Hyundai Motor said Thursday that it has reached an agreement with LG Energy Solutions on their respective cost burden for replacing the problematic LG-manufactured car batteries used in three of Hyundai’s electric-powered vehicles.
The LG battery maker is to assume 70 percent of the total costs, while the carmaker will shoulder the remaining 30 percent, according to officials.
The two companies did not specify the detailed amount, but respective amounts have been reflected in the two companies’ fourth-quarter bottom line as provisions, while the total compensation cost is estimated at over 1 trillion won ($889 million).
On Thursday, Hyundai Motor reported a revised net profit of 1.18 trillion won, down from the earlier 1.38 trillion won, reflecting the financial losses from the battery recall.
“We have managed to reach a satisfactory agreement on the ratio of cost sharing, regarding the battery recall,” a Hyundai Motor official said.
“Both companies will now exert all efforts on swiftly executing the relevant actions in the market.”
Last month, Hyundai Motor said that it will replace the batteries in around 82,000 units of Kona EV, Ioniq EV, and Elec City buses sold globally, due to their potential fire risks.
The problematic battery system was provided from November 2017 to March 2020 by LG Energy, an affiliate of LG Chem.
The battery replacement announcement came shortly after the automaker unveiled its Ioniq 5, the first model that adopts its unique EV-only electric-global modular platform -- or E-GMP -- amid a heated EV market.
The new EV model is slated to hit the European market next month and the domestic market in the second quarter, hoping to attain its global sales goal of 70,000 units this year.
By Bae Hyun-jung (firstname.lastname@example.org