LG logo in South Korea: making peace with the competition
Photo: Lee Jin-man / AP
Breathe a sigh of relief at VW and Ford: Two important automotive manufacturers' suppliers have settled a billion dollar dispute.
The impending setback for the production of electric cars has thus been averted.
The two South Korean suppliers SK Innovation (SKI) and LG Energy Solution agreed to withdraw all legal proceedings in the USA and South Korea and undertook not to bring any lawsuits for the next ten years.
SKI will also pay LG Energy the equivalent of $ 1.8 billion in cash and licenses.
LG had sued SKI for stealing trade secrets.
"The two companies can now coexist in the global market and compete in good faith," announced LG Energy Solution - a subsidiary of LG Chem.
The background to this is a legal dispute that has been raging between the two battery manufacturers since 2019.
SKI had won the contract from Volkswagen to supply e-car batteries in the USA in 2018 from bigger rival LG.
In early 2019, SKI began building a $ 1.7 billion factory in Georgia, USA.
From there, batteries are to be delivered to the VW plant in Chattanooga, around 200 kilometers away, from 2022.
SKI also wants to supply Ford from Georgia.
Volkswagen and Ford had already warned of the consequences of the dispute for production and jobs in the US amid the Corona crisis.
Success for US President Biden
Georgia was also worried about losing jobs.
The governor of the US state, Brian Kemp, had therefore asked US President Joe Biden to overturn a ruling by the US International Trade Commission (ITC).
The latter had sided with LG Chem and, among other things, only allowed SKI to import components for the production of lithium-ion batteries in the USA for Volkswagen for two years and for the US automaker Ford for four years.
Biden had set a deadline for a decision by Sunday evening.
His government, Volkswagen and Ford have urged the two battery manufacturers to come to an out-of-court settlement, people familiar with the negotiations told Reuters.
The agreement is also a success for Biden.
He wants to promote the production of e-cars and has promised to help of 174 billion dollars.
mic / Reuters