COMMERCE, Ga.—If being forced to pay a $1.78 billion legal settlement to a competitor can be considered good news, SK Innovation responded positively to the conclusion of its trade dispute with LG Energy Solution this month by pushing ahead on its massive new electric vehicle battery plant in northern Georgia.
The resolution illustrates the high-stakes nature of EV battery plans for future vehicles.
A review of SK's $2.6 billion factory project last week found that its first 200 employees are now on-site and the company remains on schedule to have 1,000 workers there by year end, and to launch commercial production of battery cells early next year to begin supplying a new U.S.-built electric Volkswagen utility and Ford Motor Co.'s planned electric F-150 pickup.
A source familiar with SK's plans told Automotive News that despite the uncertainty hanging over the project in Commerce, Ga., the company completed construction of the first of two plants at the site this year and remains on schedule to launch the second plant in 2023.
The supplier plans to eventually expand its investment there to $5 billion and to make it a multicustomer North America production hub.
Meanwhile, LG Energy also has pressed ahead, saying recently that it will increase its U.S. investment with a $2.3 billion battery plant in Spring Hill, Tenn., through its Ultium Cells battery joint venture with General Motors. It will be the partnership's second U.S. plant.
The Biden administration was instrumental in bringing a settlement in the legal battle between the two South Korean electronics giants—two companies that have been engaged in patent litigation for a decade. LG's most recent complaint that SK's batteries had benefited from misappropriated trade secrets resulted in a U.S. International Trade Commission ruling in February that could have largely locked SK out of the rapidly emerging U.S. EV battery business for a decade and rendered its massive Georgia plant useless.
The settlement will require SK to pay LG Energy $1.78 billion over six years in a combination of cash and royalties. It also prevents the two companies from suing each other for 10 years.
President Joe Biden issued a statement on the settlement, calling it "a win" for the American auto industry.
"A key part of my plan to Build Back Better is to have the electric vehicles and batteries of the future built here in America, all across America, by American workers. We need a strong, diversified and resilient U.S.-based electric vehicle battery supply chain, so we can supply the growing global demand for these vehicles and components," Biden's statement said.
IHS Markit said in a recent industry forecast that sales of battery-electric and zero-emission vehicles will represent 25 to 30 percent of U.S. sales by 2030.
"The tipping point for decisions towards an accelerated BEV road map or even a full BEV switch has arrived in the boardrooms of major OEMs in regulated markets," said Reinhard Schorsch, IHS Markit director of OEM Planning Solutions.
The legal resolution means that SK is now free to pursue larger North American plans.
SK is a Fortune 1000 company, a conglomerate of some 120 separate businesses, with deep holdings in oil and oil refining in South Korea, electronics and other interests.
It is in the process of taking one of its smaller battery-related businesses public next month in an offering that is expected to net SK $1.5 billion.
