SK Innovation paid $1.8 billion to LG Energy as part of a settlement so it can produce EV batteries at this soon-to-be-complete plant in Georgia.
South Korean battery makers LG Energy Solution and SK Innovation finally settled a two-year old dispute about intellectual property that had the potential to undermine efforts by Ford Motor Co. and Volkswagen AG to put electric vehicles on the road.
The agreement came as the Sunday deadline for President Joe Biden to become involved loomed over the process. In a joint statement released this past weekend, the sides said they agreed to settle all legal disputes relating to EV batteries in the United States and South Korea.
As part of the settlement, SK agreed to pay the equivalent of $1.8 billion in a lump sum and royalties. In return, SK can move forward with the operations of a new plant in Georgia that is expected to supply batteries for EVs built by Ford and Volkswagen.
Production at the Georgia plant was threatened by the litigation, which had grown to include the U.S. International Trade Commission and the White House as well as regulators in South Korea.
Ford relieved by settlement
Ford was counting on SK Innovation to produce EV batteries for its electrified F-150.
“We are pleased that SK Innovation and LG Energy Solution have settled their differences. This allows us to focus on delivering a range of Ford world-class battery electric vehicles for our retail and fleet customers, while also supporting American workers, the economy and our shared goal of protecting the planet,” Ford said in a statement released after the settlement was announced in South Korea.
Back in February, U.S. ITC sided LG Energy in a trade secrets case but permitted SK Innovation to import components for domestic production of lithium-ion batteries for Ford Motor Co’s EV F-150 program for up to four years, and for Volkswagen of America’s electric vehicle line for two years.
As a result of the settlement announced over the weekend, both sides have agreed to withdraw all pending legal disputes in United States and Korea and agreed to a “10-year non-assertion,” essentially agreeing not to sue each other for a decade.
Jong Hyun Kim, CEO and president of LG Energy Solution and Jun Kim, CEO and resident of SK Innovation released a joint statement announcing the settlement and agreed to focus on the larger goals set forth by the Biden administration.
The Volkswagen ID.4, which is the brand’s first EV in the U.S., will reportedly use SK Innovation batteries.
“This settlement demonstrates LG Energy Solution’s willingness to protect and maintain a fair and competitive climate within the EV industry. This agreement also reinforces the significance of our intellectual property acquired over the past 30 years,” said LG Energy’s Jong Hyun Kim.
Help from Biden sought in dispute
The settlement in South Korea also eliminates the need for even more direct intervention by the Biden administration. Georgia Governor Brian Kemp pleaded with the administration to overrule the ITC’s initial ruling.
Kemp said the ITC ruling threated 2,600 jobs at the SK plant and would be a major blow to Georgia’s economy, which already reeling from a dispute over new law that places new restrictions on voting by Georgia residents and gives the legislature the right to set aside election results after votes are counted.
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