Automotive

/

Home & Leisure

Sparks could fly after Biden decision on EV battery dispute

Riley Beggin, The Detroit News on

Published in Automotive News

WASHINGTON — President Joe Biden has until Sunday to intervene in a dispute between two major South Korean battery producers, a decision that carries major implications for plans by Ford Motor Co. and Volkswagen AG to produce new electric vehicles in the coming years.

The Detroit battle lines are clearly drawn: Ford has contracted with battery producer SK Innovation, the subject of a scathing International Trade Commission decision that determined it destroyed evidence in a case alleging stolen trade secrets. Cross-town rival General Motors Co. has a joint venture (and at least one more planned) to produce batteries with LG Chem, the company that pointed the finger at SK.

Now it's up to Biden and other top administration officials, keen to support union labor and the electrification of the auto industry, to decide whether to get involved.

The predicament illustrates the fragility of many U.S. automakers' battery supply chains, underscoring that companies investing heavily in electric vehicles remain reliant on Asian suppliers for the energy to power their EVs. And it puts Biden in a pickle, as he seeks to appear tough on unfair trade practices but support policies that will make the United States a leader in electrified transportation and reduce climate-harming emissions.

"One of the things they're going to have to weigh is consistency, both from a legal precedent and from the optics, how the United States' behavior lines up with what we're asking our countries to do in our trade relations," said Dave Andrea, an automotive analyst at Plante Moran. Biden has been a critic of unfair trade practices from the Chinese, he said, and consistency here may protect the United States in doing business with China in the future.

On the other hand, he said, Biden has goals to push the country toward electric vehicles in the hopes of cutting greenhouse gas emissions. And he will have to consider the industry's requirements under the U.S.-Mexico-Canada Agreement to have 75% of their core components produced in North America.

 

The quarrel between the two battery manufacturers began in 2019, when LG Chem alleged its competitor, SK Innovation, had stolen trade secrets related to its electric vehicle batteries by hiring its former employees and used those secrets to start their own battery business in the United States. SK Innovation denied the allegations.

SK had committed to spending $2.6 billion on two battery factories in Georgia, which would produce batteries for Ford and Volkswagen's North American operations, among others. The company estimated it would be able to supply batteries for 300,000 electric vehicles every year after being fully phased-in in 2023 and create 2,600 jobs.

Earlier this year, the U.S. International Trade Commission officially sided with LG, saying high-level SK Innovation employees had gone to "extraordinary" lengths to destroy documents related to the case.

It determined that SK would be barred from importing batteries to the United States for 10 years. The company could only produce batteries at the new Georgia plant for four years for Ford and two years for Volkswagen to give the companies time to find other suppliers.

...continued

swipe to next page
©2021 www.detroitnews.com. Visit at detroitnews.com. Distributed by Tribune Content Agency, LLC.