General Motors spent $800 million on the Chevy Bolt EV battery pack recall in the second quarter of 2021 alone, the automaker’s Q2 financial records indicate.
GM generated a net income of $2.8 billion in Q2 on EBIT-adjusted earnings of $4.1 billion. This figure includes warranty recall costs of $1.3 billion, the automaker said, of which $800 million was related to the Chevy Bolt EV battery pack recall.
The automaker issued a recall for certain examples of the Chevy Bolt EV last fall after it received reports from owners that the vehicle had spontaneously caught fire. It later issued a temporary software update for the Bolt EV that reduced the battery pack capacity to 90 percent while it investigated the cause of the fires. Shortly after in April, it instructed dealers to use diagnostic tools to test affected vehicles for battery problems and replace the battery packs as necessary. It also offered to buy back some Chevy Bolt EV models involved in the recall.
In July, the automaker issued yet another recall after it received reports of two fires that occurred in vehicles that had already been repaired as part of the initial recall campaign. A permanent fix is now once again being developed, with GM saying it is moving “as quickly as we can to investigate this issue.”
Chevrolet Bolt EV battery pack
Chevy Bolt Executive Chief Engineer Jesse Ortega has said the battery fires can be traced back to defective cells manufactured by GM supplier LG Energy Solution (formerly LG Chem) in South Korea between May 2016 and May 2019. Roughly 69,000 examples of the Chevy Bolt EV from the 2017-2019 model years are affected by the problem.
Going forward, it’s possible GM will have to replace the battery packs in all affected vehicles or offer customers a buyback – both of which are costly solutions that could take a sizable bite out of its earnings for 2021.
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Comments
This is gonna get ugly! Do the right thing gm, replace entire battery pack or buy back defective Bolts.
That is precisely what GM is doing… They are going to replace them all, then sue LG Chem to pay for it, and if LG plays hard to get GM will add to the suit for the damage to their reputation and future business. LG will settle quickly just like they did with Hyundai on the even bigger Kona recall. On the KonaEV, LG paid for all the replacement packs, and Hyundai paid for the logistics and replacements (it came out to a 75-25 split).
I actually considered picking one of these up, because they were getting really cheap when the news was out that they were catching on fire again. I figured GM would have to give me a new battery… But I didn’t want to take a chance that they’d just look it over and say it was fine.
A three or four year old Bolt with a new battery wouldn’t have been a bad deal, if you paid like $15k for it.
I’m glad I didn’t bother.
It seems the 2019’s are the really bad ones, same with Kona EV, LG Chem really had a bad time in 2019 in that plant in South Korea. Tried to go too fast, and Poof… fires all over… Battery manufacturing is hard, and has to be done very carefully. Hopefully LG learned the lesson well…
I was going to replace my 2007 HHR with a Bolt for around town. But this scares the hell out of me. I fear my Bolt would catch fire, and burn my home down. I am leaning towards a Tesla Model-Y now, but not in any rush to make a purchase. MY GM Master Card continues to Grow, so I will be watching for the results going forward.
Model Y is a far better choice, and the car will give you far more pleasure than a Bolt ever would. But Model Y is more than twice the price (55K vs 25K. If you can afford the Y, buy the Y (I did), it will make you smile every time you drive it.
Don’t be fooled by the Bolt fires though, this was an LG problem that mostly affected one model year. I would not be afraid to buy a 2020 or newer Bolt, as those batteries are made in the USA using different processes.
I’m sorry: Biden wanting to go 2 batteries driving our vehicles can SHOVE-IT!!
I’d love to know how much gm makes off of the Bolt. I suspect it’s nothing. I suspect it’s a big money loser. They make huge money off big gas-sucking 6.2 L V8 Yukons and Silverados and Escalades and blow it on Bolts. Yet they’re committed to an all EV future. I’m not good at math but even I can understand there’s a problem with the math of such a plan.
Just like Tesla and to a large extent the Prius, it’s not the profit from the car that matters, it’s the value of the CAFE and emissions credits.
There’s actually not a problem with the math. Do you think the first ICE was profitable? When Ford introduced the Model T, it was costing Ford way more money to produce it, than the public could afford. So the new models were introduced, which were used to subsidize the development costs, and create new cost saving manufacturing methods, to eventually bring the price down. Everything new in development costs money than what has been the norm before it. Look at Qi wireless Charging. Back in 2010, I remember MKBHD speaking of wireless charging mats that were being introduced by a company that cost $130! Now such mats are below $20. Using current products that have a high asking and demanding MSRP, to subsidize new and developing products is nothing new.
