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SK Innovation will pay $ 1.8 billion to LG Energy Solution to stay in the US market
As previously reported, two South Korean electric vehicle battery makers reached a last-minute settlement to a bitter U.S. trade dispute, freeing President Joe Biden from having to choose between infringing intellectual property rights and stabbing the country’s electrical efforts.
(Igor Golovniov | SOPA Images | LightRocket | Getty Images)
According to a joint statement of the two companies, SK Innovation has agreed to pay LG Energy Solution (a division of LG Chem) a sizable amount of KRW 2 trillion (about $ 1.8 billion). Fees split equally in cash and royalties.
As noted in the aforementioned joint statement, the companies will strive to work to help the development of the electric vehicle industry in South Korea and the United States through healthy competition and friendly cooperation. “In particular, we will work together to strengthen the battery network as part of the environmentally friendly policy pursued by President Biden’s administration,” the company said.
This agreement will enable SK Innovation to avoid a 10-year ban on US battery imports and end a two-year dispute between the two companies. Such a ban on imports threatened to complicate the release of the new Ford Motor F-150 pickup and the Volkswagen AG ID SUV.4 — both EVs are preparing to start mass production next year and should use batteries assembled at SK Innovation’s Georgia plant.
This standoff became a political issue for Joe Biden because it threatened up to 6,000 battery manufacturing jobs in Georgia and prompted two Democratic senators and the Republican governor of the state to urge the president to intervene. One of the senators faces re-election next year.
“This peace agreement is a victory for American workers and the American auto industry,” Mr. Biden said on Sunday. US Trade Representative Katherine Tai noted that the deal followed through significant efforts by the administration of the President of the United States.
SK and LG have also agreed to withdraw all lawsuits filed in South Korea and overseas, according to the statement. Moreover, the companies agreed not to take any legal action against each other for the next 10 years.