The Korean battery group was beaten with a US import ban

The US International Trade Commission has imposed a 10-year import ban on South Korean battery maker SK Innovation, which strikes a blow at Ford and Volkswagen’s plans to build electric vehicles.

The ruling closes a protracted trade secrets battle between SKI and domestic arch-rival LG Chem. US-based Ford and Germany’s VW have both signed contracts to buy batteries from SKI’s new 2.4-meter battery in Georgia, where the Korean group has invested $ 2.6 billion.

The ruling on Wednesday gives Ford and VW a deadline to find a new battery supplier. Both carmakers argued that a ban would jeopardize their plans to launch hybrid and electric cars, as well as harm the wider car industry, as it transitions to greener vehicles.

During that deadline, ITC said it would allow SKI to import lithium-ion battery components for Ford for four years and for VW for two years. SKI was also allowed to import materials for the repair of electric vehicle batteries in Kia cars that have already been sold.

Aside from these exceptions, ITC said SKI would be banned from importing “certain lithium-ion batteries, battery cells, battery modules, battery packs and components” after upholding an earlier decision against the company for breaches of trade secrets.

LG Chem, the world’s largest producer of lithium-ion batteries, claimed that SKI had intentionally destroyed thousands of documents, suggesting that they had illegally acquired sensitive technology.

SKI is also facing a civil lawsuit in a Delaware court where LG Chem has sued for billions of dollars in damages.

While Ford said the exceptions would allow it to bring its fully electric F-150 truck on the market in mid-2022, the decision threatens to disrupt the long-term supply of batteries to the US group and to VW’s hybrid and electric cars. It can force both car manufacturers to change supplier. VW said it was still analyzing the decision.

Ford and VW made submissions to ITC on behalf of SKI during the investigation. Last fall, VW warned that any disturbance to SKI’s plans to produce batteries at the plant in Georgia could have significant consequences for its US operations and the country’s automotive industry.

LG Chem welcomes the verdict. It said SKI had “incorrectly secured lucrative contracts with US automakers” and used LG Chem’s technology to negotiate “historic subsidies and incentives from state and local authorities to build a new production facility in Georgia”.

President Joe Biden could veto the ban, but such a blockade by the White House on an ITC decision would be extremely rare.

Lee Byoung-rae, SKI’s Advocate General, said on Wednesday prior to the ITC decision that in the event of an “unfavorable decision”, the company would “actively come forward with our case … about the impact it will have on American society”.

SKI plans to appeal the ITC decision. Lee said it would also continue to pursue an out-of-court settlement.

LG Chem separated its battery business into a device called the LG Energy Solution in December ahead of a potential IPO this year.

Lee Han-sun, vice president of LG Energy Solutions’ intellectual property division, said SKI had not made any “sincere” compensation proposals, but the door to further talks remained open.

South Korea is the world largest producer of batteries for electric vehicles. Seoul has been horrified by the rivalry between two of the country’s largest companies spreading out onto the global stage.

“It simply came to our notice then. I have reached out to top executives in both companies and urged them to find a quick solution, “said Chung Sye-kyun, the country’s prime minister, last month.

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