The Future of SK Innovation to be Decided Next Week

A decision is finally expected on February 10 in the International Trade Commission (ITC) case between electric vehicle battery producers LG Chem and SK Innovation. This decision will have a direct impact upon Georgia because of SKI’s investment in the state and the potential state and federal political ramifications for both Republicans and Democrats. President Joe Biden’s ambitious electrification plans, Georgia’s future as a hub of electrical vehicle manufacturing, and the 2022 races for U.S. Senate and Governor are all expected to be directly influenced by this case’s decision.

In the likely case of a pro-LG outcome, SKI would be forbidden from importing their batteries into the United States and their investment in Georgia would be minimized. The state could lose approximately something 6,000 good jobs. SKI has also drawn a long list of other EV parts manufacturers to Georgia since the company announced their plans to build factories in the state. Without SKI, the future of those companies’ investments in Georgia would come into question as well. 

If those jobs go, it will inevitably have an impact on how effective Governor Brian Kemp, President Joe Biden, and U.S. Senators Raphael Warnock and Jon Ossoff are preceived in Georgia. Biden’s electrification agenda could be derailed if the decision is one that puts these jobs on the chopping block and he doesn’t reverse it, as he has the power do so. But also, if Biden doesn’t do that, it could make Warnock and Ossoff look ineffective for job creation in Georgia. If Kemp can work with the Biden administration to reverse a decision that could scupper jobs, that could enhance his argument that he has been an effective governor and one who can work across partisan lines to deliver, which might help in a primary fight. All of this matters a lot now because Georgia has become a swing state, and everyone is watching what happens here thanks to a bunch of results in the 2020 election.

On national security, historically, the broader LG family of companies has maintained a lot of ties to Huawei. Considering Americans’ public opinion on China these days, this might have serious consequences for how happy China hawks in government are to see LG keep operating in the US but SKI hamstrung. The Biden administration has recently made clear that their stance on Chinese Telcos isn’t very different to the Trump administration’s; White House press secretary Psaki stated: 

“I think the second reference was to Huawei. Let me just convey clearly our position on this. Let us be clear, telecommunications equipment made by interested vendors is a threat to the security of the U.S. And our allies. We will ensure that the American telecommunications network do not make — do not use equipment from un-trusted networks and make investments to expand the development of telecommunications equipment by trusted companies.” 

LG chem’s batteries also appear to have some major safety problems; their EV batteries in particular were the cause of a recent large Hyundai recall after they caused a series of fires. That also ties in to Biden’s ability to fulfill his electrification agenda: Automakers aren’t going to want to build cars with batteries suspected of catching fire. But if SKI’s, which Hyundai now seems to be using instead of LG batteries, aren’t readily available, quick, large-scale electrification might get tough.

For all of these reasons, the Biden administration ought to exercise serious caution about letting an LG friendly decision in this ITC case stand. Besides the jobs and sizable investment the state of Georgia stands to lose if SKI loses the case and the risk to the administration’s electrification plans, the decision also holds national security implications as well. And it could really hurt Democrats and rational Republicans here, too.