LG Electronics agreed to pay up to $1.9 billion in settlement to General Motors over Chevrolet Bolt EV battery fires

South Korea-based LG Electronics has agreed to reimburse General Motors up to $1.9 billion to recall Chevrolet Bolt EVs due to fire risks caused by faulty batteries provided by LG. The battery fire problem has led GM to recall every one of its the company’s flagship mainstream electric car since production began in 2016.

“General Motors Co has reached an agreement under which LG Electronics Inc. will reimburse GM for costs and expenses associated with the recall of Chevrolet Bolt EVs and EUVs due to manufacturing defects in battery modules supplied by LG,” the automaker said in a statement.

GM also said it will recognize an estimated recovery in its third-quarter earnings that will offset $1.9 billion of $2.0 billion in charges associated with the recalls as a result of the agreement. GM also said that the faulty batteries have caused at least 13 vehicles to catch fire.

“LG is a valued and respected supplier to GM, and we are pleased to reach this agreement,” said Shilpan Amin, GM vice president, Global Purchasing and Supply Chain. “Our engineering and manufacturing teams continue to collaborate to accelerate production of new battery modules and we expect to begin repairing customer vehicles this month.”

According to a report from CNBC, the manufacturing problems occurred at LG Battery Solution’s plants in South Korea and Michigan. In July, GM explained that it had discovered a “rare manufacturing defect” in the Bolt EVs are a torn anode tab and folded separator that when present in the same battery cell increase the risk of fire.

The settlement comes as the companies are building two battery plants in the U.S. through a joint venture called Ultium Cells LLC. The plants in Ohio and Tennessee will produce GM’s next-generation batteries called Ultium, the state-of-the-art battery that powers its flying Cadillac.

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