GM settles $2 billion Bolt EV recall cost deal with S.Korea’s LG

imageStock Markets2 minutes ago (Oct 12, 2021 11:25PM ET)

(C) Reuters. FILE PHOTO: The logo of LG Chem is seen at its office building in Seoul, South Korea, October 16, 2020. REUTERS/Kim Hong-Ji

By Heekyong Yang

SEOUL (Reuters) -General Motors Co said on Tuesday its battery partner, South Korea’s LG Electronics Inc, had agreed to reimburse it for the $2 billion estimated in costs and expenses associated with the recall of Bolt electric vehicles.

The U.S. automaker did not say how much LG would pay but said it will recognize an estimated recovery in the third-quarter earnings that will offset $1.9 billion of the total charges associated with the recall.

It follows announcements earlier in the day by GM’s battery suppliers LG Chem Ltd and LG Electronics that the two South Korean firms will shoulder a combined $1.2 billion of costs associated with the recall.

GM expanded the recall, which will replace LG battery modules due to the risk of fire, in August to more than 140,000 cars.

The agreement with LG is a major step for GM in resolving an embarrassing episode that forced it to ask Bolt owners parking in decks do so on the top floor or on an open level, and at least 50 feet away from other vehicles, due to the fire risks.

LG said the final recall costs are still subject to change, depending on the number of battery modules replaced.

“While the recall measures will (proceed) with complete replacement of battery packs and modules made for the early models of batteries, the more recently manufactured battery modules will be selectively replaced following diagnostic software screening,” LG Chem’s unlisted battery unit LG Energy Solution said in a statement.

It said LG and GM conducted joint analysis and found two rare defects as the cause of the fires – a torn anode and a folded separator.

Replacement and repairing work are expected to begin this month and it is collaborating with LG to accelerate production of new battery modules, GM said.

GM and LG Energy Solution are building two joint-venture U.S. battery plants.

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

For the latest quarter, LG Chem 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, on Tuesday with investors relieved there was less uncertainty over the recall costs. GM shares closed up 1.5%, after rising more than 2% earlier in the day.

LG Energy Solution added 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.

($1 = 1,194.0300 won)

GM settles $2 billion Bolt EV recall cost deal with S.Korea’s LG

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Subscribe

Category

Related posts

Latest posts

HSBC Q3 profit up 74%, beats estimates, announces up to $2bln buyback

Stock Markets2 minutes ago (Oct 25, 2021 12:25AM ET) (C) Reuters. FILE PHOTO: A man wearing a protective mask walks past a logo of HSBC...

Gold Up after Previous Session’s Losses, Fed Taper Imminent

Commodities17 minutes ago (Oct 25, 2021 12:10AM ET) (C) Reuters. By Gina Lee Investing.com - Gold was up on Monday morning in Asia, clawing back gains...

Alec Baldwin was aiming at camera when gun discharged – affadavit

World22 minutes ago (Oct 25, 2021 12:05AM ET) (C) Reuters. FILE PHOTO: An image of cinematographer Halyna Hutchins, who died after being shot by Alec...