US trade agency criticises Ford over battery deals with SK Innovation

The US International Trade Commission has lambasted Ford for pursuing deals with South Korean company SK Innovation despite evidence that it had misappropriated trade secrets from LG Chem to develop electric vehicle batteries.

The sharp criticism of the US carmaker came almost a month after the ITC imposed a 10-year ban on SKI from importing components to make lithium-ion batteries and granted Ford and Volkswagen a grace period to find a new supplier.

Ford and VW have both signed contracts to purchase batteries from SKI’s new $2.6bn battery plant in the US state of Georgia and were granted grace periods of four and two years respectively. But the companies have argued the ban will jeopardise their plans to transition to greener vehicles.

The ITC reaffirmed its February ruling against SKI for trade secret violations. “The Commission finds SK’s destruction of evidence in this case to be extraordinary,” it said in a statement on Thursday. “The destruction was ordered at a high level and was carried out by department heads throughout SK.”

It also said SKI’s conduct demonstrated “flagrant bad faith” and questioned why Ford had continued to pursue battery contracts with the company after the “misconduct in this investigation had come to light”.

“The fault here belongs with SK, as well as with those, like Ford, who deliberately chose to continue to cultivate prospective business relationships predicated on SK’s trade secret misappropriation,” the ITC added.

The exemptions would allow Ford to bring its fully electric F-150 truck to market by mid-2022 but the ruling threatens to disrupt the long-term supply of batteries for the carmaker. The ITC rejected Ford’s request to extend exemptions to its unannounced new electric vehicles.

SKI said on Friday that the ITC decision would weaken the US’s electric vehicle competitiveness by limiting competition and cause serious economic and environmental harm.

“It would endanger US national security by making us more dependent on Chinese companies in this fast-developing, critically important field,” SKI said. “Thankfully, it is entirely within the discretion of the Biden administration to undo it.”

SKI said it would ask Joe Biden to overturn the ban, a decision the US president can make within 60 days. SKI said it had promised to hire 2,600 workers by 2024 in its Georgia plant, which will be completed by 2022.

Domestic political pressure is piling pressure on SKI and LG to pursue an out-of-court settlement, as Seoul has been dismayed by the rivalry spilling out on to the global stage. South Korea is the world’s largest producer of batteries for electric vehicles, controlling more than a third of the global market. But the two sides remain far apart over a settlement, with an LG executive saying “there is a gap of more than Won1tn” ($885m).

SKI shares fell 4.6 per cent on Friday while LG Chem stock jumped 4.5 per cent. The benchmark Kospi Composite index closed down 0.6 per cent.

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