Hyundai Motor has agreed to share the cost of replacing the batteries on its recently recalled electric vehicles (EVs) with LG Energy Solutions, according to local reports citing a source close to the matter.
The agreement relates to last month’s recall of over 82,000 electric vehicles worldwide, mostly Kona EVs but also including the Ioniq range and Elec City battery powered buses, due to the risk of fire.
A number of fires have been reported in these vehicles both in South Korea and abroad, with many occurring during recharging. A preliminary report by the South Korean Ministry of Transport’s Korea Automobile Testing & Research Institute (KATRI) blamed defects in the batteries’ high voltage cells.
Last year Hyundai recalled these vehicles for a software upgrade but the ministry ruled this to be inadequate to protect consumers.
Hyundai is understood to have agreed to pay 30% of the cost of the battery replacement recall, which could cost around KRW1trn (US$886m) in total, with LG Energy Solutions paying the remaining 70%.
The two companies have made provisions for the recall costs in their fourth quarter financial reports. Hyundai last week reported a revised net profit of KRW1.18trn to reflect KRW390bn of EV battery-related costs.
The recall comes at a bad time for Hyundai as it prepares for the global launch of the new Ioniq 5 – the first purpose-built EV to use its electric-global modular platform (E-GMP).