© Reuters. FILE PHOTO: LG Chem's logo can be seen in its Seoul office building
By David Shepardson and Hyunjoo Jin
WASHINGTON (Reuters) – South Korean battery maker LG Chem and rival SK Innovation Co have agreed to settle a trade secret dispute involving a major Georgia plant and electric vehicle plans from Ford Motor (NYSE 🙂 Co and Volkswagen AG (OTC: ) threatened. ) said three sources who were briefed on the matter.
The Biden administration through the US Trade Representative Office (USTR) was faced with a Sunday evening deadline as to whether the rare step of undoing a US International Trade Commission decision should be taken unless the companies agreed to a deal. An announcement of the battery manufacturers' agreement is expected by Sunday, the sources said.
The deal is a win for President Joe Biden, who has made the advancement of electric vehicles and US battery production a top priority. The global auto industry is racing to develop electric vehicles, and Biden has proposed spending $ 174 billion to increase EV sales and expand charging infrastructure.
The deal ends a bitter two-year dispute between affiliates of two of South Korea's largest conglomerates. After losing to SK to win contracts from Volkswagen (DE :), LG accused SK of stealing trade secrets by poaching almost 80 of its employees.
The ITC sided with LG Chem in February after the company accused SK of misusing trade secrets related to EV battery technology and imposing a 10-year import ban, which however allowed SK to produce components for batteries for Ford's EV F-150 program for four years and Volkswagen's North American electric vehicles for two years.
SK promised to exit its $ 2.6 billion battery plant under construction in Georgia if the ITC decision is not overturned.
The ITC also criticized SK's so-called "monstrous misconduct" and the destruction of documents ordered by company executives.
Ford, VW, LG and SK declined to comment.
Scott Keogh, CEO of Volkswagen of America, wrote in a LinkedIn (NYSE 🙂 post on Wednesday that an ITC decision "could reduce US battery capacity and delay the transition to electric vehicles."
LG filed a complaint against SK for the first time in 2019 and both sides hired numerous lawyers and consultants to contact the Biden administration.
The government has pushed the two companies to reach an agreement, as has VW and Ford.
The US sales representative Katherine Tai was personally involved in the settlement talks and asked both companies to find a solution. USTR declined to comment.
SK received proposed terms from LG in March, including financial reparations, to address LG's trade secret embezzlement claims, Reuters previously reported, citing a person familiar with the situation.
Georgia is home to two newly elected US Democratic Senators, Raphael Warnock and Jon Ossoff, who are a lynchpin of Biden's slim Congressional majority and who have both spoken about the importance of securing the future of the Georgia plant.
Both senators repeatedly urged the companies to reach an agreement.
Warnock praised the reported deal, which will ensure the survival of the Georgia plant, and said in a statement Saturday that it "will help keep the local economy moving".
Last month, Georgia Republican Governor Brian Kemp called on Biden to intervene. He noted that SK's facility will employ nearly 2,600 people and will be the largest foreign investment in the state's history: "Simply put, thousands of Georgians are now in your hands for a living."
LG's battery unit, LG Energy Solution, is about to complete a cell manufacturing facility in Ohio with General Motors (NYSE 🙂 and is about to announce plans to build a second facility in Tennessee worth $ 2.3 billion US dollars, sources told Reuters.
LG has stated that it will be able to meet automakers' battery needs when SK leaves its Georgia facility.
SK said LG couldn't handle the VW and Ford deals, and Chinese manufacturers could step in to meet demand.
Bloomberg reported the expected deal earlier on Saturday.