Shares in world’s largest EV battery maker fall 4% on reliability concerns
GM’s recall is the second in as many months involving LG Chem batteries © Reuters
Song Jung-a in Seoul NOVEMBER 15 2020
A second recall of electric vehicles using LG Chem batteries has put the spotlight on South Korean battery makers, raising questions over the reliability of their technology as the country tries to take the lead in the booming industry.
South Korea is home to three EV battery makers including LG Chem, the world’s largest, Samsung SDI and SK Innovation.
Shares in LG Chem, which also supplies Tesla, fell 4 per cent on Monday as news of the latest recall cast a pall over the company that controls a quarter of the world’s fast-growing EV battery market.
General Motors on Friday said it would recall nearly 69,000 Chevrolet Bolt EVs worldwide because of a fire risk, following five reported fires and two minor injuries.
It is the latest in a series of recent recalls by automakers including Ford, BMW and Hyundai Motor, all of which cited fire risks.
Detroit-based GM’s recall covers Bolt EVs made from 2017 to 2019, including nearly 51,000 in the US, with high-voltage batteries produced at LG Chem’s Ochang plant in South Korea.
GM said the vehicles caught fire when charged to full or nearly full capacity. As a short-term fix, the carmaker developed software that limits vehicle charging to 90 per cent of full capacity, and will begin software updates for Bolt EVs this week.
GM’s recall is the second in as many months involving LG Chem batteries. Hyundai said last month that it would recall 77,000 Kona EVs because of problems with battery cells. The cars that caught fire used LG Chem battery cells made in the South Korean company’s factory in Nanjing, China.
“Now that two carmakers using LG Chem’s batteries are reporting similar problems for their EVs, the possibility of faulty battery cells rather than problems with the automakers’ battery management system has increased,” said Kim Young-woo, an analyst at SK Securities.
“This hurts the image of Korean EV batteries and will likely erode the battery makers’ earnings due to provisions for the recalls,” he said.
Last month, LG Chem shareholders approved the company’s plan to spin off its lucrative EV battery business in December to fund an expansion of its facilities through a potential initial public offering. LG Chem projects the business will generate more than Won30tn ($27bn) in annual sales by 2024, from about Won13tn estimated for 2020.
BMW recalled its plug-in hybrid models last month due to fire risks, following a similar move announced in August by Ford. Samsung SDI is the common supplier to the affected EVs. US safety regulators began a preliminary probe into the GM Bolt EVs last month and advised consumers to park their EVs away from their homes until the vehicles were repaired.
LG Chem said it would fully co-operate with the probe by the National Transportation Safety Board, which is expected to announce its results soon.