LG Energy Solution and SK Innovation have come to an agreement regarding the conflict on electric vehicle (EV) battery a day before President Biden can exercise his right to veto the decision made by the ITC (International Trade Commission). The two companies have agreed on a $1.8 billion (2 trillion KRW) settlement money, withdraw from lawsuits in South Korea and the United States, and no additional lawsuit for the next ten years. By drawing a broader agreement for strengthening the EV battery industry’s competitive edge, they have been able to remove any uncertainty in their businesses and agreed to carry out healthy competitions and friendly cooperation.
LG Energy Solution and SK Innovation made a public statement on Sunday that they have agreed to end the lawsuit regarding infringement of trade secrets on EV battery. Both companies held emergency board of directors meetings and made a joint document of agreement related to the lawsuit on infringement of trade secrets and the patent litigation derived from the lawsuit public.
The two companies agreed on a $1.8 billion settlement money. LG Energy Solution will receive $900 million (1 trillion KRW) in cash from SK Innovation and a loyalty of $900 million (1 trillion KRW) regarding its battery business in the United States.
They have agreed to end any lawsuit in South Korea and the U.S. and decided not to have any additional lawsuit for the next ten years.
President Kim Jong-hyun of LG Energy Solution and President Kim Jun of SK Innovation made statements that the two companies have agreed on healthy competition and friendly cooperation for development of EV battery industries in South Korea and the U.S. and that the companies will particularly focus on plans and policies related to battery supply chain and eco-friendliness that the Biden administration is pushing for. They also added that they want to give thanks to officials from the South Korean government and the U.S. government who have put in much effort in order for the two companies to come to an agreement.
On February 10 (U.S. time), the ITC ruled that SK Innovation stole LG Energy Solution’s trade secrets and imposed a ten-year sanction that prohibits importation of SK Innovation’s batteries to the U.S.
President Biden had until the midnight to exercise his right to veto the commission’s decision.
Even after the ITC’s final ruling, LG Energy Solution and SK Innovation could not come to an agreement on the amount of a settlement money. SK Innovation even mentioned about withdrawing its business from the U.S. and had focused all its efforts into having President Biden exercise his right. To counter SK Innovation’s efforts, LG Energy had been blocking any possibility of President Biden exercising his right.
Many believe that the agreement has been made with mediation from the Biden administration. It is reported that the Office of the United States Trade Representative (USTR) has been trying to persuade the two companies to come to an agreement while looking into a possibility of President Biden exercising his right to veto the decision made by the ITC.
If President Biden, who made his plan of establishing battery supply chains in the U.S. clear, did not exercise his right to veto the decision, there was a chance that the U.S. might have suffered from economic benefits and lack of job creation ruling from stoppage of SK Innovation’s plants. On the other hand, because exercising his right to veto the decision would have contradicted his opinion on intellectual property rights that he has been emphasizing on a normal basis, it seems that the Office of the USTR has been trying hard to mediate the agreement between the two companies.
With this agreement, the sanction imposed by the ITC will become invalid. Although SK Innovation has to pay a settlement money, it will be able to globalize its battery business based on its battery business in the U.S. LG Energy Solution has prepared a groundwork to strengthen its pouch-type battery and cylindrical battery businesses.
“With this agreement, major automakers such as Volkswagen and Ford will be able to receive stable supply of EV batteries, and LG Energy Solution and SK Innovation will be able to coexist in the global market and compete against each other in good faith.” said LG Energy Solution.
SK Innovation stated that it will now focus on stable operation of its first Georgia plant and the construction of its second Georgia plant and that it will actively carry out additional investments in South Korea and other countries in order to develop the global EV industry and to create an ecosystem.
Staff Reporter Kim, Jiwoong | firstname.lastname@example.org