South Korean battery makers LG Chem and rival SK Innovation Co have agreed to settle a trade secrets dispute that has threatened a key Georgia plant and the electric vehicle plans of Ford Motor Co and Volkswagen AG, three sources briefed on the matter said.
The Biden administration through the US Trade Representative’s Office (USTR) faced a Sunday night deadline on whether to take the rare step of reversing a US International Trade Commission decision unless the companies had agreed a deal. An announcement of the battery makers’ settlement is expected by Sunday, the sources said.
The agreement is a win for President Joe Biden who has made boosting electric vehicles and US battery production a top priority. The global auto industry is racing to develop EVs, and Biden has proposed spending $174 billion to hike EV sales and expand charging infrastructure.
The accord puts an end to a bitter two-year dispute between affiliates of two of South Korea’s biggest conglomerates. After losing out to SK in its bid to win Volkswagen orders, LG accused SK of stealing trade secrets by poaching nearly 80 of its employees, Reuters reported.
The ITC in February sided with LG Chem after the company accused SK of misappropriating trade secrets related to EV battery technology and issued a 10-year-import ban, but it allowed SK to import components for batteries for Ford’s EV F-150 program for four years, and Volkswagen’s North American EVs for two years.
SK vowed to walk away from its $2.6 billion Georgia battery plant under construction if the ITC decision was not overturned.
The ITC also faulted what it called SK’s “egregious misconduct” and SK’s destruction of documents ordered by company executives.
Ford, VW, LG and SK declined to comment.
Volkswagen of America CEO Scott Keogh wrote in a LinkedIn post on Wednesday that if the ITC decision were left in place, it could “reduce US battery capacity and delay the transition to electric vehicles.”
LG first filed a complaint against SK in 2019 and both sides hired numerous lawyers and consultants to make their case to the Biden administration.
The administration has been pushing the two companies to try to reach a settlement, as have VW and Ford, the sources said.
US Trade Representative Katherine Tai has been personally involved in the settlement discussions and urged both companies to come to a resolution, sources said. USTR declined to comment.
SK in March received proposed terms from LG, including financial reparations to address LG’s trade secrets misappropriation claims, Reuters reported earlier citing a person familiar with the situation.
Georgia is home to two newly-elected Democratic US Senators, Raphael Warnock and Jon Ossoff, who are a linchpin of Biden’s slim Congressional majority and have both spoken about the importance of ensuring the Georgia plant’s future.
Both senators repeatedly pressed the companies to reach agreement.
Warnock praised the reported deal that will ensure the Georgia plant’s survival, saying in a statement on Saturday that it “will help keep the local economy moving forward.”
Last month, Georgia’s Republican Governor Brian Kemp urged Biden to intervene, noting SK’s plant will employ nearly 2,600 and is the largest foreign investment in the state’s history: “Simply put: the livelihoods of thousands of Georgians are now in your hands.”
LG’s battery unit LG Energy Solution is nearing completion of an Ohio cell manufacturing plant with General Motors and is close to announcing plans to build a $2.3 billion second facility in Tennessee, sources told Reuters.
LG has said it can handle the battery needs of automakers if SK abandons its Georgia plant.
SK has said LG could not handle the VW and Ford contracts, and that Chinese manufacturers could step in to meet demand.
Bloomberg reported the expected deal earlier on Saturday.
