Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

S.Korea's LG Chem shares dive on GM electric car recall

Stock MarketsAug 23, 2021 05:32AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: The logo of LG Chem is seen at its office building in Seoul, South Korea, October 16, 2020. REUTERS/Kim Hong-Ji/File Photo//File Photo

By Heekyong Yang

SEOUL (Reuters) -LG Chem Ltd shares closed down 11.1% on Monday after General Motors Co (NYSE:GM) said it would recall an extra 73,000 Chevrolet Bolt cars that use the South Korean firm's batteries, months after a similar recall by Hyundai Motor Co.

GM on Friday expanded its recall of Bolt electric vehicles (EVs) due to fire risk from what it called battery manufacturing defects, saying the recall would cost $1 billion and that it would seek reimbursement from LG.

The U.S. automaker said the recall covers vehicles beginning model year 2019 and that it would indefinitely halt Bolt sales. LG Chem said it was working to ensure a smooth recall.

LG Chem, which is preparing an initial public offering (IPO) for battery unit LG Energy Solution (LGES), lost more than $6 billion in market value, marking its biggest intraday percentage loss since March 2020.

"The market expected that LGES would launch its IPO in September, but with GM's expanded recall, LGES IPO is likely to be delayed for a month or two, because the company needs to reflect the recall cost before finalising the IPO paperwork," said Samsung (KS:005930) Securities analyst Cho Hyun-ryul.

GM initially recalled 69,000 Bolt cars in July. Its expanded recall comes about a week after a fire involving a Volkswagen AG (OTC:VWAGY) ID.3 EV carrying an LGES battery.

Six months earlier, Hyundai recalled 82,000 EVs over LGES battery fire risk at an estimated cost of about 1 trillion won ($851.90 million).

Both GM's and Hyundai's recalls involve pouch-type batteries, rather than cylindrical batteries supplied to LGES customers including Tesla (NASDAQ:TSLA) Inc.

In February, South Korea's transport ministry said a joint investigation with LGES and Hyundai found defects in battery cells at an LGES factory in China. The investigation is ongoing.

Neither LGES nor Hyundai have disclosed how they plan to split recall costs, though analysts expect LGES to assume 60%.

Batteries are a big component of LG Group earnings. LG Chem earned 40% of operating profit from batteries - including EV batteries - in April-June. Earlier this month, LG Electronics Inc cut its second-quarter operating profit by more than a fifth to reflect GM recall costs.

Shares of LG Electronics, which assembles LGES cells into battery modules, closed down 4.1%, versus the local benchmark KOSPI's 1% rise.

($1 = 1,172.5900 won)

S.Korea's LG Chem shares dive on GM electric car recall
 

Related Articles

Asian Stocks Up, China Releases Latest Economic Data
Asian Stocks Up, China Releases Latest Economic Data By Investing.com - Jan 16, 2022

By Gina Lee Investing.com – Asia Pacific stocks were mostly up on Monday morning, with investors digesting the latest economic data from China and what further steps the country...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Mike Mike
Mike Mike Aug 23, 2021 6:23AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Typical korean garbage
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email