SK Innovation, Preparing for 'Vito Rights' Failure, Also Receiving Consulting on US Plant Withdrawal

Minimum Relocation Cost of LG's First Plant in Georgia, USA, Estimated at Several Hundred Billion Won
Including Construction Costs, Less Than LG's Proposed Settlement
Chairman Kim Jong-hoon and President Kim Jun Receive Withdrawal Consulting Report

Former Trade Negotiations Chief of the Ministry of Foreign Affairs and Trade, Kim Jong-hoon, is being interviewed on the 5th at Asia Economy in Jung-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Hwang Yoon-joo] It has been confirmed that SK Innovation recently received external consulting related to its electric vehicle battery business in the United States. This appears to be a 'Plan B' measure in preparation for the possibility that the US President’s veto power on the final decision of the US International Trade Commission (ITC) battery trade secret infringement lawsuit may fail, as the gap with LG Energy Solution remains unresolved.

According to industry sources on the 1st, SK Innovation received consulting from a foreign consulting firm regarding the relocation of its US factory after the ITC's final ruling on the battery lawsuit. The consulting results, which considered opportunity costs and relocation expenses, were recently reported to Chairman of the Board Kim Jong-hoon and President Kim Jun.

SK Innovation invested 1.1 trillion KRW in establishing its first factory in Georgia, USA. The second US factory has just completed foundational construction, and the construction speed is being adjusted following the ITC's final ruling. Accordingly, if the factory is relocated, only the facilities of the first factory need to be moved. The consulting results reportedly indicated that relocating the factory to Eastern Europe would cost at least several hundred billion KRW and less than 1 trillion KRW at most.

Within the battery industry, it is estimated that if SK Innovation relocates the factory, the total cost including the investment in the Georgia first factory (1.1 trillion KRW) would be around 2 trillion KRW. This is lower than the settlement amount proposed by LG Energy Solution, which has been made public.

It is known that SK Innovation has prepared a plan to hold a board meeting within 2 to 3 months at the earliest to approve withdrawal from the US business if the worst-case scenario unfolds, such as difficulties in reaching a settlement or failure of the veto power. However, to complete the battery supply contract with Volkswagen, even if the factory relocation decision is made, actual withdrawal is expected to be possible only from next year. The deadline for the President’s veto power exercise is April 11.

An industry insider said, "The largest cost in a battery factory is the production line equipment," adding, "Since the core equipment of the factory can be preserved and only the costs of dismantling, logistics, and equipment reinstallation need to be paid, relocating the factory is a card SK Innovation can consider."

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