Two of South Korea's leading makers of electric vehicle (EV) batteries are locked in a dispute over alleged theft of trade secrets, potentially jeopardising production growth as accusations undermine customer confidence and a legal complaint seeks to block exports of product and equipment to the US.
LG Chem began the feud last week by alleging that smaller rival SK Innovation had strategically hired away dozens of its employees to gain access to proprietary technology. The company filed a suit against SK Innovation in a US district court in Delaware and lodged a complaint with the US International Trade Commission (ITC).
The two companies went back and forth with statements on the dispute, and SK Innovation said on Friday that it uses a different and superior type of battery technology — built on decades of research at a cost of more than 1 trillion won ($854mn) — and therefore has no need of infringing LG Chem's trade secrets.
In addition to seeking damages in its district court lawsuit, LG Chem asked the ITC to block SK Innovation from importing battery products or battery-making equipment in the US. If successful, such an injunction would come just as SK Innovation is building a new W1.4 trillion factory in the US state of Georgia to supply batteries for Volkswagen EVs in North America.
The 9.8GWh plant is scheduled to open by 2022, but LG Chem's case threatens to slow or stall the company's growth plans. LG Chem said SK Innovation has poached 77 of its highly skilled and experienced employees, including dozens of engineers, since 2016, and many of those workers curried favor with their new company by stealing technical documents on its behalf.
SK Innovation said its hiring process is open and transparent and that LG Chem may damage South Korea's national interests by weakening a vital growth industry. The company warned that if LG Chem does not back down from its harmful and false allegations, it will take "every possible means", including legal action, to protect its reputation.
Battery makers are jostling to develop cutting-edge technologies to position themselves to dominate the industry as demand from EV makers spirals upward. SK Innovation's order backlog for EV batteries has increased by 30pc to 430GWh since the end of last year alone. The backlog has surged as much as sevenfold since the end of 2017 and 13-fold since the end of 2016.
