SEOUL — South Korea’s LG Chem Ltd. and LG Electronics Inc. will shoulder a combined $1.2 billion for General Motors’ Bolt electric vehicle recall — the lion’s share of the expected costs, reassuring investors concerned about a rift between the conglomerate and a major carmaking customer.
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.
The LG group companies said on Tuesday that talks over the costs had ended. They booked most of their 1.4 trillion won ($1.17 billion) 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.
GM in a statement Tuesday estimated that the costs will be closer to $2 billion, and that it anticipates recovering $1.9 billion of it as a result of the settlement with LG.
“LG is a valued and respected supplier to GM, and we are pleased to reach this agreement,” Shilpan Amin, GM vice president, global purchasing and supply chain, said in the statement. “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.”
