SK Innovation says it will not sell its Georgia plant to LG

Industry

Published: 16 Mar. 2021, 19:14

SK Innovation says it will not sell its Georgia plant to LG

SK Innovation's Georgia plant currently under construction. [YONHAP]

SK Innovation said Tuesday it is not considering selling its Georgia facilities to LG Energy Solution, even if it is forced to pull out from the U.S. electric vehicle (EV) battery market.

“LG Energy Solution’s intention of acquiring SK Innovation’s Georgia plant in a letter sent to a U.S. senator is nothing more than a move solely intended to affect President Joe Biden’s veto decision,” SK Innovation said in a statement Tuesday.

Kim Jong-hyun, CEO of LG Energy Solution, last week sent a letter to U.S. Senator Raphael Warnock, reportedly saying that the company is willing to take over SK Innovation’s Georgia plant in Commerce if the investment and employment is an issue once the International Trade Commission (ITC)'s ruling goes through and SK has to withdraw its U.S. battery business.

SK Innovation had pledged a $2.6 billion investment in Georgia, building its own EV battery plant and creating to 2,600 permanent jobs.

The ITC in February ruled in favor of LG, banning SK from importing EV batteries and components to the United States for the next 10 years. Under the condition that the two sides don't agree on a financial settlement, Biden can exercise his veto right to overturn the ruling within 60 days or else the ITC ruling becomes final.

Georgia Governor Brian Kemp has been pushing the White House to exercise the veto right, citing employment issues and the administration’s green initiative.

LG Energy Solution made a surprise announcement last week, pledging to commit 5 trillion won ($4.4 billion) to its battery business in the United States, building at least two factories.

“LG announced a 5 trillion won investment plan without even posting a regulatory filing,” SK said. “[The investment plan] doesn’t include locations, which means it is just announced to interrupt its rival’s business.”

LG Energy Solution said on the same day it has no intent of disturbing a rival’s business.

“The gist of the latest issue is that the rival, as the firm that stole trade secrets, has to rightfully compensate the victim, which is us,” said the company.

“It is regretful that [the rival] denounces our investment, which has been announced in accordance with the growth of the U.S. market.”

Volkswagen plans six large battery factories in Europe by 2030 so it sell more electric cars while driving down battery prices and making electric mobility more affordable, an effort that would reduce dependence on Asian suppliers and help the company compete with newcomer Tesla. [AP/YONHAP]

Amid fierce conflict between the two Korean battery makers, Volkswagen Group announced Monday it will start installing prismatic-type batteries in 80 percent of its EVs from 2023, dealing a blow to both LG and SK, which mainly produce pouch-type batteries.

Volkswagen Group, which encompasses Volkswagen, Audi and Porsche, was the second biggest EV seller last year, taking 13 percent of the global market share after Tesla.

LG Energy Solution had relied on Volkswagen for 10 to 20 percent of its revenue, according to brokerage firm Mirae Asset Daewoo, and SK was scheduled to supply its batteries to the German auto giant from next year.

“LG and SK will have to compete for 20 percent of Volkswagen Group’s EVs which will limit the Korean battery suppliers’ stance within the German auto giant,” said Kang Dong-jin, an analyst from Hyundai Motor Securities.

LG Energy Solution’s shares plunged 7.76 percent on Tuesday and SK Innovation’s shares dropped 5.69 percent. Samsung SDI’s stock price fell 0.87 percent.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]