GM’s battery suppliers, LG Chem and LG Electronics, will pay the automaker a combined $1.2 billion worth of the recall that affects more than 140,000 Chevrolet Bolt EVs and EUVs built between 2017 and mid-2021.
That will see them foot more than half the bill that is incurred as a result of the recall and is estimated at $2 billion, reports Reuters. The brands plan to start replacing battery modules this month to help eliminate the fire risk that led to the recall.
“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.”
Read More: GM Says It Has Solved Chevrolet Bolt Battery Issue, Will Resume Production
GM said that it will recognize an estimated recovery in its third-quarter earnings that will offset $1.9 billion of the $2 billion in charges associated with the recall.
A torn anode and a folded separator within the batteries supplied to GM by LG Energy Solution were found to be at the heart of the issues plaguing the Bolt. The supplier said in a statement that not all batteries will have to be fully replaced.
“While the recall measures will [proceed] with complete replacement of battery packs and modules made for the early models of batteries, the more recently manufactured battery modules will be selectively replaced following diagnostic software screening,” LG Energy Solution said in a statement.
GM said previously that it is working on new software that will be able to recognize anomalies in the battery sooner to better protect its EVs against fires in the future.
LG Energy Solution and GM are building two joint-venture battery plants in the U.S. as they plan to rapidly accelerate EV production. Consumer confidence in the technology will therefore be essential.
