LG Energy Solutions Shares Down After GM's Expanded Recalls

LG Energy Solutions may have to postpone its planned IPO in wake of a massive recall by General Motors. The Detroit based automotive giant announced that it will be recalling an additional 73,018 electric cars after it announced it had to recall 1,42,000 electric vehicles, most of which were the Chevrolet Bolt EV mostly sold in the US. 

This comes after Hyundai announced mass recalls of about 82,000 EVs which also used LG Energy Solutions batteries. There could be more pain coming the way of what was formerly LG Chem. Inside EVs reports that even the Opel Ampera-E which was sold by the PSA group a couple of years ago could also have a few thousand recalls. 

LG Chem was merged with Magna's electric car effort for a JV called LG Energy Solutons 

Now in the wake of this, its shares are down by 10 per cent and it has even dragged down the shares of its parent LG electronics by 6 per cent. GM has also announced that it will pursue reimbursement from LG Energy Solution. The estimated cost is around $1.8 billion with $1 billion alone coming from the latest recall expansion. In the case of the recall by Hyundai, the cost was lower at $852 million. 

LG Energy Solution was planning an IPO between September and October but that will almost certainly be delayed. Despite being profitable in recent times, these recalls are going to be a huge dent in profitability. Recently, it was overtaken by CATL has the world's biggest supplier of electric car batteries.