The 'K-Battery' Clock Stopped Again

LG Energy-SK Innovation US Lawsuit Ruling Delayed for the Third Time

[Asia Economy Reporters So-yeon Park, Yoon-joo Hwang] The US International Trade Commission (ITC) has postponed the final ruling on the trade secret infringement lawsuit between LG Energy Solution (formerly LG Chem's battery division) and SK Innovation over electric vehicle batteries to February 10 next year. The final ruling date, originally scheduled for October 5, was first postponed to October 26, then to December 10, and now delayed for the third time to February next year. As the battery lawsuit between LG and SK enters its third year, the future of 'K-battery' faces the risk of being engulfed in uncertainty.

◆ ITC Delays 'Three Times', Passing the Ball to the Biden Administration = On the 9th (local time), the ITC decided through a commission vote to postpone the final ruling date for the battery lawsuit between LG Energy Solution and SK Innovation to February 10 next year. This decision to delay was made abruptly just one day before the scheduled ruling. The ITC did not disclose the background or reasons for the third postponement of the final ruling.

Industry insiders believe that the severe spread of COVID-19 in the US and the ITC's deliberations combined to delay the final ruling date. Both LG Energy Solution and SK Innovation are companies generating economic effects through large-scale investments in the US, and there are reportedly divided opinions within the US about confirming a loss ruling that would effectively make SK Innovation's US business impossible. Although the ITC can delay rulings, postponing about four months over three times is considered unusual. LG Energy Solution stated, "This year, ITC rulings have been delayed over 50 times due to COVID-19 impacts and other reasons, so we consider this the same reason," adding, "We will continue to engage in the lawsuit sincerely and firmly." SK Innovation said, "We regret that the lawsuit has inevitably extended into another year due to the third delay, but nonetheless, we will faithfully and fairly engage in the lawsuit."

◆ K-Battery 'All Stop'... Threat to Suppliers' Survival = The industry expects that the lawsuit risk will prolong further, and the currently stalled settlement discussions will resume. Both LG Energy Solution and SK Innovation are very exhausted from the long-term litigation. There are also criticisms that lobbyists and large law firms in the US are just enriching themselves. It is known that the two companies have spent about 400 billion KRW on litigation costs so far.

The prolonged lawsuit amid the COVID-19 situation is also worsening difficulties for suppliers. Unless an agreement is reached between the two companies, SK Innovation's planned operation and expansion of its US plant are impossible. SK Innovation originally planned to place equipment orders for additional investments around October this year. However, proper orders are expected to be possible only after the new year. Last year, SK Innovation's total facility investment was 3.7 trillion KRW, with the battery business exceeding 1 trillion KRW. For the Komarom plant in Hungary alone, about 340 billion KRW worth of orders were placed with domestic suppliers. Including the Changzhou plant in China and the Georgia plant in the US, suppliers are estimated to have received a ripple effect of about 700 to 800 billion KRW last year. An industry official said, "Since there were no large-scale projects this year, suppliers must have had a hard time," adding, "Large corporations have the stamina to endure lawsuits, but suppliers do not. A decision is needed for the suppliers supporting the battery ecosystem."

◆ Global Dependence on 'K-Battery' Decreases = Global automakers are uneasy about cooperating with Korean companies as the 'K-battery' lawsuit drags on alongside battery fire issues. With the joint battery investment plan between Volkswagen and SK Innovation delayed, rumors of joint ventures between BMW and Sweden's Northvolt are emerging one after another.

It is also concerning that Chinese battery companies are expanding battery plants worldwide by taking advantage of the 'K-battery' lawsuit. Esvolt, a battery company spun off from China's Great Wall Motors, announced plans last month to build its first battery plant in Germany. CATL, competing with LG Chem for the top battery market share, is building a 14GW annual capacity battery cell plant in Erfurt, central Germany, aiming to start operations in 2022. While Korean battery companies have production facilities in peripheral areas such as Hungary and Poland, Chinese companies are directly targeting Germany, the heart of the European automotive industry.

Brain drain is also a problem. While 'K-battery' companies are caught up in lawsuits, China is using government support and corporate capital to poach key Korean battery personnel. Recently, a major Chinese real estate developer entered battery technology research, and most of the core executives at the Global Battery Research Institute it established are Korean. An industry insider said, "All the key personnel of the three domestic battery companies have gathered in China," adding, "We must have a clear sense of crisis."

This content was produced with the assistance of AI translation services.