US President: LG Energy Solution, SK Innovation mediation is a great victory for the electric vehicle industry
SK Innovation will have to pay LG Energy Solution $ 1.8 billion in cash and royalty fees, and the two Korean electric vehicle battery makers will stop suing each other in the next 10 years.
|LG Energy Solution will receive $ 1.8 billion in cash and royalty fees from SK Innovation under the mediation agreement. Photo: AFP|
The above mediation agreement is considered by US President Joe Biden as a US victory in his effort to build a strong supply chain for the electric vehicle industry.
The reconciliation of a trade secret dispute between LG Energy Solution of LG Group – the world’s leading manufacturer of Lithium-ion batteries in the electric vehicle sector, and SK Innovation – a subsidiary of SK Group, as fore The two targets of the US, both creating jobs in the clean energy sector, and helping to respond to climate change.
With this mediation agreement, two factories of LG Energy Solution and SK Innovation in Georgia will continue to implement plans to produce lithium-ion batteries for two automakers Ford and Volkswagen.
The above agreement was reached at the last minute before US President Joe Biden vetoed the decision of the US International Trade Commission on the evening of April 11 in case the two Korean companies could not reach an agreement.
The mediation agreement between the two leading lithium-ion battery companies in the world has brought a huge victory to the Joe Biden administration as the White House has just announced a 2,000 billion-scale infrastructure investment plan. USD, including an investment of 174 billion USD in developing the electric vehicle market and gradually replacing fossil fuel-powered cars.
“We need the electric vehicle battery supply chain in the US to be strong, formatted and independent, to be able to meet the global demand for electric vehicles and vehicle parts and create high-income jobs right away. in the US and laying the foundation for future job growth, “said President Biden.
President Biden’s $ 2,000 billion infrastructure investment plan also sets out the goal of building at least 500,000 electric vehicle battery charging stations across the United States by 2030, giving Americans incentives to use electric cars, funding to lift supply of factories, and increase domestic material supply.
According to estimates, if LG Energy Solution and SK Innovation do not reach a mediation agreement, thousands of jobs in Georgia will disappear, threatening the US electric vehicle market – a market that accounts for 2% of new car sales.
Earlier, in February 2021, the US International Trade Commission ruled that SK Innovation had stolen trade secrets related to electric vehicle batteries; thus petitioning the US government to “ban” SK Innovation from importing raw materials to manufacture batteries.
In response, SK Innovation threatened to cancel the investment project of a factory under construction in Georgia with an investment of $ 2.6 billion and a size of 2,600 employees, if the decision of the US International Trade Commission was not rejected. .
In the event that LG Energy Solution and SK Innovation fail to reach an agreement, the Biden administration may have to reject the US International Trade Commission’s ruling and allow SK Innovation to continue building a factory in Georgia. If so, the two “giants” of the auto industry, Ford and Volkswagen, will have to find new partners to supply electric vehicle batteries. This could delay the launch of new models and limit their ability to meet the demand for electric vehicles.
“Today’s reconciliation is a positive step in the right direction, it will give Georgia workers some relief and create new job opportunities for the nation’s people,” President Biden said.
Mr. Jong Hyun Kim, CEO of LG Energy Solution, and Mr. Jun Kim, CEO of SK Innovation, confirmed in a joint statement that the two companies will “compete in good faith, all for the future of the industry. US and Korean electric vehicle battery production “.
“We are dedicated to working together to support the Biden administration’s climate agenda and strongly develop the US supply chain,” said a joint statement by LG Energy Solution and SK Innovation.