- GM Extends Bolt EV Recall Due To Fire Hazard
- Shares in battery supplier mother LG Chem fall by almost 10%
- Recall May Delay LG Chem’s Battery Unit IPO – Analyst
SEOUL, Aug 23 (Reuters) – LG Chem Ltd (051910.KS) shares closed 11.1% on Monday after General Motors Co (GM.N) announced it would recall an additional 73,000 Chevrolet Bolt cars use the batteries of the South Korean company. Months after a similar recall by Hyundai Motor Co (005380.KS).
GM on Friday expanded its recall of Bolt Electric Vehicles (EVs) due to the risk of fire from so-called battery manufacturing defects, saying the recall would cost $ 1 billion and a refund will be requested from LG. Continue reading
The U.S. automaker said the recall affected vehicles from model year 2019 and up and would stop Bolt sales indefinitely. LG Chem said it was working to ensure a smooth recall.
LG Chem, which is preparing an initial public offering (IPO) for the LG Energy Solution (LGES) battery unit, lost more than $ 6 billion in market value, marking its largest intraday percentage loss since March 2020.
“The market expected LGES to start its IPO in September, but with GM’s expanded recall, LGES is likely to be delayed by a month or two as the company needs to consider recall costs before completing its IPO formalities “Said Samsung securities analyst Cho Hyun-ryul.
GM initially recalled 69,000 Bolt cars in July. The extended recall takes place about a week after a fire in an ID.3 EV from Volkswagen AG (VOWG_p.DE) with an LGES battery. Continue reading
LG Chem’s logo can be seen in its office building in Seoul, South Korea on October 16, 2020. REUTERS / Kim Hong-Ji / File Photo // File Photo
Continue reading
Six months earlier, Hyundai recalled 82,000 electric vehicles with fire risk from LGES batteries at an estimated cost of about 1 trillion won ($ 851.90 million). Continue reading
Both GM and Hyundai’s recalls are pouch batteries rather than cylindrical batteries that ship to LGES customers such as Tesla Inc (TSLA.O).
In February, the South Korean Ministry of Transport announced that a joint investigation with LGES and Hyundai at an LGES factory in China found defects in battery cells. The investigation continues.
Neither LGES nor Hyundai have revealed how they plan to split the recall costs, although analysts expect LGES to assume 60%.
Batteries are an important part of LG Group’s bottom line. LG Chem generated 40% of operating profit from batteries – including EV batteries – from April to June. Earlier this month, LG Electronics Inc (066570.KS) cut its second quarter operating profit by more than a fifth to reflect GM’s recall costs. Continue reading
The shares of LG Electronics, which assembles LGES cells into battery modules, closed 4.1%, while the local benchmark KOSPI (.KS11) rose 1%.
($ 1 = 1,172,5900 won)
Reporting by Heekyong Yang and Jihoon Lee; Edited by Kenneth Maxwell and Christopher Cushing
Our Standards: The Thomson Reuters Trust Principles.
