LG will shoulder $1.2 billion of GM’s Bolt EV battery recall costs
SEOUL — South Korean battery firms LG Chem and LG Electronics will be shouldering a combined $1.2 billion for General Motors’s Bolt electric vehicle recall — the lion’s share of the expected costs. In a statement, the American automaker said “GM will recognize an estimated recovery in its third-quarter earnings that will offset $1.9 billion of $2.0 billion in charges associated with the recalls.”
GM in August expanded the recall, which will replace LG battery modules due to fire risk, to more than 140,000 cars, estimating the cost at $1.8 billion.
Shilpan Amin, GM vice president, Global Purchasing and Supply Chain, said in a statement, “Our engineering and manufacturing teams continue to collaborate to accelerate production of new battery modules and we expect to begin repairing customer vehicles this month.”
According to The Korea Times, LG said on Tuesday that talks over the costs had ended. LG Chem and its subsidiary LG Energy Solutions jointly booked most of their 1.4 trillion won (around $1.2 billion) in costs in the July-September quarter although some was booked in the previous quarter.
For the latest quarter, LG Chem, whose wholly owned battery unit LG Energy Solution supplies batteries to GM, will take a charge of 620 billion won while LG Electronics, which assembles the cells into battery modules and packs, will book 480 billion won in costs.
Shares of LG Chem and LG Electronics closed up 4.2% and 3.3% respectively with investors relieved that the uncertainty over the recall costs has gone.
LG Energy Solution added that it plans to resume working on its initial public offering which had been suspended in August due to the lack of clarity over the recall costs.
Material from Reuters was used in this report.
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