ford with electric batteries for its EV F-150 pick-up trucks for four years and to Volkswagen for its MEB line for the North America Region for two years, after which the full force and effect of the exclusion and cease-and-desist orders will remain in place. The order also allows for the repair or replacement of batteries for Kia vehicles sold by the date of the order and originally equipped with SKI batteries, as agreed by LGES and the Commission staff.

Using LG Energy Solution’s stolen technology, SKI improperly secured lucrative contracts with US auto manufacturers, whose orders totaled in the billions, and negotiated historic subsidies and incentives from state and local governments to build a new manufacturing facility in Georgia. SKI's new Georgia plant would have relied on LG Energy Solution’s stolen trade secrets, and the ITC's ruling has definitively prohibited use of LG Energy Solution’s misappropriated technology."

SK Innovation Accelerates Hiring At Its EV Battery Site In Georgia