SEOUL, April 11 (Yonhap) — SK Innovation Co. agreed to pay 2 trillion won (US$1.78 billion) to settle an electric vehicle battery dispute with LG Energy Solution Ltd. and withdraw all their other pending litigations to end their two-year legal battle, the two companies said Sunday.
The two Korean battery makers announced the results of their agreement, hours before a deadline for an import ban on SK.
The U.S. International Trade Commission (ITC) in February sided with LG in a trade secret case and issued a 10-year import ban on SK, while temporarily allowing shipments of battery components for Ford and Volkswagen to give them time to find new suppliers.
Their settlement averts the import ban, which was set to take effect unless President Joe Biden vetoed the ITC decision before the Sunday night deadline.
SK Innovation will pay 1 trillion won in cash and 1 trillion won in royalties, and the two companies agreed to withdraw all other legal disputes at home and abroad and will not lodge further complaints in the next decade, the companies said.
“The two companies agreed on sound competition and friendly cooperation for development of the EV battery industry in South Korea and the United States,” LG Energy Solution CEO Kim Jong-hyun and SK Innovation CEO Kim Jun said in a joint statement. “(The two companies) agreed to make joint efforts for the Biden administration’s push to bolster the EV battery supply chain and its eco-friendly policy.”
Their compromise will allow SK to complete the construction of the $2.6 billion electric vehicle battery plant in Georgia, which will supply electric vehicle batteries for Ford and Volkswagen.
SK earlier said it could shut down the Georgia plant if the import ban is not overturned, which could hamper the Biden administration’s EV push and pledge for American jobs.
SK has claimed that it does not need LG’s trade secrets as its development and manufacturing method for EV batteries is different from its rival and that it received an unfavorable ITC ruling due to destruction of evidence.
In the runup to the settlement, the Korean rivals made intensive lobbying efforts in the U.S. to grab a greater share of the rising battery market as the Biden administration pushes to accelerate the adoption of EVs.
LG Energy Solution, wholly owned by LG Chem Ltd., operates a lithium-ion battery factory in Michigan and is building a new factory in Ohio through its joint venture with U.S. automaker General Motors, which will be completed in 2022.
Last month, LG Energy Solution said it will invest 5 trillion won (US$4.5 billion) by 2025 to expand its battery production capacity in the U.S.
LG, which supplies Tesla and a number of automakers, is the world’s No. 2 EV battery supplier with a share of 23.5 percent, and SK Innovation was in sixth place with a 6 percent share in the global EV market last year, according to SNE Research.
The Seoul government welcomed their agreement and vowed to expand support to make the nation a battery power house.
“It is time to prepare for the future to get ahead in the tough global competition,” the Ministry of Trade, Industry and Energy said in a release. “The government will actively push for measures to bolster the rechargeable battery industry’s competitiveness.”