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LG agrees to repay GM $1.9 billion over Chevy Bolt EV battery recall

by Fred Lambert

October 12, 2021

GM and LG announced that they came to an agreement over who is going to take on most of the cost of the battery recall over potential fire risk for the Bolt EV.

LG is going to be left with almost the entire cost. For months, we have been reporting on the mounting pressure to have GM recall the Bolt EV after several cars caught on fire while charging.

Everything pointed to a similar battery defect as Hyundai experienced with its LG batteries in the Kona EV, but while the Korean automaker recalled the vehicles to replace the batteries, GM resisted battery replacements. In August, GM finally caved and announced that it will replace batteries in all 2017 to 2022 Bolt EVs.

As we reported at the time, GM put the blame on LG for the first time, and after extending the recall to even the most recent Bolt EVs in production, it raised questions about the current brand-new Bolt EV and EUVs being produced.

They halted production until the end of September when GM was finally confident that LG was shipping them good battery cells for the Bolt EV and EUV. Now the two companies are going through the process of recalling the units and replacing battery packs if they detect the cell defect.

Today, the two companies also announced that they came to an agreement over LG contributing to the cost of the recall: General Motors Co. (NYSE: GM) announced today it has reached an agreement under which LG Electronics Inc. will reimburse GM for costs and expenses associated with the recall of Chevrolet Bolt EVs and EUVs due to manufacturing defects in battery modules supplied by LG.

LG will repay $1.9 billion of the $2 billion in costs associated with the recall that GM recognized in its third quarter financial results.

Shilpan Amin, GM vice president of Global Purchasing and Supply Chain, commented on the deal: LG is a valued and respected supplier to GM, and we are pleased to reach this agreement. 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.

The situation with GM and LG was always a little more complicated since, besides the Bolt EV, the two companies are working on Ultium together, which is going to power all of GM’s next-generation electric vehicles coming in the next few years.