In a statement released Tuesday, GM confirmed LG Electronics Inc. would cover $1.9 billion of the $2 billion in costs associated with battery module fire recall. The costs will be split between LG Chem, the Korean company’s chemicals subsidiary, and LG Electronics Inc., which is tasked with assembling the lithium-ion pouch battery cells into the modules.
“General Motors Co. announced today it has reached an agreement under which LG Electronics Inc. will reimburse GM for costs and expenses associated with the recall of Chevrolet Bolt EVs and EUVs due to manufacturing defects in battery modules supplied by LG,” the statement said.
“As a result of the agreement, GM will recognize an estimated recovery in its third-quarter earnings that will offset $1.9 billion of $2.0 billion in charges associated with the recalls.”
Shilpan Amin, GM’s vice president of Global Purchasing and Supply Chain operations, said the automaker is now accelerating the production of new replacement battery modules and will begin repairing customer vehicles this month.
The recall initially involved a limited number of Chevy Bolt EV vehicles before GM expanded the recall in August to include all Chevy Bolt EV and Bolt EUV models manufactured between the 2017 and 2022 model years. The recall includes about 140,000 vehicles.
The battery fires in affected vehicles are caused when a torn anode tab and folded separator are present within one or multiple battery cells. It’s not entirely clear how this manufacturing defect materializes, however GM said previously that it was working with LG to help clean up the manufacturing process at the two battery plants that supply modules for the Bolt EV and Bolt EUV, which are located in Michigan and South Korea. GM restarted production of the battery modules used in the Chevy Bolt EV and Bolt EUV late last month.
GM’s executive vice president for Global Product Development, Purchasing and Supply Chain, Doug Parks, previously outlined plans to push a new advanced diagnostics software to affected vehicles in the near future, which will identify potential battery defects early.
“Resuming battery module production is a first step and we’ll continue to work aggressively with LG to obtain additional battery supply,” Parks said. “In addition, we’re optimistic a new advanced diagnostic software will provide more convenience for our customers.”