The South Korean supplier of electric vehicle batteries in the US for Ford Motor Co. and Volkswagen AG has reached a last-minute deal with its chief rival, said people familiar with the situation.
Saturday’s move averts a 10-year import ban on SK Innovation Co.’s products and protects thousands of jobs in the politically important state of Georgia.
The companies had no immediate comment.
The US International Trade Commission had issued the import ban Feb. 10 based on what it called an “extraordinary effort by SK Innovation to destroy evidence in a trade-secret case lodged by fellow South Korean rival LG Chem Ltd.’s LG Energy Solution Co. unit.
The ITC did carve out time to let SK Innovation import components for batteries to be assembled in Georgia for Ford and Volkswagen vehicles.
The ban was scheduled to take effect April 11, unless President Joe Biden overturned it on public policy grounds. South Korea government officials and Biden administration pushed the companies to reach an agreement instead.
The case prompted an extraordinary effort to lobby the Biden administration, with near-daily meetings over the past weeks involving officials from a dozen government agencies and officials from both companies and the automakers, as well as Georgian politicians on both sides of the political aisle.
SK Innovation argued the order would undermine Biden’s push for more American-made electric vehicles as part an effort to combat climate change. LG Energy, which makes batteries for General Motors Co. in Michigan, said such a decision would weaken policies to protect trade secrets — a long-standing issue in US talks with China — and that the carve-outs ensures Ford and Volkswagen had time to adjust.
The commission said it had already taken the president’s policies into account when fashioning a carve-out that allows SK Innovation to bring in components needed for Ford’s EV F-150 pickup for four years, and for Volkswagen’s American ID.4 SUV line for two years. Neither carmaker was appeased.
LG Energy accused SK Innovation of stealing billions of dollars’ worth of crucial information on how to make batteries, enabling it to win the contracts from Ford and Volkswagen. SK Innovation denied receiving or using any confidential information from the LG Energy employees it hired.
SK Innovation is nearing completion of one facility in Georgia and is already making battery samples, while a second facility is about 20 percent complete and projected to be done next year. A second phase is planned that would bring SK Innovation’s total investment to about $5 billion and create 6,000 jobs, the company has said.
In addition to making the batteries for Ford and Volkswagen, the SK Innovation plant would be the nation’s largest so-called non-captive plant, meaning it would be able to adapt for other manufacturers, the company has said.
LG, which is building an additional plant with GM in Ohio in addition to its facility in Holland, Michigan, has announced plans plans to invest $4.5 billion in the US by 2025 and hire 10,000 workers to expand battery capacity.
Creating more US-based manufacturing is critical because the automakers want components close to their assembly plants, especially since a shortage of computer chips has highlighted vulnerabilities for global supply chains.
Biden has committed to creating more American-made manufacturing, particularly to compete with China. The Asian nation makes 73 percent of the world’s lithium-ion batteries compared with 12 percent by No. 2 US, Jonathan Jennings, Ford’s global commodity pricing vice president, told the Senate Finance Committee on March 16.
Georgia Governor Brian Kemp, a Republican, and US Senator Raphael Warnock, a Democrat, have raised concerns the import ban would lead to the shutdown of SK Innovation’s new plant.
Former Deputy Attorney General Sally Yates, a Georgia native, had written that, while there should be “consequences for SK Innovation’s actions, the proper remedy should be resolved by a district court case with money and sanctions. Former US Energy Secretary Ernest Moniz, hired by LG Energy to help in its business strategies, had said the ITC order may be the only way to get SK Innovation to settle.
In a March 10 letter to Warnock, LG Energy said the senator should be “highly skeptical of SK Innovation’s claims it would be forced to shut down the plant. The carve out is “ample time for SKI to either reach a settlement with LGES or develop its own technology as it argued it could during the ITC litigation, LG Energy said.