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| GM Chevrolet Bolt EV / Courtesy of GM Korea |
By Kim Hyun-bin
A recent issuance by General Motors, which confirmed a second recall of its 2017-2019 Chevrolet Bolt electric vehicles (EVs), will have very limited impact on LG Energy Solution (LGES) and a marginal impact on LG Electronics, experts said, Sunday.
They said because GM and LGES believed they identified a second "rare manufacturing defect" in the EVs, for which the two parties will change modules rather than battery packs, the GM announcement has low chances of burdening investors in LGES, GM or LG Electronics.
"A recall regarding defects related to battery cells or battery packs usually costs a lot. But because the latest GM announcement will be more about fixtures, repair and replacement of some defective modules and software due to possible concerns over fire risks, the impact of GM's issuance on relevant LG stocks will be limited and short-lived," a senior fund manager at a Europe-based investment bank in Seoul said by telephone, adding he doesn't have any plans to dump his LGES or LG Electronics stocks over the recall.
Regarding any updates over the GM announcement, LGES said, "GM and LG have identified the presence of two rare simultaneous defects found in the same battery cell, made during the module manufacturing process, which are the root cause of battery fires in certain Chevrolet Bolt EVs." LGES is the primary battery supplier for GM as the two companies are operating massive battery manufacturing plants in several U.S. states.
The latest recall of 69,000 EVs comes after GM and the U.S. National Highway Traffic Safety Administration (NHTSA) urged Bolt owners to park their cars outside the house when charging.
"GM and LG engineers are working to finalize all the steps of the recall repair process. That would include a potential dealer inspection process," the U.S. carmaker said, adding it will continue to recommend customers to park vehicles outside immediately after charging and emphasized not to charge overnight as well as receiving the software update as part of the recall.
Experts said it would be a lengthy process for GM and the two LG affiliates to identify and detect the defective modules. Any failure in their internal investigation ― the recent recall is due to defective modules and software rather than battery pack-driven problems ― could result in the entities replacing the entire battery of each vehicle, as had been done in Hyundai Motor's recent Kona EV recall.
"But for the time being, such chances are quite low," the fund manager said.
GM has bought back some recalled vehicles as a means to appease unhappy customers and to avoid triggering lawsuits.
LGES agreed with Hyundai Motor to split the cost recently after the automotive company recalled 76,000 Kona-branded EVs using the company's batteries built between 2018 and 2020. LGES is among the world's top-tier battery manufacturers and is battling with the leader CATL of China for market dominance. Its main clients are GM, Ford, Renault, Hyundai, Volkswagen, Volvo and Tesla.
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