In 2018, South Korea's SK Innovation (SKI) beat local rival LG Chem (LGC) to secure a multibillion-dollar order to supply Electric Vehicle Batteries to German automaker Volkswagen in the United States. This also triggered a conflict between SK Innovation and LG Chem, and the two sides even went to court.
Battery supply for electric vehicles is "in jeopardy"
Court documents show that the ability of South Korean auto companies to supply batteries to U.S. automakers is under threat.
Cho Jae-phil, a professor at Ulsan National University of Science and Technology, said the losing side would suffer a fatal blow unless the two sides reached a settlement.
Volkswagen is concerned that there will not be enough batteries to meet all the electric vehicles planned to launch in the next five years, in part because producers such as LGC and China's Cataline Times (CATL) do not have enough skilled workers to build new factories in Europe to quickly increase production.
According to SNE Research, a South Korean battery industry tracker, batteries are the most expensive and important component of electric vehicles, and the eviction battery market will grow at a rate of 23% per year to reach $167 billion by 2025, which will surpass the global memory chip market (the chip market value is expected to reach $150 billion in 2025).
"Fight" due to battery orders
SK Innovation's $1.7 billion (£1.3 billion) plant broke ground in Georgia in March, about 200 kilometers from Volkswagen's Chattanooga plant, which will be Volkswagen's U.S. electric vehicle hub.
Unhappy by missing Volkswagen's order, LGC took SKI to the U.S. court in April, accusing it of misappropriating trade secrets. Seven months later, the two companies are fighting each other in a lawsuit for battery patent infringement in the United States, which could disrupt the efforts of some of the world's largest automakers to roll out electric vehicles.
U.S. court documents reviewed by Reuters show that the contentious companies are trying to prevent each other from importing and selling batteries from Volkswagen SUVs, General Motors Bolts, Ford pickups, Jaguar I-Pace, Audi e-tron and Kia Niro.
Jennifer Flake, a Ford spokeswoman, said it was encouraging LGC and SKI to resolve their conflicts without filing a lawsuit and believed Ford was in high demand from multiple suppliers.
Patrick Morrissey, a spokesman for GM, said GM was aware of the dispute and did not currently expect any impact on the production of its Chevrolet Bolt electric car.
Kia, Jaguar Land Rover and Volkswagen all declined to comment.