A battery supply deal with German automaker Volkwagen is at the center of a lawsuit initiated by LG Chemical against SK Innovation in the US, court documents indicated Sunday.

In a complaint filed by LG Chem with the United States District Court for the District of Delaware, the South Korean battery maker claimed that its smaller rival SK Innovation had undermined its business by unfairly pursuing the deal to supply Volkswagen with EV batteries in the US.

In the document, LG Chem accused SK Innovation of stealing vital trade secrets by poaching key personnel, resulting in LG Chem losing the Volkswagen deal for the US market as well as other potential clients. Estimating its losses at over $1 billion, LG Chem alleges that SK Innovation never would have won the deal with Volkswagen had it not illegally acquired vital LG Chem technology.


 

In an official statement, SK Innovation denied the accusations, calling them groundless, and said it was considering legal action against LG Chem.

LG Chem, the world’s second-biggest lithium-ion battery maker, which occupies a significant portion of the EV market in the US, filed actions against SK Innovation in late April with the US International Trade Commission and the District Court of Delaware, accusing the company of recruiting people with knowledge of trade secrets concerning LG Chem’s trademark pouch-type battery. Delaware is where SK Innovation’s local arm, SK Battery America, is located.

The ITC has yet to announce a date for the launch of an investigation. The court case in Delaware is expected to last two to three years.

SK Innovation won the deal in 2018 to supply Volkswagen with batteries for the automaker’s EVs targeting the US market. In March 2019, the battery producer held a groundbreaking ceremony for a brand new battery plant in Georgia, US. The state is considered a potential manufacturing powerhouse, given its proximity to arms dealer Lockheed Martin as well as global automakers such as Volkswagen, BMW, Daimler, Volvo, Hyundai and Kia.

SK Innovation’s plant will complete construction in the second half of 2021 and will start mass production in early 2022. It aims to churn out enough pouch-type batteries to collectively generate 20 gigawatts a year. At the groundbreaking ceremony, SK Innovation CEO and President Kim Jun vowed to put the company in the global top three sometime between 2023 and 2025.

Volkswagen, at the center of the LG Chem and SK Innovation battle, aims to have a manufacturing capacity of up to 15 million EVs by 2025. The automaker is one of the main clients for the global battery industry, owing to its strong EV sales. Industry insiders estimate that battery deals for Volkswagen could reach anywhere between $40 billion and $50 billion by 2025. LG Chem has a similar deal with Volkswagen for the European market, as do Samsung SDI and China’s Contemporary Amperex Technology.

By Lim Jeong-yeo (kaylalim@heraldcorp.com)