Shares of LG Chem Ltd. are staging a rebound a month after falling sharply due to a decision by General Motors Co. to recall 73,000 Chevrolet Bolt electric vehicles equipped with LG batteries.
On Thursday, LG Chem finished up 8.4%, the highest percentage gain in more than a year, at 760,000 won. In early Friday trade, the stock was trading 0.5% lower at 756,000 won.
The gains, led by strong foreign buying, helped the company return to the fifth-largest player on the main Kospi bourse in terms of market capitalization.
On Aug. 23 alone, LG Chem, the parent of EV battery maker LG Energy Solution Ltd., dived 11%, wiping out 7 trillion won ($6 billion) in market capitalization.
However, Doug Parks, GM’s executive vice president of global product development, purchasing and supply chain, said earlier this week it started replacing battery modules in recalled EVs with LG resuming production of cells at two Michigan factories.
LG has new manufacturing processes in place and is working with GM to improve its quality assurance programs to provide confidence in its batteries moving forward, according to GM.
GM said the battery supplier will institute these new processes in other facilities that supply cells to the automaker.
GM Chevrolet Bolt EV and EUV 2022 NEGATIVE IMPACT ‘EXCESSIVE’
Encouraged by the move, AllianceBernstine, a US asset management company, recently raised its target price for LG Chem to 1.34 million won, saying the negative impact on LG of the news on the recall and fire risks was “excessive.”
Shares of other Korean battery makers also rose on Thursday on expectations that the company will take shareholder-friendly action, including business expansions to meet growing demand.
SK Innovation Co. has risen 4.6% in the past three sessions to trade at 248,000 won on Friday.
The company is set to supply batteries for the IONIQ7, Hyundai Motor Co.'s electric sport utility vehicle to be unveiled in 2024, according to sources.
Samsung SDI Co., another major battery player, closed up 0.8% at 731,000 won on Thursday.
GM and LG Energy announce the construction of their 2nd Ultium Cells plant in Tennessee In early June, the company said it is considering launching a battery production joint venture in the US with a global automaker to gain ground in one of the world's biggest auto markets.
If realized, Korea’s battery trio -- LG Energy Solution, SK Innovation and Samsung SDI – would all have production facilities in the US, strengthening US-Korea battery partnerships in line with President Biden’s push for a green transportation policy.
Write to Yun-Sang Ko at kys@hankyung.com In-Soo Nam edited this article.
