Manufacturing
UPDATE: Trade Secrets Pact Allows Resumed Work on $2.6B Ga. Battery Plant
Construction on a $2.6-billion battery manufacturing plant near Atlanta can continue under an agreement reached April 11 between two rival South Korean auto battery makers—including SK Innovation, which is owner of the half-completed project.
SK Innovation will pay LG Energy Solution $1.8 billion, part in cash and part in future royalties to settle a dispute over trade secrets and intellectual property. LG Energy will drop litigation before the U.S. International Trade Commission, a U.S. federal court and South Korean courts under the agreement. The agency ruled in February that SK Innovation misappropriated trade secrets from its rival.
The agreement came at a deadline for U.S. Trade Representative Katherine Tai to rule on the company's request for a presidential veto of the agency's decision to levy a 10-year ban on importing battery-making components. With the agreement, the U.S. is “in a stronger position to drive innovation and ... clean energy technology," she said.
The two companies instead will compete in an “amicable way” for the future of the U.S. electric vehicle market, LG Energy Solutions CEO Jong Hyun Kim and SK Innovation CEO and President Jun Kim said in a joint statement.
“This settlement demonstrates LG Energy Solution’s willingness to protect and maintain a fair and competitive climate within the EV industry,” said the firm's CEO. The two companies agreed not to sue each other for 10 years.
"We need a strong, diversified and resilient U.S.-based electric vehicle battery supply chain, so we can supply the growing global demand for these vehicles and components—creating good-paying jobs here at home," Biden said. "Today’s settlement is a positive step in that direction."
Battery Goal Impact
SK Innovation had argued that the ban would have seriously affected the administration’s transition to electric vehicles, claiming the commission ruling would "destroy the economic viability of SK’s investment in battery production in Georgia and [would]l rationally and inevitably lead to its abandonment."
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The 2.4 million-sq-ft plant on 283 acres in Commerce, Ga., about 65 miles northeast of downtown Atlanta, is SK Innovation’s first EV battery factory in the U.S. and represents one of the largest single investments in a job-creating initiative in Georgia’s history and the largest in more than a decade, says facility contractor Clayco, on its website.
The project is being built in two phases. The first 1.2 million-sq-ft phase was finished late last year, with the second phase set for completion and production in 2023.
By 2025, the site will employ nearly 2,000 with a production capacity reaching 9.8GWh by 2022, according to the contractor.
SK, which makes lithium-ion batteries for hybrid and fully-electric automobiles, builds batteries for multiple vehicle manufacturers, including Volkswagen and Ford Motor Co.
ITC gave the company a four-year carveout of the 10-year ban to import components for production of lithium-ion batters for Ford and a two-year carveout for components to build batteries for Volkswagen while the auto companies transition to new domestic suppliers.
But SK Innovation said the carveouts did not allow it to recover any significant fraction of its capital investment and doesn’t change the need to stop construction of the Georgia plant.
Ford CEO Jim Farley said in a tweet that “a voluntary settlement between these two suppliers is ultimately in the best interest of U.S. manufacturers and workers.”
The agreement will help provide a stable battery supply chain for Ford and Volkswagen, which use SK Innovation EV batteries.
LG Energy Solutions said it is close to finalizing its second joint venture manufacturing plant with General Motors Corp., possibly in Tennessee, sources told Reuters and the Wall Street Journal.
The firm plans to invest $4.5 billion in its U.S. business by 2025.
