In This Situation... How Will LG Energy Solution and SK Innovation Resolve Their Dispute?

Global Electric Vehicle Battle
Conflicts Escalate Even After Verdict
Domestic Battery Companies Must Be Aware of the Crisis

LG and SK Headquarters Buildings

[Asia Economy Reporter Choi Dae-yeol] As automakers are making multifaceted efforts to seize the lead in the electric vehicle (EV) market, competition surrounding battery development and supply has intensified. Batteries are considered a crucial component that significantly affects an EV's driving performance, efficiency, and vehicle price.

Despite this situation, the dispute between Korea's leading battery companies, LG Energy Solution and SK Innovation, has yet to reach a conclusion. Many expected the conflict to subside in some way following the final ruling on trade secret infringement by the U.S. International Trade Commission (ITC), but about a month after the ruling last month, the companies continue to clash on every issue, escalating tensions.

According to data from market research firm SNE Research on January this year, the global usage of batteries for electric vehicles reached 13.7 GWh, roughly double the 7.0 GWh recorded a year earlier. Although the three domestic companies?LG Energy Solution, Samsung SDI, and SK Innovation?also increased their battery sales, their market share dropped by about 9 percentage points to 27.2% compared to January last year. Chinese companies such as CATL, BYD, and CALB, buoyed by increased EV sales within China, captured nearly half of the total market.

In this context, concerns have emerged that Volkswagen's announced mid- to long-term plan to expand its EV lineup could shake the standing of domestic battery companies. Volkswagen ranks second worldwide in EV sales after Tesla. Until now, Volkswagen has mainly used batteries from LG Energy Solution and SK Innovation for EV models sold outside China, while sourcing batteries from CATL within China. As revealed at its Power Day event on the 15th, Volkswagen plans to increase the use of prismatic battery cells, which LG and SK do not manufacture, and build large-scale factories in Europe to establish its own supply chain. This is expected to reduce the volume supplied by domestic companies in the future.

Volkswagen ID.4 in Germany

Volkswagen signed a contract to supply SK Innovation with two years' worth of batteries in the U.S., one of the major EV markets. However, following the ITC's final ruling that imposed a 10-year import ban on SK in the U.S., additional supply contracts have become virtually impossible. Volkswagen reportedly requested an extension of the two-year grace period for SK battery deliveries after the ITC ruling and also sought mediation from the Korean government. As these requests were ultimately rejected, the industry views this as a step toward ending relations with Korean battery companies.

Similarly, Ford, a U.S. automaker that also planned to source batteries from SK, has indicated it might change its EV battery supply chain by requesting the U.S. government to establish a domestic battery supply system. Chinese automaker Geely recently decided to build a battery factory in eastern China. Automakers are directly joining the battery development competition to secure a stable supply system and to meet the anticipated need for batteries with diverse performance features as the EV market expands.

Despite these developments, the battery dispute between LG and SK shows no signs of abating. Earlier this month, senior executives from both companies met, but the industry sees little chance of reaching an agreement due to persistent differences in perceptions regarding settlement amounts and other issues.

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