Kona recall agreement… Shares 30% of Hyundai Motors and 70% of LG

Hyundai Motor Company and LG Energy Solutions have agreed on the cost of recalling Kona.

From the total cost of 1.4 trillion won, Hyundai Motors shares 30% of 4255 billion won, and LG Energy Solutions shares the rest.

Hyundai Motor Company announced on the 4th that the cost of recalling the Kona electric car will be added by KRW 388.6 billion. When combined with the 38.9 billion won, the total cost is 4255 billion won.

The cost agreement was reached eight days after the announcement of the plan to recall Kona by the Ministry of Land, Infrastructure and Transport on the 24th of last month.

The Ministry of Land, Infrastructure and Transport announced on February 24 that it will take voluntary corrective actions (recalls) for 26,699 vehicles, including 25,083 Kona EVs, 1314 Ionik EVs, and 302 Elexity buses.

In addition, if the number of overseas recalls of 55,002 units, including 5,597 Kona EVs, 4402 Ionics, and 3 Elecities, is added, the total scale will reach 8,1701 units.

All are vehicles equipped with batteries produced from September 2017 to July 2019 at LG Energy Solutions’ Nanjing Plant in China.

The recall plan was announced along with the results of an interim investigation by the Ministry of Land, Infrastructure and Transport at the time, “It was confirmed that a fire could occur due to an internal short circuit due to defective battery cell manufacturing (folding the negative electrode tab) in some of the three car models, including Kona electric vehicles.”

It is reported that LG Energy Solutions has decided to pay 70% of the recall cost in respect of the Ministry of Land, Infrastructure and Transport’s judgment that a battery defect may be the cause of the Kona recall fire.

It is interpreted that Hyundai Motor’s rapid agreement with LG Energy Solutions was largely influenced by the judgment that the two companies could not benefit from each other even after taking this issue for a long time.

After the announcement of the interim investigation, LG Energy Solutions immediately clarified, “In the case of misalignment inside the battery cell (folding of the negative electrode tab) mentioned as the reason for the recall, it is difficult to see it as a direct cause as there is no fire in the reproduction experiment as announced by the Ministry of Land, Infrastructure and Transport.” .

Accordingly, some predicted the possibility of a legal dispute over cost sharing between Hyundai Motor Company and LG Energy Solutions. The fact that the cost required for this recall is 1.4 trillion won, the highest in history, fueled such observations.

However, as the two companies quickly agreed on the cost, the Kona recall situation came to an end earlier than expected.

An official from Hyundai Motor Company and LG Energy Solutions said, “It is difficult to estimate the total amount of the recall.”

After the announcement, Hyundai Motor Company said, “We agreed that LG Energy Solution should minimize customer inconvenience and market confusion, and reached an amicable agreement on sharing the recall cost.” I will do all my hard work.”

This recall will take place sequentially from March 29th. As the number of domestic recalls alone reaches 26,000, it will take at least one year to complete.

On the other hand, Hyundai Motor Company announced that it will reflect the provision for the Kona EV recall of 386.8 billion won in last year’s operating profit. Accordingly, Hyundai Motor’s operating profit last year decreased from 2.781.3 trillion won to 2.394.7 trillion won.