Shares of LG Chem Ltd. and LG Electronics Inc. fell sharply on Monday in Seoul following General Motors Co.’s announcement on Friday that it will recall about 73,000 Chevrolet Bolt electric vehicles with LG batteries.
LG Chem, the parent of EV battery maker LG Energy Solution Ltd., dived as much as 12%, the biggest percentage fall in 17 months, to 789,000 won in the morning session on the Korea Exchange. The stock finished down 11% at 798,000 won, wiping out 7 trillion won ($6 billion) in market capitalization on Monday alone.
LG Electronics, which assembles cells manufactured by LG Energy into battery modules, dropped as much as 5.8%, the biggest percentage decline in five months, to 138,000 won. Its share closed 4.1% lower at 140,500 won.
The broader benchmark Kospi index ended up 1%.
GM said it is recalling the Chevy Bolt EVs equipped with batteries supplied by LG due to fire risks.
The latest recall, which the Detroit-based company expects to cost about $1 billion, covers 73,000 Bolt EVs from model years 2019 through 2022 sold in the U.S. and Canada.
GM's Chevrolet Bolt EV 2022 The US automaker has already recalled the 2017-2019 model year Bolts twice after the initial fix.
GM also said it will pursue reimbursement from LG after further investigation.
LG VOWS TO ACTIVELY DEAL WITH RECALL
LG said it is actively working with its client and partners to ensure that the recall measures are carried out smoothly.
“The ratio of costs will be decided depending on the result of the joint investigation into the case, currently being conducted by GM, LG Electronics and LG Energy Solution,” said LG.
Earlier this month, LG Electronics and LG Chem said they slashed second-quarter profits to earmark 234.6 billion won ($200 million) and 91 billion won, respectively, in loss provisioning against GM’s two previous recalls.
GM and LG Energy Solution announce the construction of their 2nd Ultium Cells plant in Tennesse In the US, LG Energy operates a battery factory in Michigan. It also runs Ultium Cells LLC., a joint venture with GM. The JV has been building a facility in Ohio, with plans to open another in Tennessee.
Earlier this year, Hyundai Motor Co. had to recall its electric vehicles due to fire risks stemming from LG batteries.
The companies later agreed to split the recall costs with Hyundai taking up some 40% of the costs estimated at about 1 trillion won and LG assuming the remainder.
Write to Jae-Yeon Ko at yeon@hankyung.com In-Soo Nam edited this article.
