LG Electronics has agreed to compensate General Motors about $1.9 billion to recall and repair Chevrolet Bolt electric vehicles due to ignition risks due to defective batteries made by the South Korean company.
Problems with the Chevrolet Bolt – the US company’s flagship model – have forced General Motors to recall all electric vehicles since production began in 2016.
Vehicle repairs, including complete replacement of some batteries, are expected to cost about $2 billion, higher than the previous forecast of just $1.8 billion.
The settlement between the two companies is a big gain for the automaker, which failed to live up to Wall Street expectations in the second quarter because it saved some money to meet the expected costs of recalling vehicles, read more [General Motors Shares Are Falling Despite The Strong Results].
As a result of the agreement, General Motors will see a recovery during the third quarter that will offset approximately $1.9-2 billion in recall-related expenses, noting that news networks previously reported that they were seeking compensation from LG. Read more [LG Chem Shares Fall Amid GM Burning Batteries Investigations].
Manufacturing problems occurred at LG Battery Solution plants in South Korea and Michigan. These “rare manufacturing defects” in Bolt car batteries are a ruptured anode and a kinked separator, the presence of which in the same cell increases the risk of ignition, and according to General Motors, these defects led to a fire in at least 13 vehicles.