GM is exploring with LG Corp to accelerate the resolution of Bolt battery fires

September 13 (Reuters) – General Motors Co. (GM.N) takes a more direct role with South Korean corporation LG Corp (003550.KS), its long-time electric vehicle partner, in monitoring and solution of fire related problems of Chevrolet Bolts batteries. which threaten the strategic plans of both companies.

On Friday, at an investor conference, GM chief financial officer Paul Jacobson said LG is working with GM engineers to “clean up the manufacturing process” at LG’s battery plants and implement some “GM quality metrics.” .

South Korea and Michigan battery plants, operated by LG Energy Solution (LGES), have been identified by GM as the source of defects behind a battery-related fire eruption in the Bolt that has resulted in three withdrawals and 1,800 millions of dollars in collateral. GM since last November: Remember that GM has not yet implemented a hardware fix.

LGES and sister company LG Electronics (066570.KS) on Friday reiterated their “close relationship” with GM and said the three companies are “actively cooperating to reach a final withdrawal plan” to “prudently resolve” issues. of battery in more than 140,000 Bolts: all production since the end of 2016.

“GM and LG experts continue to work 24 hours a day on the issues,” GM spokesman Dan Flores said on Thursday. “We are determined to do the right thing for our customers and solve the problem once and for all. Once we are confident that LG can provide us with good battery modules, we will begin repairs as soon as possible.”

GM has said the first Bolt models will replace the entire battery, while newer models will only replace defective modules. These new parts may not be available until after November.

Meanwhile, Bolt owners and potential electric vehicle buyers have sparked a torrent of complaints and concerns on social media targeting both GM and LG. It is unclear how much permanent damage the two companies may suffer due to battery fires.

“Not even Tesla has been slowed down by the fires,” said Tyson Jominy, vice president of automotive data and analysis at JD Power. “I don’t expect this to slow down the EV transition much.”

With the resolution of the costly debacle of the withdrawal still in the air, relations between GM and LG have worsened, people familiar with the situation said. Partners are caught up in what a Korean analyst called a “marriage showcase,” in which divorce is unlikely, as there are few immediate alternatives available.

At the moment, the GM plant in Michigan, which assembles the Bolt, is closed and its 1,000 workers idle until the end of September.

The carmaker said it has bought some bolts from the owners and is reviewing those requests on a case-by-case basis. GM has also said it expects LG to help bear the $ 1.8 billion in spending to replace Bolt battery packs.

On Friday, GM’s Jacobson said the two companies are holding “high-level talks” about costs and that GM expects a refund.

But the final cost for GM and LG could be even higher. GM is stepping up a $ 35 billion campaign to launch a new generation of electric and automated vehicles powered by its patented Ultium battery technology.

The Ultium batteries that GM uses in key electric models such as the GMC Hummer EV and the Chevrolet Silverado Electric are expected to be made with LGES in joint venture factories in Ohio and Tennessee as part of a $ 4.6 billion investment program. of dollars.

But after Bolt’s last memory in late August, chief executive Mary Barra left open the possibility that GM could find new partners for future battery plants.

GM’s Ultium cells have a different design, size, and chemistry than the Bolt’s LG cells and are packaged in modules and packages in a different way.

GM executives also stress that the automaker, not LG, will oversee the manufacture and quality control of Ultium batteries.

LG and its affiliates have as much at stake as GM, if not more.

Bolt withdrawals aren’t the only ones that include LG batteries. Hyundai Motor Co. (005380.KS) of South Korea recalled earlier this year about 76,000 Kona Electric cars worldwide to replace defective battery modules following reports of fires related to LG batteries manufactured in the China.

LG’s unique battery technology, a thin, flexible rectangular format called bag cells, is one of three different types of batteries used in electric vehicles.

Tesla chief executive (TSLA.O) Elon Musk punched GM-LG bag cell technology in a recent tweet, in which he wrote that “the likelihood of thermal leakage is dangerously high. high with large bag cells. Tesla recommends that they not be used. ” Tesla mainly uses cylindrical cells from various sources, including some made in China by LG.

It is unclear what type of cells LGES expects to produce as part of its plan to invest $ 4.5 billion more in two additional U.S. battery plants. Changing the technology and formats of the battery cells could slow down the investment schedule.

On Friday, LGES told Reuters: “We will continue to win orders and proceed (with) our investment in global markets, including the United States, as planned.”

Report by Paul Lienert in Detroit and Heekyong Yang in Seoul; Additional reports from David Shepardson in Washington; Written by Joseph White and Paul Lienert; Edited by Dan Grebler

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