The Fed Might Give One Of South Korea's Biggest Battery Suppliers A Pass After All

SK Innovation supplies batteries for Volkswagen’s MEB-based vehicles, like the ID.4.
SK Innovation supplies batteries for Volkswagen’s MEB-based vehicles, like the ID.4.
Image: Volkswagen

South Korean battery manufacturer SK Innovation has been in a precarious spot over the last couple of months. Hit with a 10-year import ban by the U.S. International Trade Commission as punishment for allegedly stealing trade secrets from rival LG Energy Solutions, SK stands to lose business from big name partners like Ford and Volkswagen. A spokeswoman at the company even said it might have to abandon its construction of a factory in Georgia, which is already underway.

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It’s very fortunate news for SK, then, that the ITC threw it a lifeline on Wednesday, saying that the company did not infringe on LG’s patents. From Reuters:

The initial determination by the U.S. International Trade Commission (ITC) marks the first time LG Energy Solution has received a negative determination from the trade panel for one of its several legal disputes with SK in the United States.

“The ITC’s decision is regrettable, but we respect its decision,” the wholly-owned battery division of LG Chem said in a statement. The company, whose clients include Tesla Inc, General Motors Co and Hyundai Motor Co, had filed a claim citing four patent infringements to the ITC in 2019.

Now, it’s important to clarify that this doesn’t immediately absolve SK of wrongdoing in the other, more consequential ITC ruling between the two companies, where SK was determined to have “misappropriated” LG trade secrets. The 10-year ban is in direct response to that decision. However, if the ITC has decided no patents were violated, that could throw cold water on the other case — and rescue SK’s business in the U.S.

Interestingly, this comes merely two days after SK threatened to slam the brakes on building its American facility if the ITC ultimately enforces its ban. In that scenario, SK would be permitted to import technology related only to the Ford F-150 EV for the next four years, and Volkswagen’s EVs for two. Business with any other manufacturers, for any other vehicles, would be forbidden.

Unfortunately, politicians seemed to forget there were American jobs riding on all this, which has prompted the Department of Transportation to review the impact of the decision before advising President Joe Biden on whether to reject the ITC’s ruling. SK has attempted to appeal to Biden by arguing that banning the company could make his administration’s EV goals much harder to achieve. Meanwhile, Georgia Democratic Senator Raphael Warnock has called the ITC’s recommendation “a severe punch in the gut” for workers in the state.

Biden can still overturn the decision if he pleases; he’s had 60 days to do so since it was initially handed down on Feb. 10. Though there isn’t much time left, and that review period elapses on April 11.

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LG, who already supplies General Motors, Tesla and Hyundai, says it’d be more than happy to take over outstanding demand in SK’s absence, because of course it would. However, considering LG is already embroiled in a $900 million global recall over fire-prone batteries in the Kona Electric, maybe it’d be best if the brunt of that business went to somebody else for now.

How will all this end? Will SK be blacklisted from the U.S. after all? Will the federal government look the other way on SK’s alleged transgressions in the name of jobs and a desire to bolster EV sales? Or will the two companies simply settle things out of court, which would surely delight Ford boss Jim Farley? It’s anyone’s guess, but we should have our answer within the next 10 days!

Staff Writer at Jalopnik. 2017 Fiesta ST. Wishes NASCAR was more like Daytona USA.

DISCUSSION

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Instead of banning SK for their transgression, I suspect they might end up modifying the remedy where SK only has to pay LG a large sum for damages.