By on July 21, 2020

A legal dispute between South Korean battery manufacturers could force Volkswagen Group and Ford Motor Co. to deal with surprise supply shortages, according to documents filed with the U.S. International Trade Commission.

The industrial duo had hoped to see SK Innovation produce batteries at a planned factory site in Georgia to supply the deluge of electric vehicles both have planned. However, courtroom drama between SK Innovation and LG Chem has complicated the matter.

The South Korean battery firms are currently involved in a bitter legal battle. SKI is being sued by LG over claims of industrial espionage in the United States, with the plaintiff demanding SK Innovation not be allowed to manufacturer equipment there. This isn’t the first time the duo have butted heads, either. They seem to really hate each other, and each appears willing to do whatever it takes to gain an advantage over the other. Ford and VW have warned that the situation puts them both at risk of supply shortages during a period where reliable battery supplies are already difficult to come by. 

While none of the companies want to discuss the pending litigation, documents intercepted by Reuters give us a pretty clear picture of where everyone stands. Predictably, neither automaker wants to lose access to an essential supplier.

“Any remedial orders should seek to avoid collateral damage to SKI’s existing customers,” Volkswagen said in its public interest filing to the commission, adding that prohibiting the firm from manufacturing cells in the U.S. would cause “a catastrophic supply disruption.”

From Reuters:

LG Chem, which plans to build a battery factory with GM in Ohio, secured backing from Ohio’s governor, who said the ITC needs to “remedy SKI’s unfair competition,” the documents, dating from May and seen on Tuesday showed.

He said a failure to do so could threaten investment by LG Chem and GM that will “will bring manufacturing jobs back to the United States, ultimately employing around 1,100 American workers”.

“SKI is accused of stealing LG Chem’s intellectual property and using it to directly compete against workers in Ohio,” Ohio governor Mike DeWine said in a statement to the ITC in May.

SK Innovation is building its first battery plant in Georgia to serve VW’s EV base in Chattanooga. Tenn. Production of the [Volkswagen] ID4 electric vehicle is scheduled to begin there in 2022.

Like VW, Ford also believes Chem’s assertion that it can replace SK Innovation as a supplier is unrealistic and will needlessly cost American jobs. Shortages were reported long before the pandemic mucked up supply chain, and it doesn’t look like things have gotten any smoother. LG Chem may already have this one in the bag, anyway. It’s rumored to be favored in the trial, though we shouldn’t jump to conclusions. The International Trade Commission will make its final decision on the matter in October.

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14 Comments on “Battery Dispute Brews Trouble for Volkswagen, Ford...”

  • avatar

    Just stop it already. They know they want to build them in Tijuana anyway.

  • avatar

    As many have suggested, it looks like batteries won’t be in plentiful supply for some time, yet we continue to use taxpayer money to artificially drive EV demand. Just doesn’t make sense.

  • avatar
    SCE to AUX

    Cue the Jabba-the-Hutt laugh.

    This crap is one reason why Tesla has the Gigafactory.

    • 0 avatar
      Rick Astley

      You mean securing a billion dollars of taxpayer funds, who assumed the risk and burden of the factory, to help keep the taxpayer-funded luxury cars rolling off the lines and into the garages of those who could afford the vehicle without special assistance from John Q. Public.

      If the entirety of the EV vehicle ownership wasn’t built on the backs of taxpayers i’d have some amount of respect for them.

      But when you get pushback from EV owners to stump up a reasonable annual usage tax for the roads they use (and at great weight for their size and limited hauling capabilities), you really just set up a system for very few people to get a nice handout from everybody else. Not to mention every aspect of manufacturing and powering the vehicles.

      But i’m sure as one of EV and Tesla’s biggest fanboys, you would be comfortable with requiring some accountability from the EV sector, right? Maybe just have every EV have a specific tax to develop recycling for the horrendous batteries that are going in each one? That way when the tech rolls over every 2-2.5 years the infrastructure is already there get the elephant out of the room and get those batteries recycled safely and in a EPA-regulated nation. I’m confident that EV owners care deeply for the environment and would be glad to give back to the world, especially a world that had the taxpayers put their skin in the game.

      • 0 avatar

        @Rick Astley: “You mean securing a billion dollars of taxpayer funds, who assumed the risk and burden of the factory,”

        Get your facts straight. For the Austin plant, Tesla is getting a property tax reduction. The local government still gets tax money and it’s more than the cement plant that’s currently there. Plus they get 5000+ jobs to put money in the local economy. Tesla is assuming the risk for the plant.

        Tesla is no longer eligible for the $7,500 Federal tax credit and in many states, mine included, it’s not eligible for the local subsidy.

        My current and next EV weigh about 3500 lbs. That’s about the weight of a Porsche 911. My car can haul more than a 911.

        Battery recycling is possible now, but with newer batteries getting million-mile capability that will probably outlast the car, they can be repurposed by electric utilities to store off-peak power, then discharge it during peaks.

        I’d also be interested to know what auto company you buy your cars from that doesn’t owe it’s existence to taxpayers. Obviously you’ve found one since you have such a strong opinion and some of us are curious as to what company you bought from.

      • 0 avatar

        And y’all thought Cash For Clunkers was a bad idea.

      • 0 avatar

        “billion dollars of taxpayer funds”

        Taxpayers elect corrupted politicians for exactly that purpose – to provide funds for future elections and control of mainstream media by corrupted politician and corrupt new ones who are not corrupted yet.

      • 0 avatar
        SCE to AUX

        @Rick Astley:

        You’re not paying attention. I’ve long advocated here that gas taxes should be eliminated, and replaced by an annual tax that also covers EVs:

        Tax = GVWR x miles/year.

        Your miles/year are easily known by the state DMVs, inspection stations, or insurance companies.

        This way, trucks, ICE cars, EVs, and Grandma all pay what liberals call their “fair share”. Gas taxes make no sense in the politicized CAFE world, especially when CAFE rises.

        Also, I’m not an environmentalist, so even though I’m no fan of pollution, I don’t really care what happens to the batteries in my *Hyundai* EV, although recycling would be great.

        And taxpayers are not funding car plants; it’s their elected politicians who offer corporate welfare for jobs – no matter what the industry.

  • avatar

    Hardly a surprise, really. And with the current political situation with China, most of the EV batteries from those companies will probably stay within their borders too.

    We’ll see many companies scrambling for battery supplies for a while.

  • avatar

    Time for me to go out and buy another Big gas guzzling Truck since a new electric one will come with no batteries.

  • avatar
    Jeff S

    Agree Mexico could assemble Chinese vehicles and components for the US market and avoid the high tariffs. Not hard to imagine Chinese trucks sold in the USA but assembled in Mexico avoiding tariffs like the Chicken Tax.

  • avatar

    VW and Ford? That’s a regular Dream Team right there. /S

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