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Summary
- SK Innovation Co was accused of stealing the trade secrets related to lithium-ion battery production.
- ITC’s ruling bans SK Innovation from importing batteries for a term of 10 years.
- VW described the ruling made by ITC as a hindrance to the evolving US battery industry.
Automakers such as Ford Motor Co. and Volkswagen might witness disruption in the supply of batteries for their electric vehicles (EV) as the US International Trade Commission banned battery maker SK Innovation Co (KRX: 096770) for stealing trade secrets.
SK Innovation Co was accused of stealing the trade secrets related to lithium-ion battery production. South Korea's chemicals and electric vehicle (EV) battery maker LG Chem Ltd, which supplies EV batteries to Tesla Inc and General Motors Co, welcomed the decision.
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ITC’s ruling bans SK Innovation from importing batteries for a term of 10 years. However, the commission has given SK Innovation with the flexibility to import necessary equipment to produce batteries for Ford and VW for a limited tenure. This implies that the automakers need to find another supplier of EV batteries.
SK Innovation has invested heavily on two new battery plants located in Georgia to cater to the demand for EV batteries by the global automakers such as Ford and VW. The trade commission's ruling could weigh down heavily on the mini EV ecosystem, powered by SK Innovation.
The new battery making facilities in Georgia was set up by SK Innovation in 2019 to produce batteries that can power more than 300,000 EVs per year. But shortly after the commencement of operations, LG Chem alleged SK Innovation for poaching its employees, misappropriating trade secrets and filed a complaint with the ITC.
SK Innovation is expected to initiate discussions with the automakers in this regard, and they might seek support from the Joe Biden administration on this issue. SK Innovation might also take the matter to federal court, provided the White House does not intervene, some reports stated. Meanwhile, SK innovation has said it will proceed with the construction on the site.
Notably, the US administration has encouraged domestic battery and electric vehicle development, as without the battery supplies, the automakers might have to delay the rollout of electric-vehicle mobility solutions. The EV batteries are custom built for new models, and their supply in the US is limited.
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VW described the ruling as a hurdle to the evolving US battery industry. Ford believes that the ITC ruling has put the US at a loss in contrast to other global manufacturing hubs such as Europe and Asia. Both the automakers are expected to launch EV production in 2022.
The new ruling would certainly disrupt the supply of EV batteries in the US markets and increase the difficulties faced by the automakers. The automakers are already under pressure to reduce emissions. The automotive industry has been investing heavily in developing green technologies. Some automakers are building their own capacities for batteries, and some are reliant on external supplies. As of now, the current battery-supply chain is dominated by China.
