LG Chem Ltd. shares fell nearly 10% on Monday after GM Co. announced an additional 73,000 Chevrolet Bolt cars using LG Chem Ltd. batteries, months after Hyundai Motor Co. announced a similar recall.
GM announced on Friday that it will increase its recall of Bolt electric vehicles (EVs) owing to a risk of fire hazard caused by “battery production problems,” estimating that the recall would cost the company $1 billion and that it would seek compensation from LG.
The recall affects vehicles built from model year 2019 onwards, and sales of the Bolt will be halted indefinitely, according to the carmaker. LG Chem said it was attempting to make the recall go as smoothly as possible.LG Chem, which is preparing an IPO for its battery unit LG Energy Solution (LGES), has lost $5 billion in market value, with its shares on course for its largest intraday percentage fall since March 2020.
The market expected LGES to go public in September, according to Samsung Securities analyst Cho Hyun-ryul, but with GM expanded recall, LGES’ IPO is likely to be delayed for a month or two, because the company needs to reflect the recall cost before finalising the IPO paperwork.Hyundai had recalled 82,000 EVs six months prior due to an LGES battery fire risk, for 1 trillion ($851.90 million). Both GM and Hyundai have issued recalls for pouch-type batteries, not cylindrical batteries, which were sold to LGES clients such as Tesla.