Hyundai Motor, LG Chem in spat over Kona EV fires

Hyundai Kona EV / Courtesy of Hyundai Motor

By Nam Hyun-woo

Hyundai Motor and its electric vehicle (EV) battery supplier LG Chem are in a spat over the former's decision to recall more than 77,000 Kona EVs sold around the world, after 13 of the electric crossover vehicles caught fire.

At the same time as Hyundai Motor launched the recall based on the transport ministry's determination of risks in the battery cells, LG Chem refuted, claiming its battery is not the root cause of the fires. Given Hyundai Motor has been making efforts to diversify its battery suppliers in recent years as part of its EV expansion strategy, the recall could be a tipping point in the two companies' supply partnership, industry officials said, Friday.

During the National Assembly audit on Thursday, Hyundai Motor President Seo Bo-shin, who is in charge of quality control, said the company "admits the defects in vehicles" and "has found a solution" to fix the defects, "though it is not perfect."

Following the remark, the Ministry of Land, Infrastructure and Transport announced that Hyundai Motor "voluntarily" issued a recall affecting 25,564 Kona EVs in Korea, based on the ministry's investigation that "risks of fire were confirmed due to errors in battery cells." Hyundai Motor will recall more than 77,000 Kona EVs worldwide.

Hyundai Motor President Seo Bo-shin touches his face mask during a National Assembly audit in Seoul, Thursday. Yonhap

The Kona EV is powered by battery packs manufactured by HL Green Power; a joint venture of Hyundai Mobis and LG Chem. HL Green Power assembles LG Chem's battery cells with Hyundai Mobis' battery management system.

The ministry said it found "the separator in the battery cell was damaged due to errors in the manufacturing process," indicating LG Chem's battery cell could be the cause of fires. The National Forensic Service also came up with a similar conclusion that "electric problems in battery pack assembly" are assumed to have caused the fires.

LG Chem refuted this, saying "the recall was issued without clarifying the root cause of the fires." In a statement, the battery supplier said it and Hyundai Motor "jointly conducted experiments to determine the cause but did not find scenarios of causing fires," adding that further investigations are required.

If LG Chem's battery cells are found to have glitches, Hyundai Motor is anticipated to demand the battery supplier indemnify losses stemming from the recall.

As part of a strategy to widen its EV portfolio, Hyundai Motor has been expanding the number of battery suppliers it depends on in recent years. Hyundai Motor had been mostly relying on LG Chem batteries for its domestic EVs and in December last year it added SK Innovation as the supplier for the first out of four batches of batteries required for EVs which will be developed on the new EV platform, E-GMP. LG Chem and CATL were selected as the suppliers of the second batch.

Since Hyundai Motor plans to operate its new EV-only brand, IONIQ, from next year and roll out at least three vehicles under the brand, the company's demand for EV batteries will continue to rise. Against this backdrop, the fires and recall case could be a tipping point for Hyundai to adjust the volume of batteries supplied by each battery maker, industry officials said.

So far there have been 13 fires reported involving the Kona EV including one in Canada and one in Austria. The most recent fire took place in Daegu on Oct. 4, when a parked Kona EV ignited after being fully charged.

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