Tesla Battery Supplier LG Energy Solution Gets Favorable Verdict In Legal Spat With SK Innovation

Tesla Inc TSLA battery supplier and LG battery manufacturing subsidiary LG Energy Solution received a favorable ruling in a legal dispute with South Korea's SK Innovations over theft of trade secrets.

What Happened: As part of the final verdict, the U.S. International Trade Commission ruled that SK Innovation will be banned from importing into the U.S. certain batteries and components for a period of five years. The verdict is in confirmation with a preliminary verdict the commission issued in Feb. 2020.

The USITC instituted an investigation into SK Innovation in May 2019 following a complaint filed by LG Chem, alleging violations of section 337 of the Tariff Act of 1930, in the import of certain lithium-ion batteries, battery cells, battery modules, battery packs, components thereof and processes that misappropriate LG Chem's trade secrets.

LG Chem has since then spun off its battery business into a subsidiary going under the name LG Energy Solution.

Related Link: Tesla Supplier LG Energy Solution Reaches $9.8B Battery Investment Deal With Indonesia

Implications For Ford, Volkswagen: The commission, however, has given some exemption in the form of allowing import of battery components for Ford Motor Company's F F-150 EV for four years and Volkswagen VWAGY America's MEB line in the North American region for two years.

The lenience is allowed to facilitate the automakers to find alternative suppliers in the interim.

SK Innovation is also allowed to supply battery components to repair or replace batteries installed in EVs sold by Hyundai Motor Company's HYMTF subsidiary Kia in the U.S.

What's Next: Following the ruling, SK Innovation has a few options in moving forward, including a settlement with LG Energy Solution and a veto of the USITC's ruling by the U.S. government.

Alternatively, SK Innovation could seek to source materials in the U.S. to assemble battery components in order to circumvent the ban, which, however, is believed to be an unviable option from the cost perspective.