General Motors, an American automaker, increased its recall of Chevrolet Bolts electric vehicles on Friday because of fire risks from defective battery manufacturing. According to the automaker, it will seek reimbursement from LG Chem (its battery cell manufacturing partner) for losses of $1 billion.
LG Chem shares plunged by 11% Monday after the announcement of the recall. The third one GM issued for this vehicle. Its stock price also lost $6 billion. GMs shares closed down 1.27%
It is not the first time that LG Chems batteries have been subject to recalls by automakers. Hyundai recalled 82,000 EVs earlier this year due to a similar fire risk. The recall cost was approximately $851.9 million. Hyundai's joint battery venture was formed with LG Energy Solution, the battery unit of LG Chem. Experts believe that the recall could delay the initial public offering.
GM's investigation into battery problems revealed that there were defects in the batteries, including a folded separator and a torn tab. This recall follows a fire that engulfed a Volkswagen AGID.3 EV equipped with an LG Energy Solution battery. As well as Tesla earlier this year, Volkswagen began to move away from the pouch-type lithium-ion batteries manufactured by LG Chems and toward prismatic-type cells like those manufactured by CATL or Samsung SDI.
GM is now without fully electric vehicles in North America. This means that it cannot compete with Tesla and other automakers, as EV sales continue to rise. GM might decide to move its business elsewhere due to the loss of sales, safety concerns and the possibility that better tech is on the horizon.
There is still much to do together. GM announced that it would replace the defective battery modules in its Chevy Bolt EVs or EUVs. This is in response to the $1 billion in losses. This adds to the $800 million GM spent last November on the original Bolt recall. According to Cairn ERA data, the most expensive component of an electric vehicle is the battery pack. They cost on average $186 per kWh. GM charges $169 per kWh and the Bolt uses a 66 kWh pack.
LG Chem and GM didn't respond to comments, so it is unclear if the two will continue to implement plans that were announced in April to construct a second U.S.-based battery cell factory in Tennessee. Ultium Cells would produce more than 70 gigawatts of energy as part of the joint venture.