EV battery battle: intellectual property verdict hands SK Innovation a loss, causing shares to plunge by the most in a year

SK Innovation had the biggest decline in almost a year in Seoul trading after the International Trade Commission ruled its electric-vehicle batteries will be banned from the US for 10 years, giving bigger rival LG Energy Solution a win.

Shares of SK Innovation, which supplies Ford Motor and Volkswagen, dropped as much as 9.6 per cent in early trading, the biggest intraday decline since March 2020. The stock traded down 6.6 per cent at 277,000 won as of 9:15am in Seoul. Shares of LG Chem, the parent of LG Energy, gained as much as 5.2 per cent.

“SK Innovation will ultimately have to reach some sort of an agreement with LG Energy,” said Lee Dong-wook, an analyst at Kiwoom Securities in Seoul. “It has to consider the fact that it has supply agreements with customers and either way it has to meet those obligations. The focus will be on how big the settlement will be.”

The ITC on Wednesday ruled in favour of LG Chem in an intellectual property dispute. The South Korean company is able to import components for four years for domestic battery production for Ford’s EV F-150 launching next year, and for Volkswagen’s American MEB line for two years, to give the carmakers time to transition to new domestic suppliers, it said.

LG Energy said Thursday it expects to meet with SK Innovation soon to talk about a settlement, adding that any agreement will depend on how authentic SK Innovation’s proposal is. Korean markets opened Monday after the Lunar New Year break.

Seoul-based SK Innovation has said its first US factory, being constructed in Georgia, is scheduled to begin operations later this year, though some of components will come from overseas.