WASHINGTON - South Korean battery makers LG Chem and rival SK Innovation have agreed to settle a trade secrets dispute that has threatened a key Georgia plant and the electric vehicle plans of Ford Motor and Volkswagen, three sources briefed on the matter said.
The Biden administration through the U.S. Trade Representative's Office (USTR) faced a Sunday night deadline on whether to take the rare step of reversing a U.S. International Trade Commission (ITC) decision unless the companies agreed to a deal. An announcement of the battery makers' settlement is expected soon, the sources said.
The agreement is a win for President Joe Biden, who has made boosting electric vehicles and U.S. battery production a top priority. The global auto industry is racing to develop EVs, and Biden has proposed spending $174 billion to hike EV sales and expand charging infrastructure.
The ITC in February sided with LG Chem after the company accused SK Innovation of misappropriating trade secrets related to EV battery technology and issued a 10-year import ban, but it allowed SK Innovation to import components for batteries for Ford's EV F-150 program for four years, and Volkswagen's North American EVs for two years.
SK Innovation vowed to walk away from its $2.6 billion Georgia battery plant under construction if the ITC decision was not overturned.
The ITC also faulted what it called SK Innovation's "egregious misconduct" and SK Innovation's destruction of documents ordered by company executives.
Ford, Volkswagen, LG Chem and SK Innovation declined to comment.
Volkswagen of America CEO Scott Keogh wrote in a LinkedIn post on Wednesday that if the ITC decision were left in place, it could "reduce U.S. battery capacity and delay the transition to electric vehicles."
LG Chem first filed a complaint against SK Innovation in 2019 and both sides hired numerous lawyers and consultants to make their case to the Biden administration.
The administration has been pushing the two companies to reach a settlement, as have Volkswagen and Ford, the sources said.
U.S. Trade Representative Katherine Tai has been personally involved in the settlement discussions and urged both companies to come to a resolution, sources said. USTR declined to comment.
Georgia is home to two newly elected Democratic U.S. senators who are a linchpin of Biden's slim congressional majority and have both spoken about the importance of ensuring the Georgia plant's future.
LG Chem's battery unit LG Chem Energy Solution is nearing completion of an Ohio cell manufacturing plant with General Motors and is close to announcing plans to build a $2.3 billion second facility in Tennessee, sources told Reuters.
LG Chem has said it can handle the battery needs of automakers if SK Innovation abandons its Georgia plant.
SK Innovation has disputed that and said that Chinese manufacturers could step in to meet demand.
Bloomberg reported the expected deal earlier on Saturday.