LG Chem’s shares declined to a 9-month low as General Motors (GM)’s assurances of a continuing relationship between the two companies failed to allay investor fears that arose from General Motors’ recall campaign of electric vehicles running on the Korean company’s batteries.
LG Chem’s shares fell 3.9% to their lowest value since last November and are on track to end their worst week since the beginning of last year, down 14%.
General Motors CEO Mary Barra indicated that her company will continue to deal with LG Energy Solutions (LGES), which supplies batteries to manufacture all the vehicles it has pulled off the market, valued at about $1.8 billion.
It is reported that General Motors last week expanded its campaign to recall Bolt electric vehicles due to the risk of ignition due to “battery industry defects“, as the company described it, saying that the recall would cost it $1 billion but that it would seek to recover costs from the Korean company, and GM, LGES and LG Electronics are still investigating the cause of manufacturing defects.
During July, General Motors initially recalled 69,000 Bolt vehicles due to ignition risks, bringing the total number of vehicles recalled to 142,000, with an approximate value of $1.8 billion. After the incident, the company said it would definitely halt sales of Bolt vehicles.
LG Electronics stock fell 0.7% compared to its broader index gaining 0.3%, while the LG Chem Index tumbled 2% in recent trading.