Volkswagen calls possible electric vehicle battery supply disruption 'catastrophic,' report says

Georgia plant slated to supply VW Chattanooga

Staff file photo / Vehicles move down the assembly line in this pre-coronavirus outbreak file photo taken at Volkswagen's Chattanooga production plant.
Staff file photo / Vehicles move down the assembly line in this pre-coronavirus outbreak file photo taken at Volkswagen's Chattanooga production plant.

Volkswagen says that a South Korean company ought to be allowed to make electric vehicle batteries at a plant under construction in Georgia that's slated to supply VW's Chattanooga factory.

The German automaker said that permitting SK Innovation to supply batteries to the company would prevent VW from suffering "a catastrophic supply disruption" resulting in delayed introduction of the company's electric vehicles in the United States.

SK Innovation, a part of South Korea conglomerate SK Group, broke ground in Northeast Georgia last year on a $1.67 billion EV battery manufacturing facility that would create 2,000 jobs. Last month, the company said it plans to plow another $940 million into the site.

But The Korea Times has reported that the U.S. International Trade Commission sided with another South Korean company, LG Chem, in a claim that SK Innovation attempted to destroy a wide range of evidence indicating that it stole confidential battery-making trade secrets.

The newspaper said that SK Innovation is trying to avoid an embargo on its EV battery products in the U.S. through reconciliation with LG Chem involving financial compensation. The commission is set to make a final ruling in the case on Oct. 5.

VW Chattanooga is constructing an $800 million expansion where a new electric SUV is to be assembled in 2022.

Marie Gordon, the Georgia Department of Economic Development's communications director, said the total investment announced by SK Innovation in the state is the single-biggest in over a decade.

She said the state has provided comments to the trade panel about the importance of the project for Georgia and the automotive industry.

Gordon said construction is "moving along well, and anyone driving by the project can see it week-to-week and month to month."

Volkswagen Group of America said that it takes no position on the merits of the ongoing disputes between LG Chem and SK Innovation.

"However, allowing a recent default judgment ... to stand against SKI will have widespread negative, lasting effects on the U.S. energy-efficient automotive industry and the overall U.S. workforce," the automaker said.

VW said that the action will frustrate the purpose of the United States-Mexico-Canada Trade Agreement (USMCA) by preventing VW from domestically sourcing batteries for its line of EVs for the North American region.

VW said there are less disruptive ways for the parties to resolve of their disputes, and it has asked the commission to allow SK Innovation to fulfill its existing contract with VW to manufacture batteries in the Georgia facility. The automaker said it also has requested to exempt any imported components needed for SK Innovation to operate its Georgia facility.

Contact Mike Pare at Follow him on Twitter @MikePareTFP.

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