LG Electronics will pay US$1.9 billion in compensation to General Motors
LG Electronics will pay US$1.9 billion in compensation to General Motors.
Electric car charging may spontaneously ignite? This battery giant has to pay more than 12 billion US companies for major events!
When charging, pure electric vehicles will ignite spontaneously. Is it the auto company responsible for the manufacture of the complete vehicle or the supporting company that provides the power battery that is responsible for the compensation?
This time, South Korean battery manufacturer LG Electronics will face the highest lump-sum payment in its history.
The American giant General Motors (General Motors) announced on October 12 local time that it has reached an agreement with its battery supplier LG Electronics on the cost of the Chevrolet Bolt recall.
According to the agreement, LG Electronics will pay General Motors up to 1.9 billion U.S. dollars (approximately RMB 12.2 billion) to compensate for the recall costs and expenses of the Chevrolet Bolt electric vehicle due to the risk of battery fire.
According to GM’s estimates, its global recall of 143,000 Chevrolet Bolt models, as well as the cost of repairs and replacement of batteries, will reach US$2 billion.
The conclusion of the agreement will offset 95% of the costs associated with GM’s recall. In other words, LG Electronics has almost borne all the costs of this recall of Bolt models, reducing GM’s losses to 100 million US dollars.
LG Electronics will pay US$1.9 billion in compensation to General Motors
LG Electronics is a power battery supplier for General Motors, and the power battery used by General Motors’ Chevrolet BOLT is provided by LG Electronics.
On October 12, in the United States, General Motors announced on its official website that it had reached an agreement with LG Electronics.
According to the agreement, LG Electronics will pay General Motors US$1.9 billion to compensate Chevrolet BOLT for recall costs and expenses caused by the risk of battery fire.
According to GM’s estimates, it will recall approximately 143,000 Chevrolet BOLTs worldwide, and provide repair, battery replacement and system upgrade services for these models. The total assembly will reach 2 billion U.S. dollars. Although LG Electronics did not bear all the costs, it also assumed 95% of it.
Shilpan Amin, GM’s vice president of global procurement and supply chain, said: “LG is a respectable supplier to GM and we are very pleased to reach this agreement. Our engineering and manufacturing teams will continue to work together to accelerate the production of new ones. Battery module. We expect to start repairing customer vehicles this month.”
In fact, this is not the first time that LG Hua has compensated for the spontaneous combustion of pure electric vehicles. Before General Motors, LG Chem also assumed about 70% of the global recall of Hyundai Motor’s electric vehicles, amounting to 980 billion won (approximately RMB 5.6 billion).
At least 13 spontaneous combustions have occurred
According to The Paper, Bolt is a household five-door electric car launched by Chevrolet in 2017. In March 2019, a 2018 Chevrolet Bolt in Massachusetts, USA, caught fire while charging.
This was the first time that General Motors officially recognized the spontaneous combustion of this model of vehicle.
According to data officially released by General Motors, starting from 2019, there have been at least 13 spontaneous combustion incidents in the Chevrolet Bolt model, which is loaded with a power battery produced by LG Electronics.
According to information on GM’s official website, the original defective battery was originally discovered at LG’s Ochang plant in South Korea.
The high-voltage battery produced by it has a potential for fire when it is full or close to full. A follow-up investigation found that the battery cells produced in production facilities other than the Aochang factory also had manufacturing defects.
The results of multiple investigations by General Motors and LG Electronics pointed out that in the batteries manufactured by the LG factory, the same battery has two manufacturing defects at the same time: the battery separator is folded and the battery anode is damaged. The occurrence of the above two rare conditions at the same time may be the root cause of the battery fire.
In order to curb the further occurrence of this situation, General Motors initiated a recall notice.
According to the financial community, due to the risk of fire, General Motors first announced the recall of Chevrolet Bolt electric vehicles in November 2020, but it did not immediately resolve it.
In May, it announced a software repair, but then two fires involving Bolt occurred. The repair procedure led to another recall of 70,000 cars in July. A month later, the automaker recalled 70,000 cars.
At present, the total cost of the company’s recall of Bolt cars is expected to reach 1.8 billion US dollars. In April 2021, GM also announced an upgrade of software to eliminate hidden dangers, but with little effect.
GM spokesman Kevin Kelly said that once the company determines that its battery supplier LG Energy has produced non-defective batteries, the company will begin to replace the battery modules on the Bolt EV without charging any fees to car owners. He said that there is no specific time frame to determine when non-defective batteries can be produced.
Does not affect the partnership between GM and LG
According to The Paper, LG Electronics is the world’s second largest battery manufacturer. As of the end of August, the global installed capacity of LG batteries was 39.7GWh, accounting for 21.5% of the global electric vehicle battery market, second only to China’s CATL.
In recent years, CATL has established strategic partnerships with many auto giants such as Tesla, Toyota, Honda, and Volkswagen, with a market share of 32.5%.
On October 12, LG Electronics released its third quarter performance report. The report shows that the company’s total revenue from July to September of this year was 18.7845 trillion won, a year-on-year increase of 22%, a record single-season high. However, GM’s huge indemnity of US$1.9 billion caused its operating profit to drop by 49.6% year-on-year.
LG Electronics stated in the statement that General Motors is an important customer under the strategic partnership for more than 10 years and has successfully resolved the recall issue. As one of LG Electronics’ most important customers, GM’s orders are crucial to its global market share competition.
It is worth mentioning that the economic losses caused by this incident did not affect the partnership between General Motors and LG.
General Motors recently stated that the company regards LG as a long-term partner to promote the development of electric vehicles.
GM’s Detroit plant is advancing the establishment of a joint venture with LG, investing in two new power battery plants in Ohio and Tennessee, USA, mainly for the production of next-generation batteries Ultium.
This also reminds domestic power battery manufacturers. While expanding production capacity at a high speed, it is necessary to ensure the safety of power batteries.
Unlike gasoline vehicles, pure electric vehicles are more dependent on power batteries. To some extent, the reliability of the power battery determines the safety of the vehicle.