It’s been clear for some time that the next decade will be historic because of the rapid shift to electric mobility; but it will also be marked by the emergence of new problems related to emerging technologies.
In recent years, there have been continuing reports of fires involving the Hyundai Kona Electric. The manufacturer has now announced a recall that will see it replace the battery packs of some 82,000 electric vehicles worldwide. It’s an operation that will shrink the company's bank account by some $900 million USD.
The recall is also noteworthy for another reason. Responsibility for the problem lies in part with Hyundai, but only in part. The battery manufacturer, LG in this case, also bears some of the blame. So the question becomes, who covers what percentage of the massive costs of such a recall?
Lee Hang-Koo, senior researcher at the Korea Institute for Industrial Economics & Trade, explained that “It's very significant for both Hyundai and LG as we are in the early stages of the electric vehicle era. How Hyundai handles this will set a precedent not just in South Korea but also for other countries.”
The recall is primarily for the Kona Electric, Hyundai's best-selling EV. It was recalled for the first time late last year for a software update after a wave of fires. However, one of the recalled vehicles caught fire in January. This led South Korean authorities to launch an investigation to determine whether the first recall was sufficient.
LG Energy Solution, a division of LG Chem Ltd, which manufactures the batteries, was quick to deflect criticism. It said Hyundai had misapplied suggestions for rapid charge parameters in the battery management system, adding that the battery cell should not be considered the direct cause of the fire-risk problem.
The South Korean ministry of transportation issued a statement saying defects had been found in some battery cells produced at LG Energy's Chinese plant. Hyundai itself did not comment on the cause of the fires.
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Hyundai shares fell 3.9 percent on the news of the recall, with LG Chem shares dropping 2.8 percent.
An agreement on cost sharing could be reached next week, but considering the disagreement regarding liability, it could easily take longer to iron out. Hyundai declined to comment on LG Energy's statement or provide details on when it will calculate the costs, saying only that it will first wait for the results of the ministry’s inquiry.
The recall impacts close to 76,000 Kona Electric models built between 2018 and 2020, of which approximately 25,000 were sold in South Korea, as well as electric versions of the Ioniq and electric buses manufactured by the company.
A total of 15 cases of fire involving the Kona Electric have been reported, including 11 in South Korea, two in Canada and one each in Finland and Austria.
Owners of Kona Electric and Ioniq models are advised to limit battery charging to 90 percent of capacity until the battery has been replaced, the company said.