SK Innovation Can't Accept LG Chem's Settlement Demands
The company would be willing to pay a third of what LG Chem proposes, according to reports.
The negotiations between SK Innovation and LG Chem’s LG Energy Solution in a dispute over claims SK Innovation misappropriated trade secrets continue, however, there are no signs of agreement.
According to The Elec, SK Innovation said at its shareholders’ meeting that it cannot accept the demands made by LG, because the compensation would be too high to stay in the battery business in the US.
“SK Innovation director Lee Myoung-young said it was impossible to accept demands that would make the continuation of its battery business in the US pointless or drastically reduce its business competence.”
According to the article, LG is demanding up to 3 trillion won (about $2.26 billion), while SK Innovation is considering paying no more than 1 trillion won ($886 million).
Well, that’s quite a big difference. SK Innovation is in a very difficult situation because the cost of canceling the battery plant investment and deals with automakers would be costly as well.
This is why SK Innovation is trying to prevent the ITC ruling from coming into effect through President Joe Biden’s administration (who has a few weeks left out of the 60-day period to reject the ban). The company is also underlining that its batteries never caused EV fires and recalls.
LG Chem’s LG Energy Solution, on the other hand, proposes evidence to show that the misappropriated trade secrets were real and promises big investments in the U.S.
Let’s recall that LG Chem is considering a $4.5 billion investment by 2025 to expand EV battery manufacturing capacity by 70 GWh annually and create an additional 10,000 jobs.
LG Energy Solution presence in the U.S.:
- research facility established in 2000
- $600 million investment in the first battery plant (5 GWh annually) built in Michigan in 2012
- In 2019 investment in Ultium Cells joint venture with GM (35 GWh) in Ohio.
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