At stake is what has looked like one of the most promising partnerships in the burgeoning world of EVs. CEO Mary Barra is betting GM’s future on going electric, setting a goal in January to sell only zero-emission vehicles by 2035. LG Energy is pursuing a stock listing after splitting last year from South Korea’s LG Chem Ltd. and can ill afford to lose such a big customer.
“Together with our client and partners, LG is actively working to ensure that the recall measures are carried out smoothly,” the South Korean company said in an emailed statement. The root-cause investigation is being carried out by GM, LG Electronics Inc. and LG Energy Solution.
“We think the market has it right,” Tom Narayan, an analyst with RBC Capital Markets, wrote to clients. LG shares have been hit harder “as it appears that the bulk of issues are specific to them.”
GM first recalled about 70,000 Chevy Bolts from the 2017 through 2019 model years in November. A month earlier, NHTSA opened an investigation into whether the cars were prone to catch fire when parked. GM voluntarily called back the vehicles, citing issues with batteries made in Ochang, South Korea.
The automaker asked Bolt owners to take their cars to dealerships for a software upgrade that limited recharging to 90 percent of full battery capacity as it worked to find a permanent remedy. NHTSA urged Bolt owners to park outside and away from their homes as a precautionary measure, saying it was aware of five fire incidents, including at least one that ignited a home.
In July, GM recalled the same group of cars again, after two vehicles that had been repaired caught fire. The company said it would replace battery modules after identifying the simultaneous presence of two manufacturing defects in the same battery cells.
“Batteries are very hard,” Greg Less, technical director of the University of Michigan’s Battery Lab, said by phone Sunday. “When something goes wrong in a cell, the cell goes bad — but not always right away.”
Early this month, GM took an $800 million charge related to the recall, which contributed to quarterly profit missing estimates and its shares plunging the most in more than a year. Barra said cells for the 2020 and later model-year Bolts were built using improved manufacturing processes, so the recall didn’t affect the newer vehicles.
Two weeks later, GM changed its tune. In a statement issued after the close on Aug. 20, the carmaker said that in rare circumstances, batteries supplied for newer Bolts may have two manufacturing defects — a torn anode tab and folded separator — in the same cell that increases fire risk. The additional cost: $1 billion.
Working with LG, the best information GM had the time that it reported earnings early this month was that battery module issues were confined to the LG plant in Ochang, according to Dan Flores, a spokesman for the carmaker.
“As we continued analyzing battery modules and doing physical teardowns of battery packs, we found rare instances of these issues in battery modules from other production lines,” Flores said in an email Sunday.
GM recently confirmed that a fire in Chandler, Arizona, involved a 2019 Bolt that contained cells from an LG factory in Holland, Michigan. Flores said a recent battery fire posted to YouTube also has been confirmed to involve a 2020 Bolt. GM has not inspected the vehicle and the video didn’t factor in the company’s decision to expand its recall, he said.