According to a recent report on Automotive News, which was published with contributions from Bloomberg, LG Chem and LG Electronics will help with $1.2 billion for GM's Chevrolet Bolt EV and Bolt EUV recall. The report says the funds coming from LG are "the lion's share of the expected costs."
Many of us have wondered how this was all going to play out. However, it's important to keep in mind that it's not only GM that has a reputation to uphold. As EVs move into the mainstream, LG is wise to step in and assist. Otherwise, the South Korean battery maker could see a lack of interest in its cells, as well as future partnerships, going forward. Not to mention that LG Energy Solution will now continue work on its upcoming IPO.
Bloomberg Intelligence energy analyst Horace Chan wrote:
“LG needs to ensure there are no more large-scale defects in the future, as investors’ patience has been stretched by a series of recalls over the past year.”
General Motors decided in August that it will replace the batteries in every Bolt EV and Bolt EUV ever produced. This all came about due to increased fire risks, which proved unable to solve via other "fixes." Replacing the battery packs in some 140,000 cars was initially expected to cost about $1.8 billion.
According to the sources, LG Chem will pick up $620 billion of the total costs, while LG Electronics will cover $480 billion. Interestingly, GM said this week that the total costs will be around $2 billion, but it expects to get about $1.9 billion back due to a settlement with LG.
GM vice president for global purchasing and supply chain Shilpan Amin shared:
“LG is a valued and respected supplier to GM, and we are pleased to reach this agreement. 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.”