Hyundai recalls 80,000 electric vehicles, battery supplier LG bears 70% of the cost, good news for CATL

Electric vehicle spontaneous combustion is a big problem for all automakers. If the same model of car spontaneously catches fire one after another, the automaker will have to recall the model and will inevitably bear the corresponding huge costs.

Hyundai Motor recently announced that it will recall its KONA and IONIQ electric vehicles worldwide starting from March 29 due to risks in battery system components, involving a total of 81,701 vehicles.

According to data released by Hyundai Motor, there have been 14 reports of fires involving KONA electric vehicles since they were launched in 2018, 10 of which occurred in South Korea.

Hyundai said the recall is expected to cost 1 trillion won (about 6 billion yuan).

However, according to a report from the Ministry of Land, Infrastructure and Transport of South Korea, the cause of the fire in Hyundai electric vehicles is defects in some high-voltage battery system components, which may short-circuit and cause the vehicle to catch fire.

Therefore, most of Hyundai Motor's recall costs will be borne by its battery supplier LG Chem. According to Korean media reports, LG Chem will bear 70% of the recall costs.

Samsung Securities analysts estimated that LG Chem's burden would be lower, about 62% of the cost. Based on this, LG Chem also significantly reduced its operating profit by 80% to 119 billion won.

This Hyundai Motor recall is also the world's first large-scale replacement of battery packs, and will also provide a reference precedent for the division of recall responsibilities between automakers and battery suppliers in the future.

It is worth mentioning that due to this recall incident, Hyundai Motor has doubts about LG Chem's battery production and supply capabilities, and may transfer some battery orders to Chinese battery manufacturer CATL.

Not long ago, Hyundai Motor and CATL reached a battery supply contract for its E-GMP platform, and the relevant models are expected to be launched in 2023. After that, CATL also received a second batch of orders from Hyundai Motor, with an order amount of approximately US$14.3 billion.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.