Daily Management Review

Global Supply Of Batteries For EVs Could Be Disrupted Due To Feud Of Korean Firms


Two South Korean battery manufacturing firms SK Innovation and LG Chem are fighting a bitter battle in court in the United States over charges of misappropriating trade secrets with the aim of each to prevent importing and selling EV batteries to a host of planned electric vehicles of a number of global brands.
The genesis of the issue dates back to 2018 when SK Innovation beat LG Chem to bag a multibillion dollar deal for supplying car batteries to for the electric vehicles of German auto giant Volkswagen in the US. LG Chem alleged that SK Innovation (SKI) had poached 77 of its employees along with trade secrets and was using them inappropriately to make financial gains. The law suits are also amounted to allegations of battery patent infringements with both sides charging the other.
The batteries that are to be manufactured by the two companies are destined to be used for a range of planned electric vehicles including the SUVs of VW that it will manufacture in Tennessee, US, GM's GM.N Bolt, Ford F.N pickups, Jaguar's I-Pace, Audi's NSUG.DE e-tron, and Kia Motor's Niro.
But what actually is being threatened is the capacity of both the Korean firms of manufacturing and supplying batteries in the United States at a time when car makers are jostling to come out with electric cars and therefore want to ensure adequate supply of cat batteries for such electric vehicles.
"Whoever loses the fight would suffer a fatal blow, unless the two reach a settlement. This will also be a setback for automakers," said Cho Jae-phil, a professor at Ulsan National Institute of Science and Technology who worked previously at another Korean rival, Samsung SDI.  
Both LG Chem and SKI are being urged to resolve the issue out of court, said Ford spokeswoman Jennifer Flake and added that the US car maker was the market for electric cars had enough demand to cater to two production capacities for multiple battery suppliers.
"We are aware of the issue. As a normal course of action, we have business continuity plans in place to protect our interests," Flake said in an emailed statement to the media.
While being aware of the dispute between the two South Korean firms, car maker GM currently does not expect that there will be any impact because of the dispute on the production of its Chevy Bolt electric vehicle, said the company’s spokesman Patrick Morrissey.
No comments on the issue was however available from Kia, Jaguar Land Rover and Volkswagen.
In an earlier statement however, worries were expressed by Volkswagen about the possible lack of enough supply of batteries for all the EVs that it planned to come up within the next five years partly because of a lack of enough skilled worker with battery makers such as LGC and China's CATL to augment production capacities for the new plants in Europe.  
Te global battery industry for EVs, which are the most critical as well as most expensive components of EVs,  is expected to record a yearly growth of 23 per cent to reach a total value of $167 billion by 2025, according to Korea's battery industry tracker SNE Research.