Biden’s electric vehicle plans put to test in dispute between battery makers

Source: By Steven Mufson, Washington Post • Posted: Thursday, February 11, 2021

In a decision issued Wednesday evening, the independent agency ruled the battery maker, SK Innovation, was making batteries with trade secrets stolen from one of its competitors, LG Chem.

The spat between the two South Korean corporate giants could have ripple effects for U.S. automakers gearing up to produce electric vehicles. It also puts Biden himself in the hot seat since he has to decide whether to let the ITC’s decision move forward.

ITC is trying to reprimand the South Korean battery maker without disrupting the nascent electric vehicle market.

The agency’s decision would prevent SK Innovation from importing certain lithium-ion batteries and other components for the next 10 years, with a few exceptions. The limitations would make it very difficult for the company to get the parts it needs to manufacture batteries in the United States. 

But crucially, the agency is giving two automakers — Ford and Volkswagen’s division in North America — time to find alternative sources of batteries to put into the electric F-150 and other electric models. The commission said SK Innovation can still make enough batteries to satisfy Ford’s needs for four years and VW’s for two.

Ford spokeswoman Rachel McCleery said the exemption “supports our plans to bring the all-electric Ford F-150 to market in mid-2022.” Making an electric version of the bestselling truck is ”a top priority for the company,” she added.

Volkswagen did not respond to a request for comment. The order also allows for the repair or replacement of batteries for Kia vehicles already on the road. The commission issued a 96-page nonpublic opinion that the companies involved were scrutinizing.

In a statement, Jong Hyun Kim, the chief executive of LG Chem’s energy division, said the company was grateful for the ITC’s decision. “SKI’s total disregard of our warnings and intellectual property rights gave us no choice but to file this case.”

SK Innovation, meanwhile, said it will discuss what to do next with Ford and Volkswagen — and plans to appeal to the Biden administration for relief. The ruling “could have a serious adverse impact on President Biden’s policies to combat climate change,” it said.

The firm is sinking about $2.6 billion into a massive plant in a rural Georgia, making for the largest foreign investment in the state’s history and expected to employ 2,600 people when completed.

The ruling comes as Biden prepares to jump-start the domestic EV industry to confront climate change.

The president campaigned on juicing the market for electric cars by helping Americans buy more of them. Congressional Democrats are preparing to try to pass into law a new rebate for electric vehicle buyers later this year — a linchpin of Biden’s $2 trillion climate plan.

In response to those changing political winds in Washington, General Motors and other major automakers have announced plans to move away from producing cars with internal-combustion engines to ones running solely on electricity.

But those plans hinge on building out a delicate supply chain in the United States that gets electric vehicles from the factory floors to roads — all while, Biden hopes, creates thousands of well-paying jobs.

Biden has 60 days to nix the ITC ruling.

The carve-outs for Ford and VW avoid putting as much pressure on Biden as a broader ban would. And historically, presidents have exercised that authority only a handful of times over the decades.

“It renders the likelihood of presidential veto, which was already small, vanishingly small,” said David K. Callahan, a lawyer at the firm Latham and Watkins representing LG Chem.

The ITC itself said that the “tailoring of its orders is appropriate in view of the public interest considerations.”

The White House did not respond to a request for comment. But in a confirmation hearing last week, Biden’s energy secretary nominee, Jennifer Granholm, said the United States needs to manufacture more batteries at home if it wants to compete in the world’s electric vehicle market.

“Of the 142-lithium ion battery mega factories that are under construction, 107 are in China. Nine are in the U.S. We can’t sustain this,” she said. “We have got to lean in much more quickly.”