The lawsuit between LG Energy Solution and SK Innovation has reached a dramatic settlement, raising expectations that additional investment will gain momentum along with an increase in the operating rate of U.S. factories.

LG Energy Solution and SK Innovation announced on the 12th that they had reached an agreement regarding the lawsuit between the two companies.

The lawsuit between LG Energy Solution and SK Innovation, which began on April 29, 2019, was a slugfest that not only involved trade secret infringement, patent infringement, and invalidity lawsuits at the U.S. ITC, but also expanded into defamation and trade secret infringement lawsuits in Korea.

On February 10, the US ITC made a final ruling in favor of LG Energy Solution regarding the core trade secret infringement issue, and a surprise agreement was decided just before midnight on April 11, the deadline for US President Biden's veto.

The total agreement size is expected to be 2 trillion won, with 1 trillion won to be paid in cash and 1 trillion won in future royalties.

This agreement is expected to lead to additional investments along with increased operating rates at both companies' U.S. factories.

US President Biden's grand planAccording to the mother stimulus package, the electric vehicle infrastructure portion amounts to $170 billion.

In addition, the EPA (U.S. Environmental Protection Agency) is expected to raise automobile emission standards in July, and with new electric vehicles scheduled to be released in the U.S. within the year, including GM Lyriq/Hummer, Ford Pronco, Tesla Cybertruck, and Lucid Air, demand for batteries is expected to increase.

Accordingly, LG Energy Solution plans to independently invest more than 5 trillion won to secure an additional battery production capacity of more than 70 GWh in the U.S. alone by 2025, and its joint venture with GM also plans to decide on investment in a second plant within the first half of the year, following the first plant.

SK Innovation also plans to proceed with full-scale investment as the risk of litigation has been resolved with this battery dispute settlement.

SK Innovation's battery production capacity is expected to expand significantly from 30 GWh in 2020 to 85 GWh in 2023 and 125 GWh+α in 2025. Production capacity in the U.S. is planned to reach 22 GWh in 2023.

An LG Energy Solution official said that the significance of this agreement lies in the recognition of intellectual property rights related to batteries. In addition, the two companies announced that they will play an active role in successfully expanding the supply of large-scale batteries and spreading electric vehicles through bold and preemptive investments, and that they will establish a relationship of friendly competitors and cooperative partners.

LG Energy Solution President Kim Jong-hyun said, “We have decided to engage in healthy competition and friendly cooperation for the development of the electric vehicle battery industries in both Korea and the U.S. I would like to express my gratitude to the Korean and U.S. government officials who have worked hard to reach the agreement.”

An official from the Ministry of Trade, Industry and Energy also said, “We warmly welcome the agreement between LG Energy Solution and SK Innovation to end their dispute over secondary batteries,” and added, “We hope that this incident will serve as an opportunity to further strengthen solidarity and cooperation throughout the secondary battery industry.”

He also said, “Now is the time to prepare for the future in preparation for fierce global competition, and the government also plans to actively pursue support to strengthen the competitiveness of the secondary battery industry.”