EV production might be disrupted because of Korean battery suppliers’ fight

Dec 02 2019 / By Shreyas Tanna

In 2018, a multibillion-dollar deal was made in South Korea's SK Innovation to deliver the Volkswagen Group with electric car batteries in the United States.

With great enthusiasm, SK broke ground in March, about 200 km (120 miles) from VW, Chattanooga, which will be the center of electric vehicles in the United States. In Georgia, the $1.7 billion plants are located in international trade.

Fast seven months in advance and the two companies have been hit by U.S. battery breach lawsuits in a dispute that threatens some of the world's biggest car producers to disrupt the launch of electric vehicles.

The US court documents reviewed by Reuters reveal that feuding suppliers are trying to prevent each other from importing and exporting the EV batteries for the SUVs that VW is to be produced in Tennessee as well.

Korean firms are at risk, according to court submissions of the two companies and several industry experts, to be able to supply batteries for automakers in the USA as well as the automakers are struggling to secure supply with lucrative contracts in the face of anticipated demand increases.

VW said that it is worried that all-electric vehicles it plans to launch in the next five years will not be fitted with enough batteries, partially because producers such as LGC and Chinese CATL have not enough qualified staff in Europe to rapidly increase output.

The demand for E-batteries, the largest and most expensive components of vehicles, is set to rise 23% a year to hit $167 billion by 2025, thus rising above the global memory chip market that is estimated to be $150 billion by the end of 2015, according to Korea's SNE Research battery industry tracker.

If the United States? On 5 June, when a preliminary ruling was to be reached, International Trade Commission (ITC) rules for LGC which may, in court filings, jeopardize the plans of SKI to supply VW in the U.S. with Georgian batteries or a new factory in Hungary.

The Committee's investigative staff recommended, according to a report received on Wednesday by Reuters, a motion in support of LGC, because it was "the most suitable punishment for the widespread spoliation of evidence by Respondents (SKIs).