SOUTH Korean battery makers LG Energy Solution and SK Innovation Co agreed on Sunday to settle disputes over electric-vehicle (EV) battery technology, avoiding a potential setback for US EV ambitions.
The settlement by affiliates of two of South Korea's biggest conglomerates comes hours before a Sunday deadline for the administration of President Joe Biden to decide whether to take the rare step of reversing a US International Trade Commission (ITC) decision.
The core dispute had threatened the EV plans of Ford Motor and Volkswagen, as well as a Georgia plant that is key to the growing industry.
The resolution is a win for Mr Biden, who has made boosting EVs and US battery production a top priority. The global car industry is racing to develop EVs, and Mr Biden has proposed spending US$174 billion to hike their sales and expand charging infrastructure.
SK Innovation agreed to pay LG Energy Solution, a wholly owned subsidiary of LG Chem, two trillion won (S$2.4 billion) in cash and royalties. The companies agreed to drop all litigation in the United States and South Korea and not raise further lawsuits against each other for 10 years.
"The two companies now can coexist in the global market and compete in good faith," LG Energy Solution said in a statement.
SK said that it would invest actively both in South Korea and abroad now that uncertainties for its EV battery business in the US have been dissolved.
Mr Biden's Office of US Trade Representative faced a Sunday night deadline on whether to take the rare step of reversing a US ITC decision unless the companies had agreed on a deal.
The administration, Volkswagen and Ford had been pushing the South Korean companies to settle, sources briefed on the matter told Reuters.
Trade Representative Katherine Tai was personally involved in the settlement discussions, urging the companies to come to a resolution, the sources said.
In the bitter two-year dispute, LG lost to SK in a bid for VW orders, then accused SK of stealing trade secrets by poaching nearly 80 of its employees. LG filed a complaint against SK in 2019, and both sides hired numerous lawyers and consultants to make their case to the Biden administration.
The ITC in February sided with LG after the company accused SK of misappropriating trade secrets related to EV battery technology. It issued a 10-year-import ban but allowed SK to import components for batteries for Ford's EV F-150 programme for four years, and VW's North American EVs for two years.
In March, SK vowed to walk away from the US$2.6 billion Georgia battery plant, which is under construction, if the ITC decision was not overturned. LG said in March it could handle the battery needs of carmakers if SK abandoned the Georgia plant. REUTERS