LG Electronics has agreed to pay General Motors (GM) $1.9bn over the recall of electric vehicles (EVs) due to risk of fire.
The payment is to cover costs and expenses associated with the recall of Chevrolet Bolt EVs due to manufacturing defects in battery modules supplied by LG.
In November 2020, GM recalled 2017-19 Bolts with high voltage batteries produced at LG Chem’s facility in Ochang, South Korea, because of the risk of fire. In August 2021 the recall was expanded to all 2019 and 2020-22 Bolt models.
GM said as a result of the agreement it would recognise an estimated recovery in its 2021 third quarter earnings of $1.9bn, against $2bn in costs associated with the recalls.
Shilpan Amin, GM vice president, global purchasing and supply chain, welcomed the agreement and said LG was a valued and respected supplier.
“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,” he said.
Since 2015, LG Electronics has been supplying 11 key vehicle components, including infotainment systems, instrument clusters and driving components, for the Bolt.
LG said operating profit of $480m in the third quarter of 2021 was expected to be 49.6% down year-on-year after reflecting the recall payment.
GM plans to offer 30 new EVs globally by 2025 based on the Ultium battery platform.
GM, its subsidiaries and joint venture entities sell vehicles under the Chevrolet, Buick, GMC, Cadillac, Baojun and Wuling brands.
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