Autos

LG to pay up to $1.9 billion to General Motors over Bolt EV battery fires

Key Points
  • LG Electronics has agreed to reimburse General Motors up to $1.9 billion to recall Chevrolet Bolt EVs due to fire risks caused by faulty batteries provided by the South Korean supplier.
  • Problems with the Bolt – the company's flagship mainstream EV – have led the automaker to recall every one of the electric cars since production began in 2016.
  • Fixing the vehicles, including completely replacing some batteries entirely, is expected to cost $2 billion, the

In this article

A 2019 Chevrolet Bolt EV caught fire at a home in Cherokee County, Georgia on Sept. 13, 2021, according to the local fire department.
Cherokee County Fire Department

LG Electronics has agreed to reimburse General Motors up to $1.9 billion to recall and fix Chevrolet Bolt electric vehicles due to fire risks caused by faulty batteries provided by the South Korean supplier.

Problems with the Bolt – the company's flagship mainstream EV – have led the automaker to recall every one of the electric cars since production began in 2016. Fixing the vehicles, including completely replacing some batteries entirely, is expected to cost $2 billion, GM said Tuesday. That's up from a previous estimate of $1.8 billion.

The settlement between the companies is a major win for the automaker, which missed Wall Street's expectations in the second quarter due to setting aside money related to the expected recall costs.

As a result of the agreement, GM will recognize an estimated recovery in the third-quarter that will offset $1.9 billion of $2.0 billion in charges associated with the recalls. The automaker previously said it was  pursuing reimbursement from LG.

The total cost of the recall will vary based on the number of vehicles that are fixed. LG companies earlier in the day said they expected the recall to cost about $1.2 billion, according to Reuters.

LG did not immediately respond for comment.

The manufacturing problems occurred at LG Battery Solution's plants in South Korea and Michigan. The "rare manufacturing defects" in the Bolt EVs are a torn anode tab and folded separator that when present in the same battery cell increase the risk of fire, according to GM.

"LG is a valued and respected supplier to GM, and we are pleased to reach this agreement," said Shilpan Amin, GM vice president of global purchasing and supply chain, in a 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."

The faulty batteries have caused at least 13 vehicles to catch fire, according to GM.

The settlement comes as the companies are building two battery plants in the U.S. through a joint venture called Ultium Cells LLC. The plants in Ohio and Tennessee will produce GM's next-generation batteries called Ultium.

The supply and production of battery cells are crucial for automakers pivoting to electric vehicles.

GM sets target to double annual revenue by 2030
VIDEO3:0703:07
GM sets target to double annual revenue by 2030