Hyundai, GM EV battery fires linked to cells manufactured in LG factories

Shares in Korean battery maker LG Chem fell to a nine-month low on Friday as investors digested reports linking fires in General Motors Co and Hyundai Motor Co vehicles to LG batteries at at least two factories in Asia .

Documents submitted by GM and Hyundai to the US safety regulator show how the two automakers have separately identified the same cause of battery fires in their latest electric vehicles, tracing them to similar manufacturing defects in battery cells made in at least two factories operated by a unit of LG Chem.

“Together with our customer and partners, LG is actively working to ensure that recall measures are carried out smoothly,” an LG spokesperson said on Friday. “The reservations and cost ratio for the recall will be decided depending on the outcome of the joint investigation looking for the root cause, currently owned by GM, LG Electronics and LG Energy Solution.”

GM and Hyundai have linked the fires to lithium-ion battery cells supplied by LG Energy Solution, a subsidiary of LG Chem and one of the world’s largest battery manufacturers. The cells were produced at LG’s factories in South Korea and China.

In Korea, the slump in LG Chem shares reflected investor concerns about the multibillion-dollar cost of recalling defective batteries and how it could affect the company’s relations with GM, Hyundai and others.

LG supplies similar EV battery cells to several vehicle manufacturers, including Ford Motor and Volkswagen. Ford and VW did not report similar problems with LG cells.

GM told the National Highway Traffic Safety Administration last week that experts at LG and GM on July 21 identified “two rare manufacturing defects in the same battery cell” as the root cause of the Chevrolet Bolt EV battery fires.

GM identified the defects as a torn anode flap and a bent separator, and said the defective cells were produced at LG’s factory in Ochang, Korea.

After the tenth Bolt fire in Chandler, Ariz., GM said it had discovered manufacturing defects in some cells “produced at LG’s facilities beyond the Ochang plant.”

GM last week extended the Bolt recall to more than 140,000 vehicles to replace the batteries, at a cost now estimated at $1.8 billion (about Rs. 13.229 crores). The automaker said it will seek reimbursement from LG – GM’s partner in the Ultium LLC battery joint venture in the United States.

In a statement on Friday, LG said its share of the cost of the recall “will be decided depending on the outcome of the joint investigation looking for the root cause.”

Hyundai said its investigators determined that a battery fire in a Kona EV – one of more than 15 such incidents in Korea, Europe and Canada – was caused by an internal short circuit in a battery cell. Hyundai has traced the problem back to a “bent anode flap”.

South Korea’s transport ministry said in February it would recall Kona electric vehicles with battery cells made at LG’s China plant.

Hyundai said it would spend almost $900 million (about Rs. 6,614 crores) to replace LG batteries in about 82,000 EVs worldwide, including more than 75,000 Kona EVs.


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