Ford and Volkswagen are concerned that a legal dispute between two South Korean battery makers could cause battery-supply issues for upcoming electric cars, Reuters reported Tuesday.
The report cites documents submitted by Ford and VW to the United States International Trade Commission (ITC), asking the ITC to allow SK Innovation to manufacture batteries at a proposed factory in Georgia for use in an electric version of the Ford F-150 pickup truck and other vehicles, according to Reuters.
SK Innovation announced last year that it would build two separate factories on a common site in Commerce, Georgia, at a cost of $2.5 billion. At the time, it estimated combined annual capacity of 21.5 gigawatt-hours from the two factories.
But SK Innovation and its automaker clients have a potential problem.
Last year, rival South Korean battery firm LG Chem sued SK Innovation, alleging trade-secret violations in the U.S., and seeking to bar SK Innovation from producing battery cells in the U.S.
2021 Ford Mustang Mach-E First Edition
The case dates back several years—with LG Chem essentially claiming that SK was producing "knockoff" cells that went on to be installed in some vehicles like the Kia Niro EV.
Allowing SK Innovation to produce batteries in the U.S. is necessary to "avoid a catastrophic supply disruption," VW said in a May statement to the ITC cited by Reuters.
VW said last year that its battery supply was secure, thanks to deals with both SK Innovation and LG Chem, as well as fellow South Korean firm Samsung, China's CATL, and Swedish startup Northvolt. But the automaker is specifically counting on SK Innovation for the U.S., as one of its Georgia factories is earmarked to supply batteries for the ID.4 crossover, to be produced at VW's Chatttanooga, Tennessee, factory beginning in 2022.
Ford said LG Chem's claim that it could replace SK Innovation as a battery supplier was not "credible," given current battery-supply shortages, Reuters reported. However, Ford is turning to LG Chem for Mustang Mach-E battery supply, with most or all of the cells expected to come from an LG Chem plant in Poland.
LG Chem has a facility in Michigan, and it's building a facility in Ohio with GM, to supply batteries for GM's Ultium propulsion strategy.