LGC and SKI feud affecting VW

Two Korean Firms Are Feuding And It’s Affecting Volkswagen

Major automakers are striving to dominate the electric vehicles (EV) market and are investing billions of dollars on plants, technologies, and battery supplies in an urge to bridge the gap between demand and supply. However, the feud between the two South Korean electric battery supplier has disrupted the launches of EV’s by some of the world’s biggest carmakers.

What Happened?

In 2018, South Korea’s SK Innovation won a multi-billion dollar deal of supplying, German Automaker, Volkswagen (VW) with electric battery supplies, winning the bidding war against a local rival LG Chem (LGC) and it couldn’t handle the defeat.

To blowout the rival, LGC filed a lawsuit against SK Innovation accusing of misappropriating trade secrets. It didn’t stop here. Fast forward to today, both the companies have filed a lawsuit against each other for battery patent infringements. This has created chaos in the EV ecosystem.

“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.

According to Reuters, VW has stated that there won’t be enough batteries for all of its EV because of manufacturers such as China’s CATL and LGC who don’t have enough skilled workers to ramp out the supplies quickly.

In one of the court filings reviewed by Reuters, LGC said that SKI has poached its employees and used their information to work on VW’s MEB electric architecture and has only won the contract because it stole trade secrets.

While SKI denied all the allegations saying that we sign agreements with the employees to not share any information from former workplaces. “We value intellectual property,” said a SKI spokesman.

LGC has asked the US International Trade Commission (ITC) to block SKI batteries and components from entering the country. SKI has already pumped in $1.7 billion to build a factory in Commerce, Georgia. If the decision goes in the favor of LGC, it would jeopardize SKI’s plan to supply VW. The factory production is scheduled to start in 2022.

It doesn’t matter who wins the battery infringement patent case, both the companies will lose the capabilities to market the `products using the patents in the country.

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