South Korean battery firms to shoulder $1.2 bln of GM’s Bolt EV recall costs

The logo of LG Chem is seen at its office building in Seoul, South Korea, October 16, 2020.   REUTERS/Kim Hong-Ji

SEOUL, Oct 12 (Infoday) – South Korean battery firms LG Chem Ltd (051910.KS) and LG Electronics Inc (066570.KS) will be shouldering a combined $1.2 billion for General Motors Co’s (GM.N) Bolt electric vehicle recall – the lion’s share of the expected costs.

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. read more

The LG firms said on Tuesday that talks over the costs had ended. They booked most of their 1.4 trillion won 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.

($1 = 1,199.2900 won)

Reporting by Heekyong Yang; Additional reporting by Jihoon Lee; Editing by Edwina Gibbs

Our Standards: The Thomson Infoday Trust Principles.

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