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U.S. automaker General Motors on Friday extended its recall of Chevrolet Bolt electric vehicles due to fire hazards linked to manufacturing defects in batteries. The automaker has said it will seek reimbursement from LG Chem, its battery cell manufacturing partner, for what it expects to amount to $ 1 billion in losses.
Following the announcement of the recall, the third GM issued for the vehicle, shares of LG Chem fell 11% on Monday and its share price fell $ 6 billion in market value. GM shares were down 1.27% at the close of the market.
This is not the first time that LG Chem’s batteries have been the subject of a recall from automakers. Earlier this year, Hyundai recalled 82,000 electric vehicles over a similar battery fire risk at an estimated cost of around $ 851.9 million. Hyundai’s battery joint venture was with LG Energy Solution, LG Chem’s specific battery unit, which is preparing for its IPO in September, but experts say IPO could be delayed due to costs reminder.
GM’s investigation into its battery problems revealed battery cell faults like a torn anode tab and a bent separator. The recall comes a week after a fire involving a Volkswagen AG ID.3 EV with an LG Energy Solution battery. Earlier this year, Volkswagen, along with Tesla, began to switch from LG Chem’s brand of pouch-type lithium-ion battery cells to more prismatic-type cells, like those made by CATL and Samsung SDI.
The recall leaves GM with no fully electric vehicles for sale in North America, meaning it cannot compete with Tesla and other automakers as sales of electric vehicles are on the rise. Lost sales, safety risks and the possibility of better technology on the horizon could cause GM to expand its business elsewhere.
For now, there is still work to be done together. GM has said it will replace faulty battery modules with new ones in the Chevy Bolt EV and EUVs, which it says represent losses of $ 1 billion. This is in addition to the $ 800 million GM already spent on the recall of the original Bolt last November. Batteries are the most expensive component in the electric vehicle, costing an average of around $ 186 per kWh, according to data from energy storage research firm Cairn ERA. GM pays around $ 169 per kWh, and the Bolt has a 66 kWh battery.
LG Chem and GM did not respond to requests for comment, so it is unclear whether the two plan to move forward on plans announced in April to build a second battery cell plant in the United States. United in Tennessee. The joint venture, called Ultium Cells, would aim to produce more than 70 GWh of energy.
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