LG Electronics (KRX: 066570) agreed to repay General Motors (NYSE: GM) up to $1.9 billion to recall and replace defective Chevrolet Bolt EV and EUV batteries due to fire risks.
In August, GM expanded its recall of Chevrolet Bolt EVs and EUVs to include the remaining 2019 and all 2020-2022 models after discovering two manufacturing defects in the batteries supplied by LG. The defects included a torn anode tab and folded separator in batteries, which increases the risk of fire. The expanded recall covered more than 140, 000 vehicles
GM first issued a recall of Chevrolet Bolt EVs and EUVs in November 2020. The initial recall covered the model years 2017 to 2019. In July 2021, GM issued another recall affecting 50,932 vehicles Model Year 2017-2019.
The U.S. automaker initially estimated that the cost of the recall would be around $1.8 billion. However, its estimate increased to $2 billion. In August, it missed Wall Street analysts’ earnings expectations for the second quarter. Its quarter earnings were negatively impacted by warranty recall costs including the $800 million associated with the Chevrolet Bolt EVs and EUVs.
