Agreement between Korean battery companies is of great benefit to US electric vehicle manufacturers

Big winners from the Tesla inventory spike: lithium miners and battery makers

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The deal reached Sunday between South Korean companies LG Energy Solution and SK Innovation will see SK pay LG 2 trillion Korean won, or $ 1.8 billion, divided into lump sum payments and current royalties.

It could also pave the way for LG to announce a second joint venture battery plant with General Motors (GM). The two companies have acknowledged that they are looking to build another facility in addition to the one they are building in Lordstown, Ohio.

But there is a looming shortage of the batteries needed to power cars. Lack of inventory could put upward pressure on battery prices and keep the cost of electric vehicles higher than traditional gasoline cars.
Even with its own battery plant in Nevada, the leader in electric cars Tesla (TSLA) said he needed more batteries from suppliers, and also said that the lack of batteries is the reason he has not yet released an electric semi-tractor truck, which will need five times more batteries than a typical electric vehicle.

The dispute between battery manufacturers has led to a ruling by the United States International Trade Commission that SK Innovation has stolen 22 trade secrets from LG Energy and should therefore be prohibited from importing, manufacturing or selling batteries in the US market for 10 years. But the commission allowed SK to continue selling batteries to Ford (F) for four years and VW (VLKPF) for two years to give builders time to find other suppliers.

“We are pleased that SK Innovation and LG Energy Solution have resolved their differences,” said Ford. “This allows us to focus on providing a line of Ford world-class battery electric vehicles for our retail and fleet customers, while supporting American workers, the economy and our common goal of protecting the planet.” . “

President Joe Biden had until Sunday night to overturn the Trade Commission’s decision. Georgia politicians, including newly elected Senator Jon Ossoff, had been pushing to overturn the USITC decision.

“This settlement agreement is a victory for American workers and the American auto industry,” Biden said in a White House statement on Sunday. “We need a strong, diverse and resilient US-based electric vehicle battery supply chain, so that we can meet the growing global demand for these vehicles and components – creating well-paying jobs here at us and laying the foundation for the jobs of tomorrow. ”

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