South Korean battery manufacturers will bear $1.2 billion of General Motors’ Bolt EV recall costs.

LG Chem Ltd and LG Electronics Inc of South Korea will bear a combined $1.2 billion for General Motors Co (NYSE: GMBolt)’s electric vehicle recall, accounting for the lion’s share of the estimated costs.

GM increased the recall, which will replace LG battery modules due to a fire risk, to more than 140,000 vehicles in August, with a cost estimate of $1.8 billion. The LG firms announced on Tuesday that cost-cutting talks had come to an end.

The majority of their 1.4 trillion won in costs were booked in the July-September quarter, however some were booked in the prior quarter. LG Chem, whose fully owned battery unit LG Energy Solution supplies batteries to GM, will take a 620- billion-won charge for the most recent quarter, while LG Electronics, which incorporates the cells into battery modules and packs, will book 480 billion won in charges.

Investors are relieved that the concern surrounding recall costs has passed, as shares of LG Chem and LG Electronics closed up 4.2 percent and 3.3 percent, respectively. LG Energy Solution also stated that it intends to resume work on its initial public offering, which was halted in August owing to a lack of clarity regarding the recall costs.

LG Chem, who’s fully owned battery company LG Energy Solution supplies batteries to GM, will take a charge of 620 billion won for the latest quarter, while LG Electronics, which assembles the cells into battery modules and packs, will book charges of 480 billion won.

Investors are relieved that the worry regarding recall costs has passed, as shares of LG Chem and LG Electronics closed up 4.2 percent and 3.3 percent, respectively. LG Energy Solution also stated that company intends to resume work on its initial public offering (IPO), which was put on hold in August owing to a lack of clarity on recall costs.

Story by : Norvisi Mawunyegah