LG Electronics has agreed to pay General Motors as much as $1.9 billion to cover expenses associated with the recall of Chevy Bolt EVs over faulty batteries made by the South Korean supplier that could erupt into flames, the companies announced Tuesday.
GM has spent $2 billion recalling and fixing every single Chevy Bolt — its flagship electric car — made since production began in 2016, the Detroit-based automaker said.
The deal with LG will offset nearly all of those costs.
“LG is a valued and respected supplier to GM, and we are pleased to reach this agreement,” said Shilpan Amin, GM’s vice president of 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.”
GM first recalled the Chevy Bolts over the faulty batteries in 2020, but then had to issue a second recall after some of the cars that had already been repaired still erupted into flames.
In July, a week before the second recall, GM and federal regulators urged owners to park the Chevy Bolts outside and away from their home due to the risk of fire.
The National Highway Traffic Safety Administration said at the time that the battery cell packs in the 2017-2019 Bolt EVs “have the potential to smoke and ignite internally.”
The fire could then spread to the rest of the vehicle and cause a structure fire if the vehicle is parked inside a garage or near a house, the NHTSA warned.
Shares of GM turned sharply upward on the news and were last seen 1 percent higher in premarket trading.
The NHTSA opened an investigation into the matter in October of last year and issued a recall for the 51,000 affected cars in the US in November.
But after the first recall, there were at least 10 reported fires in Bolts — including one that occurred while the car was charging at the home of a Vermont state lawmaker, according to CNBC.
GM said in September it will not resume Bolt production or sales until it is satisfied that the recall remedy will address the fire risk issue.
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