Business & Investment

GM Resolves $ 2 Billion Bolt EV Recall Cost Agreement with South Korea’s LG By Reuters

© Reuters. File Photo: The LG Chem logo can be seen on October 16, 2020 in an office building in Seoul, South Korea. REUTERS / Kim Hong-Ji

By Heekyong Yang

Seoul (Reuters)-General Motors said on Tuesday that battery partner LG Electronics Inc of South Korea has agreed to reimburse an estimated $ 2 billion in costs and costs associated with the recall of volt electric vehicles.

U.S. automakers haven’t said how much LG will pay, but said they would recognize an estimated recovery in third-quarter earnings, offsetting $ 1.9 billion in total recall-related costs.

It was after GM’s battery suppliers LG Chem Ltd and LG Electronics announced that the two South Korean companies would bear a total of $ 1.2 billion in costs associated with the recall.

In August, GM expanded the recall to replace LG’s battery module to more than 140,000 due to the danger of fire.

The agreement with LG gave GM an embarrassing episode that forced GM to ask owners of bolts to park on the deck to park at least 50 feet away from other vehicles on the top floor or at the open level. This is the main step to solve. Danger of fire.

LG said the final recall cost may change depending on the number of battery modules replaced.

LG Chem’s unlisted battery unit LG Energy Solutions said, “Recall measures (progress) with a complete replacement of battery packs and modules made for early model batteries, but recently manufactured battery modules are diagnostic. It will be selectively replaced after software screening. ” In the statement.

A joint analysis by LG and GM found two rare defects that caused the fire. The anode is torn and the separator is folded.

Replacement and repair work is scheduled to begin this month, according to GM, and is working with LG to accelerate production of new battery modules.

GM and LG Energy Solution are building a US battery plant in two joint ventures.

LG Chem and LG Electronics said on Tuesday that they booked most of the cost of 1.4 trillion won ($ 1.2 billion) in the July-September quarter, although some were booked in the previous quarter.

In the most recent quarter, LG Chem will cost 620 billion won and LG Electronics, which assembles cells into battery modules and packs, will cost 48 billion won.

LG Chem and LG Electronics shares closed 4.2% and 3.3% on Tuesday, respectively, and investors were reassured that recall costs were less uncertain. GM stocks rose 1.5% after rising more than 2% earlier in the day.

LG Energy Solution has added plans to resume its initial public offering work, which had been suspended in August due to unclear recall costs.

($ 1 = 1,194.0300 won)

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GM Resolves $ 2 Billion Bolt EV Recall Cost Agreement with South Korea’s LG By Reuters GM Resolves $ 2 Billion Bolt EV Recall Cost Agreement with South Korea’s LG By Reuters

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