| 5:03 PM EST

Suppliers’ Legal Battle Rattle EV Plans at Ford, GM, VW

Outcome could threaten timing of EV programs at all three carmakers
#Volkswagen #LG #Ford

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Electric car plans by Ford, General Motors and Volkswagen are being disrupted by a legal tiff between would-be battery suppliers.

The carmakers have been caught up in claims by LG Chem that arch-rival SK Innovation stole trade secrets about its lithium-ion technologies.

LG Chem petitioned the International Trade Commission through two complaints last year to bar SKI from setting up local cell production in the U.S.

Cell Fight

LG Chem says SKI hired 77 staffers and researchers from its lithium-ion battery division. A “significant” number of them, the company claims, stole proprietary information about LG Chem’s “pouch” type batteries. The company notes that SKI’s lithium-ion battery contracts have multiplied 14-fold since the hirings.

LG Chem also asserts that it could step in to avoid any supply problems with Ford and VW by taking over SKI’s contracts with those companies. Ford and VW dismiss that option as unfeasible.

Instead, they assert that SKI should be allowed to launch cell production as scheduled. They argue that, as existing customers, they should not become “collateral damage” in the dispute. VW warns that a lack of resolution would cause “catastrophic” supply disruption.

GM Venture

The bruhaha also touches GM, but from a very different perspective.

Last December, GM formed a 50:50 joint venture with LG Chem to build a huge cell-making plant in northern Ohio. The carmaker is counting on the $2.3 billion project to help supply the EVs it intends to produce next year and beyond.

Ohio Gov. Mike DeWine has weighed in, declaring that SKI’s alleged theft of trade secrets could jeopardize the venture and threaten the job prospects of 1,100 American workers to be hired at the factory.

The ITC made a preliminary ruling in favor of LG Chem, according to Reuters, but the commission isn’t expected to render a final opinion until October.

EV Supply Chains

VW is preparing its assembly plant in Chattanooga, Tenn., to begin building ID4 compact electric crossovers in 2022. The Tennessee facility also intends to assemble EV batteries from cells shipped in from a $1.1 billion factory SKI currently is constructing in Commerce, Ga.

Ford, meanwhile, aims to begin making electric F-Series pickups and Transit commercial vans in 2022. It aims to buy cells for those vehicles from a second factory SKI plans to build.

Ford and VW point out that the two SKI facilities also would create hundreds of new jobs. Like Ohio’s governor, they agree that employment is an especially critical issue because of the economic damage inflected by the pandemic.

Bottom Line

Plenty of high drama all around on this one. Two battery cell makers are vying for competitive advantage, with LG Chem making copious charges of massive thefts of trade secrets by its ex-employees.

At the same time, the affected carmakers are locked in their own competitive battles. Each has a strong and opposite interest in which supplier prevails. Stand by for more fireworks ahead.

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