LG-SK ELECTRIC VEHICLE BATTERIES

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The two-year-long legal dispute over electric vehicle batteries between LG and SK has come to an end with SK deciding to pay two trillion won in compensation. What led to the two conglomerates to settle this legal fight and what does it mean for the Korean industry? We take a look.

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LG Energy Solution and SK Innovation have ended their long dispute over a trade secret violation. The settlement amounts to two trillion won. SK Innovation will pay that amount to LG with both cash and royalties. The two firms also agreed to drop all ongoing lawsuits and to not engage in any legal battles associated with this matter for the next 10 years. The last-minute deal was reached after the U.S. government urged the two Korean companies to settle their dispute. The Biden administration reportedly got involved because the two companies create jobs in America and stabilize the electric vehicle batteries supply chain. The Korean government had also urged for a quick settlement.

[Soundbite] Chung Sye-kyun(Prime Minister(Jan.)) : "I hope the two companies stop fighting over a small piece of pie and instead go out to a larger global market."

The dramatic settlement came just one day before the U.S. International Trade Committee’s ten-year import ban on SK Innovation goes into effect. President Biden had until Sunday to veto the ITC's decision.

[Soundbite] Kim Seok-hwan(Researcher, Yuanta Securities) : "With the lawsuit risk removed, an environment has been created for both companies to focus on their signature areas."

The settlement now allows SK Innovation to resume normal operation of its battery manufacturing plant in the US state of Georgia. LG Energy Solution also gains business momentum in America with the settlement. The two-year legal dispute over batteries is over. But the fight between the two companies has incurred multi-billion dollar legal costs and has allowed foreign battery makers to catch up with them.