First, the issue: The transportation sector accounts for approximately one-third of emissions, and EVs represent a key component of the action plan. The administration's aim to replace the entire federal fleet, 645,000 vehicles, "with clean electric vehicles made right here in America, by American workers," is a testament to the White House's commitment. Adding in the private fleet requires a significant investment in the U.S. and the mobilization of the worldwide auto supply chain.
Second, the problem: One intricate part of this equation is the battery technology and infrastructure required. Federal agencies are funding a significant amount of research to develop this battery technology domestically, but many U.S. companies still rely on foreign battery companies to fulfill their production needs.
However, the two big South Korean battery companies, LG Chem and SK Innovation, had been locked in a legal battle in front of the U.S. International Trade Commission since April 2019. LG accused SK of stealing its trade secrets by poaching employees and destroying relevant documents.
The rift between the companies has a longer history, dating back to 2014. SK recently countersued LG in South Korea, claiming that the companies signed an agreement in 2014 not to sue each other over the battery separator patent. The courts, however, rejected SK's case, giving the green light for LG's legal action in the U.S.
Both companies carry significant weight in the U.S. and global market. LG Chem is the No. 1 lithium ion battery producer in the world. SK also has significantly ramped up its production, increasing its footprint in the field. LG has a plant in Michigan that supplies batteries to General Motors and Tesla, and SK broke ground last year on a plant in Georgia, with plans to provide batteries to Ford Motor Co. and Volkswagen.
It is no surprise that the auto industry was nervously watching the tussle between the battery makers.
Third, how the U.S. proceeded: In February 2020, the International Trade Commission released its preliminary ruling that sided with LG, with a deadline of Oct. 5, 2020, for the final ruling. But the ruling was delayed three times without giving a reason. The final ruling was released on Feb. 10, 2021. Again, the trade commission found in favor of LG.
The final report, released publicly on March 4, shows how the International Trade Commission reached the decision as well as the level of sanction.
The sanctions include SK being prohibited from importing batteries and other components needed to support U.S. factory production for a period of 10 years, which spelled trouble for the planned Georgia plant.
This decision was not yet final, as there was a 60-day review period during which the White House could overrule it.