Numbers(Numbers)As business and economy, Let’s interpret the technology. Numbers are a source of information. The information is open to anyone and the numbers are visible to anyone,, Not everyone has an eye to see the truth behind it. A story of numbers so that everyone can relate <Number>I will solve it easily with.
April 10 is expected to be the’day of fate’ for SK Innovation. This is the last day for US President Joe Biden to exercise his veto over SK Innovation’s restrictive import ban ruled by the US International Trade Commission (ITC).
If US President Joe Biden does not veto and the ITC’s final ruling is executed, SK Innovation must pay an astronomical amount and agree with LG Energy Solution. This is due to the ruling by ITC that SK Innovation infringed on the trade secrets of LG Chem’s battery division (currently LG Energy Solutions) in the process of expanding the battery business.
According to the industry, the amount of the settlement amount is expected to reach several trillion won, but the settlement is not expected to be easy due to differences in positions between LG Energy Solution and SK Innovation. The dispute between the two companies either ends with’money’ or is up to President Joe Biden’s decision.
The industry believes that President Biden’s veto power will not be less likely. The first reason is that the US battery industry has contracted. The second reason is because of the’Net Zero’ policy of the United States, and the third reason is that the factory of SK Innovation is located in Georgia, which gave President Biden victory. Let’s analyze them one by one.
First, it is highly likely that President Biden will veto SK Innovation’s import ban from an industrial perspective. The United States is the world‘s largest consumer market after China. However, the’factory of the world‘ is concentrated in China and Southeast Asia, not in the United States. The same goes for the battery industry. 80% of batteries produced worldwide are produced in Asia, including China.
Only four global battery companies have factories in the US. Panasonic, LG Energy Solutions, and SK Innovation are major players. China‘s AESC also has a battery plant in the US, but the scale is not as big as 3GWh (gigawatt hour). In the end, it is only Panasonic and Korean companies.
Panasonic has a battery production plant in Nevada, USA. The production capacity is 37GWh per year. The batteries produced in this factory can make 1.48 million electric vehicles. All batteries produced at Panasonic’s US factory are delivered to Tesla. Tesla is building a 10GWh battery plant at its Fremont plant in the United States. This plant is also delivered to Tesla.
In the end, it can be seen that LG Energy Solutions and SK Innovation take over the production of the quantity of products that will enter the U.S.’Vitesla’ company. LG Energy Solutions has a battery production plant in Michigan. Capa can produce 320,000 electric vehicles at 8GWh per year. LG Energy Solutions is building a 30GWh battery plant in Ohio with GM, an American automaker. From 2022, the batteries produced at this plant will be delivered to GM.
SK Innovation is building two battery factories in Georgia, USA. Plant 1 will start operating this year, and Plant 2 will start mass production in 2023. When the capa of the two factories is combined, it can produce 800,000 electric vehicles with 20GWh.
The US is a market where global automakers compete. Production plants of global companies such as △Ford △BMW △Volkswagen △GM △FiatChrysler Automobils (FCA), as well as domestic automakers such as Hyundai and Kia Motors, are built. However, these factories only import and assemble parts of finished cars from Mexico and other places.
The heart of an electric vehicle is the battery. More than 30% of the cost is taken up by batteries. In the era of electric vehicles, an increasing number of Americans prefer electric vehicles. According to Bloomberg New Energy Finance (BNEF)’s 2019 EV Forecast Report, the U.S. is set to emerge as the world‘s third-largest market for EV acceptance. The proportion of EV sales in 2040 is expected to increase to 60%.
Half of the battery makers are Chinese. Among the global top 10 battery companies in terms of market share, there are 5 Chinese companies (CATL, BYD, AESC, CALB, Guoxuan) and 3 Korean companies (LG Energy Solution, SK Innovation, and Samsung SDI). Japanese makers are Panasonic and PEVE. If the US does not directly produce batteries for electric vehicles, but imports and uses them, the US will indirectly support China‘s growth. It’s like supporting the growth of China with American’money’. You are well aware that the United States regards China as a country that threatens its interests. An example is the US’ Huawei sanctions.
Under such circumstances, if President Biden accepts the ITC’s ruling, the U.S. electric vehicle conversion policy will inevitably be braked. This is because if SK Innovation does not agree with LG, it will not be able to operate in the US market. There can be significant disruptions to the electric vehicle value chain in the south.
Panasonic, which built a plant in the western region, has established a solid partnership with Tesla, and LG Energy Solutions, which has a plant in the eastern region, is strengthening cooperation with GM. SK Innovation is working with Ford and Volkswagen.
At present, the battery ecosystem in the United States is shrinking so much that it is difficult to find a’compound’ except for SK Innovation. According to Ibis World, the battery market in the US is worth about 10 billion dollars (11 trillion won). From 2015 to 2020, the U.S. battery industry has shrunk by 5%. In the United States, there are factories of local companies such as Clarios (formerly Johnson Controls Delco battery) and Energizer. None of the companies rank in the top 10 in the global market.
However, it is impossible to reach out to China, and it is difficult for China to build factories due to the uncertainty of US government sanctions. Eventually, we have no choice but to strengthen cooperation with Korean and Japanese companies.
