Luckily, the battery supplier has agreed to cover most of the costs.
Right now, Hyundai is in the midst of one of the most expensive electric car recalls ever. Over 82,000 Hyundai cars are being recalled worldwide due to a battery fire risk after several Hyundai Kona Electric SUVs burst into flames while recharging. It all started in South Korea when a Kona Electric caught on fire while parked in an underground parking garage.
Luckily, no injuries were reported as a result of the fires. Most of the cars on the recall list are Kona EVs, but the Ioniq and South Korea's Elec City buses are also affected. All affected models in South Korea will get a software update, but some will inevitably need to have the batteries replaced.
Unsurprisingly, a recall of this scale has huge financial repercussions: it was initially feared that replacing the batteries of every affected car could cost Hyundai over $500 million. However, according to Just Auto, LG Chem, the South Korea-based company that supplied the batteries, has agreed to share the cost of replacing the batteries with Hyundai.
Hyundai will pay around 30 percent of the battery recall costs, while LG Chem will cover the remaining 70 percent. In total, the recall is expected to cost around KRW1trn ($886 million), meaning Hyundai will pay around $264 million.
As a result, both companies have adjusted their Q4 financial reports to account for the recall costs. As for the cause of the fires, a report by South Korea's Ministry of Land, Infrastructure, and Transport (MOLIT) blames a folded anode tab in the batteries that "could allow the lithium plating on the anode tab to contact the cathode, resulting in an electrical short."
While Hyundai acted fast to prevent further fires, the timing of the recall isn't ideal considering the Korean automaker is preparing to launch the new Ioniq 5, the first model that will be sold under the new Ioniq EV sub-brand.