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The world, Korean companies are at risk of disruption of electric-car batteries supplies

SEOUL (Reuters) – In 2018, South Korea’s SK Innovation, beating bigger local rival LG Chem to be a multibillion-dollar deal to supply the German car maker, Volkswagen electric car batteries in the United States of america.

FILE PHOTO : cars drive during a ceremony to mark the start of production of the new electric Volkswagen model NAME.3, in Zwickau, Germany, on November 4, 2019. (REUTERS photo/Matthias Rietschel/File Photo

With great fanfare, SK Innovation (SKI) (096770.ME) broke ground in March on a $1.7 billion in its plant in Commerce, Georgia, located about 200 km away from the VW ‘ s for VOWG_p.DE) Chattanooga plant, which will be the manufacturer of the electric vehicle hub as in the United States of america.

LG Chem (LGC) (051910.SO, had other ideas.

Stung by the lack of VW, the deal for the new kid on the block, and the departure of the 77 employees of his competitor on the other side of the Han River in Seoul, south korea, LGC took the SKI to the right in the United States of america, in April, accused of misappropriating trade secrets.

Fast-forward seven months, and the two companies have hit each other in AMERICAN court cases for the battery pack of patent infringement in a bitter row that threatens to disrupt the start-up of electric vehicles (EVs) by means of a number of the world’s largest automobile manufacturers.

U. S court filings reviewed by Reuters show that the rival companies are trying to stop each other and to the import and sales of the EV batteries are designed for the VW Suv built in Tennessee, and GM (genetically-modified (gm).(N) Bolt, Ford (F. N) pickups, Jaguar f-Pace, Audi’s (the NSUG.DE e-tron and Kia Motors (000270.ME), Niro.

The commitment of the Korean companies in order to automobile manufacturers in the United States, with the battery, just as car manufacturers are scrambling to lock in supply of lucrative contracts for an anticipated increase in demand, according to the court filings by the two companies, and a number of experts in the industry.

“Whoever loses the fight may suffer a fatal blow, unless the two reach a settlement. It will also be a setback for automakers,” said Cho Jae-phil, a professor at the Ulsan National Institute of Science and Technology, who have previously worked with other Korean rival Samsung SDI (006400.ME).

Ford spokeswoman Jennifer Flake said, is that the stimulation of LGC-in and SKI-to resolve their conflict without litigation, and that he believed that there is sufficient demand to multiple vendors.

“We are aware of the problem. As a normal course of action, we have to ensure the continuity of business plans are in place to protect our interests,” Flake said in a statement via e-mail to Reuters.

GM spokesman Patrick Morrissey said the company was aware of the controversy on this point, it is not expected to have no impact on the production of the Chevrolet Bolt all-electric vehicle.

Kia, Jaguar, Land Rover and Volkswagen, which also owns the Audi, declined to comment.

SECRETS

Volkswagen has said that he is concerned that there are not enough batteries for all EVs, and they plan to launch in the next few years, in part because of the producers, such as the LGC, and China is the world’s CATL (300750.SS) do not have enough skilled workers to new plants in Europe to invest in, and the output is fast.

According to the Korean battery industry tracker, SNE Research, the market for EV batteries, the most expensive and important component in the vehicle is set to grow by 23 percent per annum to $167 billion by the year 2025, which is greater than that of the global memory chip market, which is forecast to have a value of over $150 billion by then.

In a court filing, LGC, said of his rival, poached employees to work on a project to supply batteries to VW’s of his wife and children, electric vehicles, architecture, and the SKI that won, only the VW, the contract, as it had misappropriated trade secrets.

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The SKI has refused to accept the theft of trade secrets, the employees signed agreements not to use the information from the previous work places. “We are the value of intellectual property,” said a spokesman for the SKI, ” they said.

If the U.S. International Trade Commission (ITC) rules in favor of the LGC on the 5th of June, when it is due for a preliminary ruling, which could compromise the SKIS, it’s time to contribute to VW in the United States of america, with the batteries that are available in Georgia or in a new factory in Hungary, according to court documents.

In April, the LGC asked the ITC to block the SKI and the battery, and components in the United States of america, as well as in the production of systems that are needed for US production, which is scheduled to launch in 2022.

The right choice of a spokesperson, said that there had been no change to the plans for the facility, which will have the capacity to make batteries for 200,000 EVs a year. He said the SKI had to ask questions about the processes of our customers, including you, if it would have an impact on supply, without any effect.

LGC, said a final decision on the matter would have to be made on Oct. 5 of next year, but said the information technology (it), earlier this month, a so-called. judgment was given in default against it on the SKI soon.

According to a memo obtained by Reuters on Wednesday, the Commission’s research staff recommended that a decision in favour of the LGC, as it is the most appropriate sanction for the Respondents ‘ (the SKIS) are widespread spoliation of evidence.”

Evidence spoliation is the destruction or alteration of evidence are used in judicial proceedings.

It is said also to be a two-day hearing was to be held “because of the seriousness of the alleged misconduct, and the nature of the relief requested by the (LGC).”

The SKI did not deny the charge of robbery be proved, in a statement on Wednesday, saying: “it’s yours, you are responding to a survey by the information technology (it),” and in the statement of the position of the jury is clear, is the “baseless” accusation.

A WAR OF WORDS

The patent infringement lawsuits filed by companies in the United States of america, in the mean time, it means that if you have one or both of them, they probably wouldn’t be able to be in the market for products using the patents in question in the country, the companies said in court filings. The two have taken their feud in South korea’s court of law.

LGC said in a statement that it would not be possible to get around the patent whilst on the SKI, said the loss of the patent case, it could create “substantial setbacks” in the battery business.

The SKI and the LGC, said that there have been no interruptions in the power supply yet.

LGC was an early industrial strength, it should be expected to win a deal in 2008 to supply batteries for GM’s Volt, the world’s first mass-market plug-in hybrid car, and since then has worked with nearly every EV maker, including Tesla (TSLA.D).

But the LGC has been grappling with an exodus of employees: 1,258 staff to jump ship, from 2016 to 2018, according to its report. The company told Reuters that the total number of members of staff who take part in the SKI-in 2016, and has increased ever since it filed the complaint in April, to over 100.

The bitterness of the conflict, it is alarming Korean government officials on the ground can result in damage to the business reputation and allow competitors to gain market share is by South Korean enterprises.

FILE PHOTO: the logo of The FIRST “Innovation” is seen in front of its headquarters in Seoul, South Korea, on February 3, 2017. REUTERS/Kim Hong-Ji/Photo File

The lawmakers have called on the government to intervene, and the Industry Minister, Yoon Sung-mo, said in October it was reviewing the litigation closely in order to see how and where it may have a role to play in order to achieve a positive outcome for the country in general.”

Beejay Kim, a battery, a consultant, said that Volkswagen might have been a broker for a cease-fire, if it is a dispute that could disrupt not only the battery pack from a supplier, but also the degree of competition between the suppliers.

“No one is willing to fight to the very end,” he said.

Additional reporting by Ben Klayman in Detroit and Edward Taylor in Frankfurt and Jan Wolfe in Washington; Editing by Jack Kim and David Clarke

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