SEOUL (Reuters) – LG Chem shares fell to a nine-month low on Friday, as assurances from General Motors of a continued relationship with it failed to calm investor worries stemming from GM’s recall of electric vehicles (EVs) powered by the South Korean firm’s batteries.
LG Chem Ltd shares slid as much as 3.9% to the lowest since November and were on track for their worst week since early last year with a 14% decline.
General Motors Co’s CEO Mary Barra signalled on Thursday the automaker would continue its relationship with LG Energy Solution (LGES), the battery supplier at the heart of its $1.8 billion vehicle recall, Bloomberg News reported.
She also said that the automaker had “multiple pathways” to secure a leading position in the transition to EVs.
GM last week expanded its recall of Bolt EVs https://www.reuters.com/business/autos-transportation/gm-recalling-73000-bolt-evs-cost-1-billion-halts-sales-2021-08-20 due to fire risk from what it called battery manufacturing defects, saying the recall would cost $1 billion and it would seek reimbursement from the South Korean firm.
GM, LGES and LG Electronics Inc are still investigating the cause of manufacturing defects.
The on-going investigation and media reports that speculate the cause of battery fire have created uncertainty, leading to a drop in LG Chem shares, analysts said.
In April, GM and LGES said they would build a second U.S. battery cell manufacturing plant in Spring Hill, Tennessee. Their first joint U.S. battery plant is under construction in Lordstown, Ohio.
In July, GM initially recalled 69,000 Bolt EVs for fire risks, resulting in a recall of a total of 142,000 vehicles at an estimated cost of $1.8 billion.
GM has since said it would indefinitely halt Bolt sales.
Shares of LG Electronics, which assembles LGES cells into battery modules and packs, were trading down 0.7% as of 0305 GMT, versus the broader market’s 0.3% rise.
LG Chem was down 2%.
(Reporting by Heekyong Yang; Editing by Himani Sarkar)