WASHINGTON: The U.S. International Trade Commission (ITC) on Wednesday sided with South Korea's chemicals and electric vehicle (EV) battery maker LG Chem Ltd, which accused its cross-town rival SK Innovation Co Ltd of misappropriating trade secrets related to EV battery technology.
The ITC said it was issuing a limited 10-year exclusion order prohibiting imports into the United States of some lithium-ion batteries by SK Innovation, but would permit SK to import components for domestic production of lithium ion batteries, battery cells, battery modules, and battery packs for Ford Motor Co's EV F-150 program for four years, and for Volkswagen of America's MEB electric vehicle line for the North America region for two years.
The ITC added that SK Innovation can replace or repair its batteries in Kia vehicles sold to U.S. consumers. The move could effectively ban the company from supplying EV batteries in the United States unless the company can source all the needed materials there - a step analysts say is not feasible.
The ITC said the decision would allow the automakers to transition to new suppliers for these programs.
LG Chem's wholly owned battery subsidiary LG Energy Solution praised the ruling.
"SKI’s total disregard of our warnings and intellectual property rights gave us no choice but to file this case," Kim Jong-hyun, the CEO of LG Energy Solution, said in a statement. He said the company would "further strengthen the protection of intellectual property rights going forward."
"SK Innovation should stop twisting the litigation situation and humbly accept the ITC's final decision and we urge (SK Innovation) to actively take actions to close the lawsuit as soon as possible by making responsible proposals," LG Energy Solution said in a separate statement.
SK Innovation, in a statement, said it regretted the ITC's decision "but it's a relief that we will continue to supply to Ford and Volkswagen."
SK noted there was a 60-day presidential review period in which President Joe Biden could decide to reverse the ruling. Biden has made electric vehicles and reducing vehicle emissions a top priority.
A White House spokesman declined to comment on the ruling.
LG Chem split off its battery business renamed as LG Energy Solution, an EV battery supplier for Tesla Inc and General Motors Co. It filed its U.S. trade complaints against SK Innovation in April 2019 alleging that its rival stole trade secrets.
It sought to block SK from bringing batteries and components into the United States, as well as manufacturing systems needed for U.S. production which is scheduled to start in 2022.
In February 2020, the ITC made a preliminary ruling in favour of LG Chem, which has since split off its battery business as LG Energy Solution.
SK Innovation is building two EV battery factories in Georgia to manufacture batteries for us in Volkswagen and Ford electric vehicles. LG Chem has set up an EV battery cell venture plant with GM in Ohio.
"With the ITC's final ruling, SK Innovation is now facing scenarios that they would not be able to operate their business in the United States, which will likely accelerate settlement talks between LG and SK," said Han Sang-won, an analyst at Daishin Securities, adding that SK Innovation needs to settle the lawsuit to better operate its EV battery business.
Ford said the "ITC decision supports our plans to bring the all-electric Ford F-150 to market in mid-2022."
"We are continuing to analyze today's ruling from the U.S. International Trade Commission and its impact on Volkswagen. Regardless, this ruling does not change our commitment to produce EVs in Chattanooga, TN, in 2022," Volkswagen said in a statement.
Volkswagen and Ford previously warned a U.S. legal row between South Korean battery makers could disrupt supplies of the key EV parts and cost U.S. jobs during the COVID-19 pandemic.
(Reporting by David Shepardson in Washington and Heekyong Yang in Seoul; Editing by Chris Reese, David Gregorio and Gerry Doyle)