WASHINGTON/SEOUL — South Korean battery makers LG Energy Solution and SK Innovation Co. agreed on Sunday to settle disputes over electric-vehicle (EV) battery technology, avoiding a potential setback for US EV ambitions.
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The settlement after marathon talks by affiliates of two of South Korea's biggest conglomerates was announced just hours before a Sunday night deadline for President Joe Biden's administration to decide whether to take the rare step of reversing a US International Trade Commission decision (ITC).
In a statement, Biden called the settlement "a win for American workers and the American auto industry. ... We need a strong, diversified, and resilient US-based electric vehicle battery supply chain."
The core dispute had threatened the EV plans of Ford Motor Co. and Volkswagen AG, as well as a Georgia plant that is key to the growing industry.
The resolution is also a win for Biden, who has made boosting EVs and US battery production a top priority. The global auto industry is racing to develop EVs, and Biden has proposed spending $174 billion to hike their sales and expand charging infrastructure.
SK Innovation agreed to pay LG Energy Solution, a wholly owned subsidiary of LG Chem Ltd., $1.8 billion — 500 billion won each this year and next, and royalties for at least six years.
"We expect our payment plan will not be financially burdensome," an SK Innovation official told Reuters.
The companies agreed to drop all litigation in the United States and South Korea and not to raise further lawsuits against each other for 10 years.
"The two companies now can coexist in the global market and compete in good faith," LG Energy Solution said in a statement. SK said it would invest actively both in South Korea and abroad now that uncertainties for its EV battery business in the United States have been cleared up.
The US Office of US Trade Representative had faced a Sunday night deadline on whether to take the rare step of reversing a US International Trade Commission decision unless the companies had agreed a deal.
The Biden administration, Volkswagen and Ford had been pushing the Korean companies to settle.
Trade Representative Katherine Tai was personally involved in the settlement discussions, urging the companies to come to a resolution, the sources said.
"I congratulate both companies for working through their significant differences to resolve this dispute, which builds confidence in their reliability and responsibility as suppliers to the US auto industry," Tai said in a statement after LG and SK announced the settlement.
"We are pleased the two battery suppliers at the center of this recent trade dispute have come together and solved their differences," Volkswagen said in a statement on Sunday.
“We are pleased that SK Innovation and LG Energy Solution have settled their differences," Ford said in a statement.
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