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Korean battery companies reach deal to avoid import ban, clear way for electric Ford F-150

Jordyn Grzelewski, The Detroit News on

Published in Business News

In a victory for Ford Motor Co.'s bid to ramp up production of electric vehicles, the automaker's battery supplier reached a settlement Saturday in a trade-dispute case with a rival company.

The deal between South Korean companies SK Innovation Co. and LG Chem was first reported by Bloomberg, which cited "people familiar with the situation." A person familiar with the discussions confirmed the news to The Detroit News.

SK is an EV battery supplier for Volkswagen AG as well as Ford.

The deal reached Saturday is "enormous for both Ford and for Volkswagen," said Sam Abuelsamid, principal research analyst at Guidehouse Insights. Ford, he noted, plans to release battery-electric versions of two of its signature vehicles next year — the Transit commercial van and its profit-rich F-150. Volkswagen plans to use SK's batteries for its MEB EV lineup in North America.

The U.S. International Trade Commission earlier this year sided with LG Chem in a dispute over intellectual property that LG alleged SK stole. SK denied the allegations.

The ITC said that SK employees had gone to "extraordinary" lengths to destroy documents related to the case. The agency also ruled that SK would be barred from importing batteries to the U.S. for 10 years, though it said SK could continue to supply Ford for four years and Volkswagen for two years so the companies would have time to find new suppliers.

 

The decision prompted an outcry from elected officials and others concerned about the future of battery factories — and thousands of jobs tied to them — SK had committed to building in Georgia. The ruling effectively would have forced SK to close a battery plant that is nearing completion, which according to an estimate from Benchmark Mineral Intelligence would take 15% of EV batteries off the market this year and reduce U.S. EV manufacturing capacity by more than 50,000 vehicles per year.

Though the full details of the settlement are not yet clear, it means that SK will avoid the 10-year import ban on its products. That's good news for Ford, because it means SK will be able to import parts for Ford's forthcoming battery-electric F-150.

"The F-150 is going into a very competitive marketplace," said Abuelsamid. "They did not want one more problem like this to hold them up ... so I'm sure that they were very anxious to get the deal done so they can move forward."

There was likely strong interest from both sides to reach an agreement, he said.

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