LG to pay GM $1.9 billion to cover cost of Bolt recall for battery fires
By Chris Isidore, CNN Business
General Motors will be getting $1.9 billion from its battery supplier LG to cover most of the cost of the expensive recall of the Chevrolet Bolt after a series of fires.
GM is recalling 143,000 Bolts, which represents most of the Bolts sold since the electric car debuted in 2016. A series of fires occurred in the vehicles, mostly when the cars were parked.
The estimated $2 billion cost works out to about $14,000 per recalled vehicle, making it one of the most expensive recalls ever on a per-vehicle basis. That’s because the large lithium batteries will need to be replaced in the cars, and those batteries make up a significant part of the cost of an electric vehicle.
“LG is a valued and respected supplier to GM, and we are pleased to reach this agreement,” said Shilpan Amin, GM vice president, Global Purchasing and Supply Chain. “Our engineering and manufacturing teams continue to collaborate to accelerate production of new battery modules and we expect to begin repairing customer vehicles this month.”
The Bolt batteries being replaced came from LG plants in South Korea. LG and GM are in the process of building joint-venture plants in Ohio and Tennessee to manufacture batteries for the next generation of electric vehicles from GM. It is part of GM’s plan to invest $35 billion through 2025 in all-electric and autonomous vehicles and launch more than 30 new EVs globally. Although GM has big plans for EVs in the future, the Bolt is currently the only EV it sells in North America.
The recall fires have been a blow to GM’s efforts to attract buyers to its EVs. The company has even offered to repurchase some of the cars from customers who have been warned not to park the cars in garages or next to houses due to the threat of a fire causing damage to the structure.
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