Battery Dispute Brews Trouble for Volkswagen, Ford

Matt Posky
by Matt Posky

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.

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Jeff S Jeff S on Jul 22, 2020

    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.

    • DenverMike DenverMike on Jul 22, 2020

      That and the world's largest lithium reserve just found in Mexico.

  • ToolGuy ToolGuy on Jul 23, 2020

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

  • Wjtinfwb Job cuts and EV's... is that a winning strategy? You're locked in to substantial labor expense after the UAW agreement signed a few months ago. And EV's ain't exactly flying off the shelves en masse. Get the new Charger out already, it's been teased more than the Bronco and Supra were combined. Get a real Hybrid option out for the RAM trucks and big Jeeps that consumers will buy. Consider bringing back a Gen 3 Hemi with an aluminum block, direct injection and perhaps a Hybrid option to counter the Toyota debacle and get a jump on GM. Dump the Hornet and build Dodge a version of the Jeep Compass they can actually sell. A Dodge with Alfa bones isn't compelling to either brands fans. Fix the Durango's oil cooler problems to avoid alienating police departments nationwide. Do you want every cop in the US driving an Explorer? Freshen up the Pacifica and get Chrysler a cool sedan or wagon that can create a buzz like the 300 did more than a decade ago. And fix your dealers, they are by a large jackasses. Plenty of opportunity for improvement.
  • 3-On-The-Tree True that’s the worst beat down in history.
  • Jalop1991 Tesla has made getting repairs a real headache for some owners, as the automaker hasn’t allowed them to get work done at third-party shops. That policy has led owners to seek  class-action status against the company,So, move next to the airport then complain about the noise.Got it.
  • Jalop1991 One of the most interesting parts of this situation is that Stellantis, and by extension, the Chrysler Group, is increasingly considered a foreign companyNational Lampoon, May 1981.
  • ChristianWimmer This W126 example looks very nicely maintained and very clean inside and out. Definitely owned with love and respect. I can see Bill from Curious Cars selling this thing! My father drove a second hand bare bones facelifted 1985 Mercedes 300SE W126 back in the day until the early 2000s which eventually got passed down to me. The previous owner had only paid extra for a sunroof and automatic transmission. It had black cloth seats, no A/C, manual windows, no cruise control and those ugly plastic hubcaps which were so common on 1980s Mercedes’. I drove the 300SE for about seven years and enjoyed the comfort and pretty low running costs: reliable and also relatively fuel efficient. If you drove it normally you could get it to sip 9 L / 100 km. Motor oil consumption was pretty high as it got older needing a top up with 1 L of oil every 1,500-2,000 km, but this was apparently normal on the 3.0 inline-6. A comfortable long-distance cruiser and it even “handled” pretty nicely when you attempted to drive it in a 50% sporty manner on some backroads. After the free-for-all parking lot it usually parked on got demolished and parking such a huge barge became a problem, I ended up selling it to a local classic car club which still own it to this day and display it at classic car shows. Great memories of that car. 420SE/SEL and the 560SE/SEL are nice but the thirsty motors are something of a turn off.
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