The recall is one of the first mass battery pack replacements
conducted by a major automaker.
"It's very significant for both Hyundai and LG as we
are in the early stages of the electric vehicle era. How Hyundai handles this
will set a precedent not just in South Korea but also for other
countries," said Lee Hang-koo, senior researcher at the Korea Institute
for Industrial Economics & Trade.
The recall mostly concerns the Kona EV, Hyundai's
biggest-selling electric car which was first recalled late last year for a
software upgrade after a spate of fires. One of the recalled Kona EVs caught
fire in January, however, and South Korean authorities launched a probe into
whether the first recall had been adequate.
LG Energy Solution, a division of LG Chem Ltd which
manufactures the batteries, was quick to deflect criticism.
It said in a statement that Hyundai misapplied LG's
suggestions for fast-charging logic in the battery management system, adding
the battery cell should not be seen as the direct cause of the fire risks.
South Korea's transport ministry said in a statement that
some defects had been found in some battery cells produced at LG Energy's China
factory. Hyundai did not comment on the cause of the fires.
Hyundai shares tumbled 3.9% while those for LG Chem closed
down 2.8% in line with the broader market.
Analysts said they had been told by Hyundai that an
agreement on how to split the costs may be worked out next week. Even so, they
thought it might take longer given that reputational stakes were high and the
two firms appeared to be at odds over the cause of the fires.
Hyundai declined to comment on LG Energy's statement or
provide details on when it will work out costs, saying only it will first wait
for the results of the transport ministry's probe.
The recall applies to nearly 76,000 Kona EVs built between
2018 and 2020, including about 25,000 sold in South Korea. Some Ioniq EV models
and Elec City buses are also included in the recall.
The estimated 1 trillion won ($900 million) in cost includes
38.9 billion won that was spent on the first recall.
There have been some 15 cases of fires involving the Kona EV
- 11 in South Korea, two in Canada and one each in Finland and Austria.
Kona and Ioniq owners are advised to limit battery charging
to 90% of capacity until the battery has been replaced, Hyundai said.
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