Second, the US is stepping on the’Net Zero’ pedal again after the regime change to the Biden administration. President Biden returned to the Paris Climate Agreement on the 19th. The Trump administration withdrew from this agreement, and the United States is again working with the world to reduce greenhouse gas emissions.
President Biden has pledged to realize a’net zero’ by 2050 that will eliminate any net carbon emissions. We plan to invest 2 trillion dollars (2,000 trillion KRW) in eco-friendly energy business by 2035. He also announced plans to build 500,000 electric vehicle charging stations and introduce electric buses. We provide subsidies for the purchase of electric vehicles to sequentially exit internal combustion engine vehicles.
The core of Net Zero is the energy source. From power generation to consumption, it must be done eco-friendly. We need to convert hydrogen energy, household energy, and industrial energy from fossil fuels (coal, oil, natural gas) into eco-friendly energy sources. By storing the energy obtained from wind, water, and solar energy in an ESS (Energy Storage System), you can supply power when it is needed.
In the U.S., the demand for decentralized power generation is on the rise due to the PG&E’s forced shutdown in 2019 and the outage in Texas in 2021. An alternative is to switch from intensive power generation such as nuclear power plants and thermal power plants to decentralized power generation such as ESS. Domestic companies such as Samsung SDI and LG Energy Solutions dominate more than half of the global ESS market.
Currently, Tesla is prominent in the North American market by launching its’Powerwall’ product. LG Energy Solution launched’RESU’, an ESS for home use. Samsung SDI previously signed an ESS contract with an American power plant. SK Innovation has also resumed its ESS business, which had been discontinued for business reasons.
According to energy consulting firm Wood Mackenzie, the U.S. ESS market has grown at an annual average rate of over 200% since 2018. The home ESS market is also on the rise. ESS is emerging as a core product in the era of’Net Zero’ in that it can even serve as a power plant by collecting multiple ESSs. Since there is a risk of safety in the ESS market, it is desirable for various companies to enter and compete.
In the era of Net Zero, energy for transportation must also be changed to eco-friendly energy that does not emit greenhouse gases. To do this, the proportion of internal combustion engine vehicles should be reduced, and electric vehicles or hydrogen electric vehicles should increase. The U.S. electric vehicle market in 2025 will be 1.65 million units. It is expected to increase by 26.7% annually on average. According to Deloitte Anjin, the U.S. share was about 14% in 2030. China’s 49%, Europe’s 27%
President Biden ordered an executive order on the 24th (local time) to review the supply chain of major industrial items such as semiconductors and batteries. President Biden said, “We will ensure that the United States does not run out of critical products that it needs in a crisis situation. We will move a series of important products to the US territory and create new jobs.” President Biden said that “we will implement fundamental reforms that protect the US supply chain.”
President Biden will △use the full power of the federal government to improve the manufacturing capacity of major product supply chains in the United States △implement a comprehensive approach necessary for the crisis and national security in the United States △Work with allies to create new markets for U.S. export Pioneering △ We instructed us to rebuild domestic manufacturing capabilities by utilizing the full power of the federal government.
Earlier, President Biden’s “by American” executive order, shortly after taking office, forced the federal government to spend only on products made by American workers.
In order to change the world‘s largest consumer market, the United States, to’Net Zero’, the energy supply system needs to be eco-friendly. To do this, the federal and state governments have to spend huge amounts. Can the American’blood tax’ be used to buy products made abroad? President Biden’s successive executive orders show his will to make batteries directly produced in the United States.
Third, this is because SK Innovation’s factory is located in Georgia. During this year’s US presidential election, Georgia and North Carolina were the last regions counted. Georgia confirmed Biden’s victory after three recounts. Of the 538 electors in Georgia, President Biden secured 306, and former President Trump secured 232. The first Democratic candidate since 1992 has won Georgia. Georgia, Texas and Ohio are traditionally unpopular places for Democratic candidates. Nevertheless, it won the state of Georgia.
Senator also won Democratic candidate Rafael Warnock with a gap of 1.2 percentage points. The senator has also changed from a Republican to a Democrat in 20 years.
SK Innovation is building a battery factory in Georgia. SK innovation invested 2.6 billion dollars (about 3 trillion won) to establish the factory. 2600 jobs are expected to be created. The economic effects that will be derived for the community are expected to be significant.
The U.S. Trade Representative (USTR) is the most important factor in the U.S. President’s veto power over ITC rulings. The U.S. Trade Representative writes a recommendation on the ITC ruling and serves it on the White House, and the president decides whether to exercise the veto.
The USTR representative is Robert Lightheiser. He is a leading US trade expert and a protectionist. In the 1980s, when Japanese products swept across the United States, he used a super 301 trillion to protect his own industry. Super Section 301 was abolished by the Bush administration as a provision that allowed discriminatory retaliation against trading partners.
Representative Lightheiser is also a representative opponent of’offshoring’ (a phenomenon in which companies move overseas to reduce expenses). During the Trump administration, he said, “The era of offshoring is over,” and emphasized reshoring (a phenomenon in which companies that have moved overseas move their production bases to their home countries).
From the ITC’s ruling, it seems clear that SK Innovation infringed on the trade secrets of LG Energy Solutions. However, this issue is expected to be judged by political judgment. Whether or not President Biden’s veto is exercised is expected to be dealt with based on’American First’. Interest is focused on the fate of SK Innovation in April.