Everyone on this forum is hardcore ICE; which is understandable, as that is all you have known. People felt the same way about abandoning their horses for an ICE vehicle in the early 1900’s.
Being open to change, and embracing new technology accelerates its growth, and allows for the rest of the world to Catch up.
Another example is Windows Vista. Windows Vista itself wasn’t a flop. But what was; was that manufacturers were reluctant to build machines that kept up with the requirements Windows Vista demanded. Without that hiccup, PC’s wouldn’t be where they are today. That analogy can be used to describe charging infrastructure, and charging speeds.
There are always going to be innovations on the horizon. But it’s up to manufacturers and consumers to come together to embrace it, and move the technology forward, so it benefits us all.
Embrace technology even if it is flawed or the consumer does not want it?
The consumer doesn’t know what they want, until they experience it for themselves. That doesn’t come from me, but it comes from Steve Jobs. The greatest innovator of all time in the modern era, objectively.
SonicFan,
Good comment and I certainly understand that profits from today’s tech pays for investment in what will become the norm tomorrow. The irony here though is the notion that the planet is about to burn up and we must do something about it NOW. For gm to do their part they must convert their entire fleet to EVs in 10 years but…..in the meantime, they’re going to keep building and selling, and really pushing giant 6.2 L V8 gas-sucking SUVs and pickups. Why? Isn’t there hypocrisy there? Wouldn’t it be helpful in saving the planet to immediately cease production of the worst violators; the very vehicles causing the most harm to our planet. The answer is because they’re the only thing making gm any real money so the company clearly talks out of both sides of their mouth. Mary talks big about her commitment to a green new world but her current actions only exacerbate the problem.
Hey, Mary has made it very clear that GM will go all in on EV’s as long as the taxpayers help fund the development of them and production of them and pay incentives to make people buy them and develop the electrical grid to charge them so what’s to go wrong?? Plus, we simply have to source the earth elements to build the batteries and technology from China and Russia since we are restricting mining to, again, save the planet. This is all a wonderful strategy or is it? GM will have to be supported since they are too big to fail, as usual, but what if our economy fails with all this foolish overspending?
Being a Chevy person, the fact I have a New Colorado that cost me over $50K, I am sure they are making good on that one.
White Elephant.
No Sam, completely inaccurate headline, and reporting, GM took a charge of $1.3B for recall expenses in Q2, with $800M of it being for Bolt EV, the actual battery pack replacements have not started yet on a wide scale. Let’s work on some simple math for you, $800M divided by the recall population of 60K is $13K per vehicle., which using GM’s guidance is more then the value of all the battery packs. When a company takes a charge for the recall, that is a signal to investors that of the assumed total cost, and that the funds are earmarked.
Now once GM takes care of their customers and gets the new battery packs installed they will work this out with LG Chem, peacefully, or in court, and then there will be a “rebate” to GM. This is clearly LG Chem’s responsibility and GM might play nice with them for right now, but once the total is tallied GM will ask for LG to take responsibility.
Gosh, the writers on this site really are clueless about how a business works, especially the financial side.
Dont worry, you can buy a new truck/suv inflated 20K over price to finance this electric adventure for self flaggelating elites…
this is what happens when the no nothing govt hacks designs your car not engineers.
Our planet Earth does not need to be saved. God, our Lord knew what he was doing in the original creation and He does not need our help. Granted, many of you don’t recognize this nor even believe in a Supreme Creator God. On the other side of this life for which there will be no escape you will be shown that you were gravely mistaken and there is a final judgement awaiting you. Absolutely you will bow your knee at that time but to no avail. Your only opportunity to change this to a good final outcome is right now while you are still able to take a breath. I do wish you well!
Mods letting the crazies in?
There is a lot of talk and rightly so about the possible consequences of EV fires and the financial impact of recalling 10’s of thousands of battery packs supplied by LG Chen to the industry but I haven’t seen anyone mention the environmental impact of replacing defective battery packs.
After all isn’t that what this car is about?
If the root cause is defective LG batteries why is GM paying for it? They should sue LG for repairs. Reminds me of defective air bag issue. This could mean all electrics could see issues if batt mfg is is bad
Jeez, is anything by GM designed and built in the USA?
As Commentator James J. Kilpatrick used to make serious comments on 60 MINUTES before that goofball ANDY took his place – he said increasing foreign manufacture and the commensurate hollowing out of the USA’s manufacturing capability – that
“In 10 years ( 30 years ago now ), we’ll all be selling each other insurance”..
Haha!!! He was so right…