SK Innovation drops most in a year on U.S. ban of EV batteries

SK Innovation Co. 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 U.S. for 10 years, giving bigger rival LG Energy Solution Co. a win.

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

“SK Innovation will ultimately have to reach some sort of an agreement with LG Energy,” said Lee Dong-wook, an analyst at Kiwoom Securities Co. 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.”

U.S. agency ITC on Wednesday ruled in favor 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 automakers 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 U.S. factory, being constructed in Georgia, is scheduled to begin operations later this year, though some of components will come from overseas.

LG Energy has accused SK Innovation of stealing its battery-making secrets. The ITC affirmed a judge’s decision that the import ban was the appropriate punishment for SK Innovation destroying evidence LG Chem said it needed to prove its case.

SK Innovation and the automakers can petition President Joe Biden to veto the import ban on public policy grounds. If the president doesn’t take any action, the order will take effect in 60 days. SK Innovation, which called the decision “regrettable,” has argued that its EV battery efforts are key to Biden’s green-energy agenda.

SK Innovation may consider appealing the ITC ruling after a thorough review, according to a statement Thursday. It also said that it’s willing to negotiate so long as conditions are reasonable.

LG Energy was set up in December after LG Chem split its battery business into a new entity and is seeking an initial public offering. The company has a factory in Holland, Michigan. General Motors Co. and the South Korean company are also planning a battery factory in Ohio for use in GM vehicles.

The two South Korean companies are competing for a bigger share of what’s expected to be a fast-growing market for batteries that power electric vehicles, putting the automakers in the middle.