SK "Battery Supply Grace Period is a Relief"... Biden's Veto Becomes More Difficult

The site around the battery plant in Georgia, USA, confirmed by SK Innovation in 2019

[Asia Economy Reporter Choi Dae-yeol] On the 10th (local time), the U.S. International Trade Commission (ITC) recognized the trade secret infringement between LG and SK and issued a 10-year import ban. Notably, a grace period of 4 years and 2 years was granted respectively for battery parts and materials used in electric vehicles to be released by Ford and Volkswagen, allowing imports during that time.

These automakers have supply contracts with SK Innovation and planned to use SK batteries in electric vehicles produced locally in the U.S. In particular, it drew attention that the batteries to be supplied to Ford will be used in the pickup truck F150. It is considered an iconic model representing the U.S., maintaining the number one sales ranking in the fiercely competitive U.S. automotive market for decades. The vehicle is under development aiming for a 2023 release, and SK's significant investment in local battery plants was also a move to increase local automaker customers, led by Ford and Volkswagen.

In October last year, Joe Biden, then the Democratic presidential candidate, visited a resort in Georgia, USA during his presidential campaign. <이미지출처:연합뉴스>

Following the ITC decision, SK stated, "It is fortunate that a grace period was granted to supply batteries in order to protect customers (Ford and Volkswagen)." Since this is a sanction due to legal violations, if parts and materials could not be procured from local battery plants and thus could not be supplied to automakers, SK would have faced astronomical compensation payments. Industry insiders predicted that damages for breach of contract could reach tens of trillions of won. It was said to be fortunate that this worst-case scenario did not occur.

However, by granting only a short grace period this time, the presidential veto, which had been anticipated considering the U.S. political landscape, has become less likely. Many expected that even if the ITC recognized trade secret infringement and issued an import ban, U.S. President Joe Biden would exercise his veto power, as he is actively expanding the electric vehicle market by increasing subsidies.

The U.S. administration was not expected to make a decision that would halt factories involving trillions of won in investment. However, since a grace period was granted, even the justification for exercising a veto has disappeared. SK's U.S. battery plants cannot operate without parts and materials sourced from overseas such as Korea or China, so if the 10-year import ban is maintained, it is expected that the plants would effectively have to shut down.

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