Battery Dispute Brews Trouble for Volkswagen

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 manufacture 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 the 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.

a version of this article first appeared on TTAC