GM was already prepared to pay for the recall and battery replacement of tens of thousands of Chevy Bolt vehicles, but what was unexpected is that they reached an agreement with LG, which produces batteries, and LG bears US$1.9 billion of the estimated cost of US$2 billion. The heavy financial burden on GM was alleviated a lot at once. GM expects to re-add this recovered amount in the third quarter’s financial report.
GM said that it is very happy to reach an agreement with its suppliers that it “values and respects”, but in fact the greater significance lies in the definition of the responsibility for the entire battery incident. While LG agreed to bear the cost of the recall, it also means that LG has admitted that there are indeed flaws in the production of the battery, and not any problem on the GM side.
LG has discovered a potential problem with the separation between the cathode and anode of its battery, which may cause leakage and cause a fire. LG has corrected the problem and started to produce improved new batteries. However, whether it is to the image of LG or GM, I am afraid that the damage has already been caused. Even if the money loss to be paid by the GM side is not large, it is still hard to say that it is completely retreated in this incident.