Big Relief For US EV Makers Comes From Deal Between Korean Battery Firms

A deal on an intellectual property dispute has been reached between two major makers of lithium batteries that are used for electric vehicles.

An unresolved dispute had threatened to hit the supply of batteries crucial for boosting production of electric vehicles in the United States.

The two companies in question are both South Korean – LG Energy Solution and SK Innovation, who came to an agreement on Sunday according to which the SK will be paying LG 2 trillion Korean won, or $1.8 billion which will be divided into lump-sum payments and a running royalty.

This deal also clears the path for continuing to build its new plant in Commerce, Georgia, which is expected to create about 2,600 jobs. The company plans to make batteries for the electric version of the Ford F-150 and a Volkswagen EV which will be made at the company’s plant in Chattanooga, Tennessee.

The deal could also prompt LG to launch work on a second joint-venture battery plant in partnership with General Motors (GM). The two companies have previously acknowledged that they are contemplating construction of another factory in addition to the one the companies are building in Lordstown, Ohio.

Most of the large global auto companies are currently trying to ramp up production of electric vehicles in order to meet the stringent environmental regulations as well as to meet the increase in demands from customers for electric cars. Electric vehicles can be cheaper than building conventional cars because of the lesser number of moving parts in electric vehicles which leads to reduction in labour hours for assembling electric vehicles than conventional vehicles.

However those efforts are threatened by an impending shortage of the batteries required for powering the electric cars. There can be a rise in prices of batteries because of the lack of inventory which will keep the prices of electric vehicles higher than the conventional gas powered vehicles

Despite having its own battery making factory in Nevada, the United States based electric car maker Tesla has expressed its requirement for more batteries from suppliers. The shortage of batteries is the only reason that Tesla has not been able to launch an electric semi-tractor truck since such vehicles will require five times the number of batteries for powering compared to the typical electric vehicles, the company had also said.

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

“This settlement agreement is a win for American workers and the American auto industry,” Biden said in a statement released by the White House Sunday. “We need a strong, diversified and resilient US-based electric vehicle battery supply chain, so we can supply the growing global demand for these vehicles and components — creating good-paying jobs here at home, and laying the groundwork for the jobs of tomorrow.”

(Adapted from CNN.com)



Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability, Uncategorized

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