Hyundai Motor Co. will recall about 82,000 electric cars globally and take an almost $900 million hit after the South Korean government found defects in some of the vehicles’ battery cells.
LG Energy Solution Co. made the cells at a factory in China.
The replacement of the battery systems is expected to cost about 1 trillion won ($899 million), a charge that will be reflected in the automaker’s fourth-quarter earnings.
South Korea’s transport ministry said Wednesday that initial findings of an investigation into the matter showed a Kona EV caught fire because of a problem with battery cells manufactured at LG Energy’s Nanjing plant.
Wednesday’s recall, which expands upon an earlier callback of Konas in October, comes at an awkward time for the Hyundai group.
Earlier this month, Hyundai and its affiliate Kia Motors Corp. said in separate exchange filings they weren’t in any talks with Apple Inc. to develop a self-driving electric car, backing away from an earlier Hyundai statement that said they were in discussions.
Hyundai also is in the middle of a big marketing campaign for its Ioniq 5, the first battery-electric model from its dedicated EV brand.
The company plans to sell 70,000 of the vehicles built on its EV-dedicated platform this year and 100,000 units in 2022, President Jaehoon Chang said earlier this week.
According to SNE Research, Hyundai sold 64,000 EVs in 2019 and 42,000 in 2018. For the nine months through September, Hyundai and Kia combined sold 130,000 EVs.
Some 16 cases of Kona EVs catching fire have been reported globally, including in Canada and Australia in 2019, according to Yonhap News.
One of the incidents took place in the South Korean city of Daegu, where a vehicle parked in an underground lot imploded.
Hyundai will initially reflect the cost of the recall, and depending on talks with LG Energy, some of that could be recovered, the automaker said.
In January, Hyundai reported an operating profit of 1.64 trillion won for the three months ended Dec. 31.
LG Energy will work closely with Hyundai on the recall, it said in a separate statement.
LG also said that the issues the transport ministry mentioned regarding its batteries were problems caused when the plant initially went into production and have since been improved.
LG also will step up safety protocols around its manufacturing and quality-check processes.
South Korea’s transport ministry plans to come up with measures to improve regulations to ensure the battery cells’ safety by the end of March after completing its investigation.