Korean battery agree to settle U.S. trade dispute

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© Reuters. FILE PHOTO: The logo of LG Chem is seen at its office building in Seoul

By David Shepardson and Hyunjoo Jin

WASHINGTON (Reuters) – South Korean battery makers LG Chem and rival SK Innovation Co have agreed to settle a trade secrets dispute that has threatened a key Georgia plant and the electric vehicle plans of Ford Motor (NYSE:) Co and Volkswagen AG (OTC:), three sources briefed on the matter said.

The Biden Administration through the U.S. Trade Representative’s Office (USTR) faces a Sunday night deadline on whether to take the rare step of reversing a U.S. International Trade Commission decision. An announcement of the settlement is expected soon.

The ITC in February sided with LG Chem after the company accused SK of misappropriating trade secrets related to EV battery technology and issued a 10-year-import ban, but it allowed SK to import components for batteries for Ford’s EV F-150 program for four years, and Volkswagen (DE:)’s North American EVs for two years.

SK vowed to walk away from its $2.6 billion Georgia battery plant under construction if the ITC decision was not overturned.

Ford, VW, LG and SK declined to comment. The office of the USTR did not immediately respond to a request for comment.

Volkswagen of America CEO Scott Keogh wrote in a LinkedIn (NYSE:) post on Wednesday that if the ITC decision were left in place, it could “reduce U.S. battery capacity and delay the transition to electric vehicles.”

The administration has been pushing the two companies in recent days to try to reach a settlement, as have VW and Ford, the sources said.

SK in March received proposed terms from LG, including financial reparations to address LG’s trade secrets misappropriaton claims, Reuters reported earlier citing a person familiar with the situation.

The global auto industry is racing to develop EVs, and Biden has proposed spending $174 billion on boosting EV sales and developing charging infrastructure.

Georgia is home to two newly-elected Democratic U.S. Senators who are a linchpin of Biden’s slim Congressional majority and have both spoken about the importance of ensuring the Georgia plant’s future.

LG’s battery unit LG Energy Solution is nearing completion of an Ohio cell manufacturing plant with General Motors (NYSE:) and is close to announcing plans to build a $2.3 billion second facility in Tennessee, sources told Reuters.

LG has said it can handle the battery needs of automakers if SK abandons its Georgia plant.

SK has said LG could not handle the VW and Ford contracts, and that Chinese manufacturers could step in to meet demand.

Bloomberg reported the expected deal earlier on Saturday.

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