Ministry of Land, Infrastructure and Transport investigates Hyundai Motor Kona EV fire… Minister Byeon Chang-heum “Results to be announced soon”
Recall provision for’battery cause’… SK Innovation’s’Litigation Settlement’ Negotiation Power May Deteriorate
LG Energy Solution’s “Kona EV fire recall issue and SK Innovation litigation are separate issues”
–
[인사이트코리아=서창완 기자] LG Energy Solutions is in a difficult situation due to the continuing electric car fire. If the possibility of negligence of the company’s battery is admitted, it could lead to lawsuits by car manufacturers. If the battery safety issue goes beyond the level of controversy and is recognized as a defect, it may affect future orders. LG Energy Solutions, which overcame the hurdle by winning the’trade secret infringement lawsuit’ with SK Innovation recently met another big mountain.
According to industry sources on the 22nd, Hyundai Motor Company is planning to submit a recall plan for the fire of Kona EV batteries sold in Korea to the Ministry of Land, Infrastructure and Transport. The plan contains the share of compensation and replacement plans.
Kona EV has had 11 fires in Korea and 4 fires abroad. As the fire continued, in October of last year, Hyundai Motor Company recalled 77,000 Kona EVs manufactured from September 2017 to March 2019 from around the world.
After the battery management system (BMS) update, if any signs of battery abnormality were found, the battery was replaced immediately. On the 15th of this month, a fire broke out in an electric city bus made by Hyundai Motor Company, and the battery installed in this vehicle was also a product of LG Energy Solutions.
The Ministry of Land, Infrastructure and Transport is expected to announce the cause of the Kona EV fire sooner or later. Minister of Land, Infrastructure and Transport Byun Chang-heum attended the National Assembly’s National Land Transportation Committee on that day and answered, “When will the results of the investigation come out?”
If the Kona EV fire investigation by the Ministry of Land, Infrastructure and Transport reveals that the cause of the fire is a battery, the burden on LG Energy Solutions will inevitably be significant. This is because Hyundai Motor Company may demand a large cost while carrying out the recall. The industry predicts that hundreds of billions of billions of dollars will be required for replacement costs.
What is more worrisome than the immediate recall provision issue is the significant recall period. It is observed that it will take about one to two years, but it is inevitable that it will seriously damage the image of the’safety’ of the LG Energy Solution battery.
Some observers say that if the result of a battery defect is found, it may affect the lawsuit against SK Innovation. It is said that LG Energy Solutions’ bargaining power may decline due to external adverse events in the context of having to settle a lawsuit.
In particular, there are some observations that LG Energy Solutions will put a burden on the IPO planned for this year if a large provision is generated. This is due to concerns that worsening earnings could disrupt IPO box office success. Due to this burden, there are also predictions that it will not actively engage in negotiations with SK Innovation.
LG Energy Solutions recently drew a firm line for various market forecasts linking the Kona EV fire and litigation. It has been more than ten days since the final decision of the US International Trade Commission (ITC) was issued, but the two companies have not shown much movement.
An official from LG Energy Solutions said, “The recall issue caused by the Kona EV fire and the SK Innovation lawsuit are completely separate and separate matters.”
– .
