LG-SK Battery War, Now Focuses on 'Settlement'...Will There Be a Dramatic Agreement?

President's 'Veto Power' Card Remains but Low Possibility
Intensive Behind-the-Scenes Negotiations to Begin Over the Next Month

[Asia Economy Reporter Hwang Yoon-joo] The U.S. International Trade Commission (ITC) has ruled in favor of LG Energy Solution in the final judgment of the battery trade secret infringement lawsuit against SK Innovation. As a result, LG Energy Solution is now in a favorable position for settlement negotiations regarding compensation. SK Innovation can still hope for an appeal and the U.S. president's 'veto power' card, but the consensus is that the likelihood is low.

◆ ITC "10-year limited import ban"... Consideration for Ford and Volkswagen = The ITC ordered a 10-year import ban within the U.S., ruling that SK Innovation's battery cells, modules, packs, and related component materials violated Section 337 of the U.S. Tariff Act. However, parts supplied to Ford are allowed to be imported for 4 years, and parts supplied to Volkswagen are allowed for 2 years.

SK Innovation is currently constructing Plants 1 and 2 in Georgia, U.S., capable of producing electric vehicle batteries for 430,000 units annually (21.5GWh). The investment amount alone reaches 3 trillion KRW. Plant 1 has completed construction and is preparing for prototype production, and from next year, it will supply batteries for 200,000 electric vehicles annually to Volkswagen. Plant 2 will be completed next year and is expected to produce batteries for 230,000 units annually to supply Ford's electric truck F-150 series starting in 2023.

The ITC's decision to allow a grace period for parts supplied to Ford and Volkswagen in this final ruling is interpreted as a measure to accommodate automakers that have invested in electric vehicle plants in the U.S.

An automotive industry official said, "Automakers select key parts suppliers and prepare for new vehicle production 2 to 4 years before launching new models, so this grace period creates time to find alternative battery suppliers for upcoming vehicles," adding, "From SK Innovation's perspective, it means that if they do not reach a settlement, they will not be able to conduct battery business in the U.S. going forward."

◆ Low possibility of appeal and presidential 'veto'... Settlement likely to accelerate = SK Innovation currently has two remaining options. First, to file an appeal with the Federal Circuit Court. However, even if they appeal, the import ban remains in effect until the appeal is won.

The second is the exercise of veto power by U.S. President Joe Biden. After the ITC decision, there is a 60-day review period during which the president can veto the import ban administrative action. However, the industry views this as unlikely as well. The veto is a political judgment considering the 'public interest' regarding the ITC's administrative order. Since the ITC granted a grace period for automakers like Ford and Volkswagen, considering the impact on the U.S. economy in this final ruling, the industry interprets that it is awkward for the president to exercise veto power.

However, if SK Innovation posts a bond during the 60-day presidential review period, the import ban order on the trade secret infringement items will be temporarily suspended. SK Innovation can use this as leverage to request a presidential veto for settlement negotiations.

An industry official said, "With the ITC's final decision, SK's burden regarding the settlement amount has increased," adding, "It is expected that settlement efforts will intensify after the Lunar New Year holiday, and we hope both companies conclude the case at an appropriate level."

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