Sun, October 17, 2021

in-focus

South Korean battery makers reach last-minute settlement


Two South Korean industrial giants have reached a last-minute global settlement that will allow a pair of new plants in Commerce, Ga., to move ahead with plans to supply batteries for Ford and VW electric vehicles, according to people familiar with the negotiations.

The deal will be a victory for President Joe Biden, who has been eager to create jobs, build a U.S.-based supply chain for electric vehicles and move toward slowing climate change - all without taking sides in a dispute between the firms over intellectual property.

SK Innovationcan now complete construction of its $2.6 billion manufacturing facilities, which will employ 1,000 workers by the end of this year. By 2024, the plants will have 2,600 workers and churn out lithium ion batteries for more than 300,000 electric vehicles, mostly for Ford and VW brands.

The settlement will cover not only a ruling by the U.S. International Trade Commission but also litigation in federal court.

LG Energy Solution had accused SK of stealing trade secrets and destroying documents. In April 2019, it sought to limit SK's battery output in the United States and said there was no battery shortage in the United States.

Lawyers for both companies declined to comment Saturday.

The trade commission sided with LG and restricted SK's ability to operate its plants in this country. SK would have been barred from importing crucial battery components for 10 years. Butthe company still could have imported enough to supply batteries to certain VW brands for two years and for certain Ford brands for four years, including Ford's best-selling F-150 pickup truck. During that period, VW and Ford were supposed to line up new suppliers.

The Biden administration, which had until Sunday to overturn the ITC ruling, feared that finding new suppliers could prove difficult if the automobile industry rushes to expand its offerings of electric vehicles. The administration has cited the need to overhaul the American car and truck fleets and make them all electric. The settlement gives the president a boost on the jobs front and among climate activists and those worried about climate change.

The SK battery plants, located 70 miles northeast of Atlanta, have drawn support from Georgia Republicans and Democrats, including Republican Gov. Brian Kemp, Democratic Sen. Raphael Warnock and Democratic former Atlanta mayor Andrew Young. Kemp said in a statement in February that Biden and his administration "have the opportunity to support thousands of hardworking Georgians - and their communities - who would benefit from SK Innovation's continued success in our state."

The state of Georgia has provided $300 million in grants, free land and other incentives to the South Korean company.

The settlement, which is expected to be announced this weekend, allows Biden to sidestep a conflict with the ITC. The president has the authority to overturn commission rulings within 60 days, a power generally delegated to the U.S. trade representative. But a president has done so only once. In August 2013, President Barack Obama reversed an ITC ruling that would have imposed a ban on the sale of some older Apple iPhones and iPads, dealing a blow to Samsung Electronics Co. in a long-running patent battle between those two companies.

SK, South Korea's third largest conglomerate, had lined up prominent advocates to press its case, including former Obama administration officials. Former deputy attorney general Sally Yates, a Georgia native, said its factory should stay open to avoid disrupting the U.S. economy and efforts to fight climate change. She said the two South Korean firms should argue their positions in U.S. District Court, where LG is already suing SK.

"We have a severe shortage of EV batteries in the U.S. with insufficient domestic production, and the SK plant in Georgia is necessary to address this supply chain threat," she wrote.

LG, however, had contended that the Biden administration should let the ITC process work. David K. Callahan, a partner at Latham & Watkins, last week disputed the idea that the United States is heading toward a shortage of EV batteries. He said LG Chem has a plant in Holland, Mich., that has been making batteries for about eight years and a joint venture with General Motors in Lordstown, Ohio. Last month, he said, LG announced $4.5 billion in commitments for two additional battery plants.

Separately, Samsung announced last month it would build a plant to make battery cells, which Samsung already imports and then assembles.

Published : April 11, 2021

By : The Washington Post · Steven Mufson