South Korean Battery Makers Reach $1.8 Billion Settlement, Saving Georgia Plant

SK Innovation headquarters in Seoul, South Korea, February 2017. (Kim Hong-Ji/Reuters)

South Korean battery-making rivals SK Innovation and LG Chem have reached a last-minute settlement in a trade-secret dispute that threatened to shut down an electric vehicle battery plant in Georgia.

SK Innovation agreed to pay 2 trillion won ($1.8 billion) to LG Energy Solution, a unit of LG Chem, according to a statement from the two companies first reported by Bloomberg News. The payment is divided equally between cash and royalties.

The two companies said in a joint statement that they “will work to help the development of EV battery industry in South Korea and the U.S. through healthy competition and friendly cooperation.”

“In particular, we will work together to strengthen the battery network and environmentally-friendly policy that the Biden administration is pursuing,” the statement adds.

The settlement comes as a U.S. International Trade Commission (ITC) ruling that implemented a ten-year import ban on SK Innovation’s batteries into the U.S. would have essentially shut down the 2.4 million square foot plant in Commerce, Ga. The factory is set to create more than 2,600 jobs in its first phase of opening.

Georgia lawmakers on both sides of the aisle had asked President Joe Biden to step in and reject the ruling, as the president had the power to veto the decision for any reason within 60 days of the ruling.

After the ITC released its decision in February, Biden faced an April 11 deadline to intervene. However, the settlement relieved him of the need to do so.

“This settlement agreement is a win for American workers and the American auto industry,” Biden said in a statement Sunday.

U.S. Trade Representative Katherine Tai said the deal comes after “significant engagement” by the administration.

The companies agreed to withdraw all lawsuits brought in South Korea and overseas and not to pursue any legal action against each other for the next decade, according to the statement.

The import ban had imperiled the rollout of Ford’s new F-150 electric pickup truck and the Volkswagen AG’s ID.4 SUV, which were both set to begin production next year with EV batteries from the SK Innovation plant.

Georgia governor Brian Kemp, a Republican, wrote to Biden last month calling on him to intervene to save the plant, noting that “the livelihoods of thousands of Georgians are now in your hands.”

“The Commerce plant fits squarely into your publicly announced goal of electrification of the U.S. auto fleet with good, high paying jobs for local workers,” Kemp wrote. “Furthermore, your recently announced Executive Order on supply chains recognized the critical role of EV batteries to our economy and national security. Given that China is currently the leading producer of EV batteries, closing the Commerce, Georgia plant will result in the United States falling further behind China in the global EV battery race.”

He noted that the factory, upon completion, will account for “nearly half of our nation’s vitally needed non-captive EV batteries, which will be available for purchase by EV manufacturers on the free market.”

The plant, which will be the only major EV battery plant in the nation to have been built without federal subsidies, will have an initial yearly output that will supply enough battery capacity for 330,000 electric cars, he added.

Currently, if an automaker wants to purchase batteries they either have to import them or seek out a joint venture with a big battery company. Most imports currently come from China, which houses roughly 73 percent of the battery production business.

The SK Innovation facility will serve as the nation’s largest non-captive plant, as it would be able to adapt for other manufacturers besides Ford and Volkswagen.

LG, which has a facility in Holland, Mich., is building an additional plant with GM in Ohio and has said it plans to invest $4.5 billion in the U.S. by 2025 and hire 10,000 workers to expand battery capacity.

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