Hyundai Motor and LG Energy Resolution has reached an agreement on how to burden the cost for the recall of Kona EV, following a string of fire involving the car model.
The pair announced on Thursday that they have reflected the cost to their earnings in 2020.
Hyundai’s operating income for the whole of last year, which was 2.78 trillion won, was reduced to 2.39 trillion won. LG Chem, which previously LG Energy Solution was a part of, decreased its operating income in the same time period to 1.79 trillion won from 2.35 trillion won. Hyundai reduced its income by 386.6 billion won and LG 555 billion won.
The companies didn’t announce how much each will spend on the recall. However, combing the decrease in operating income and related provisions gives a rough estimate __ Hyundai’s will be around 425.5 billion won and LG’s will be 695 billion won. This puts the total cost of recall at 1.12 trillion won.
Hyundai said the pair will work closely together to quickly implement measures for the recall. LG said it will actively participate in the recall and added that they two have agreed to bear the cost together.
However, despite their current agreement, there still maybe disagreements that may arise between the companies due to ongoing investigations on the precise cause of the fires, which has not been conclusively determined.
On February 24, the transport ministry cited a defect in the battery as the cause of the fire. One of its subsidiary agency collected the batteries from the fire for testing, and said misalignment within the battery cell could have potentially been the cause of the fire. LG has disputed this claim.
Recall of Kona EV and other electric vehicles ordered for repair will start on March 29. In total, 81,702 vehicles manufactured between November 2017 to March 2020 will be affected.