LG will cough up $1.9 billion (R28.4 billion) to replace the faulty batteries it supplied for GM’s Chevy Bolt electric cars.
That forms part of an agreement reached by the two companies after the recall of about 140,000 Bolt vehicles due to battery fire risks.
“GM will recognise an estimated recovery in its third-quarter earnings that will offset $1.9 billion of $2.0 billion in charges associated with the recalls,” the company said in a statement on Tuesday.
GM vice president for global purchasing and supply chain, Shilpan Amin, said LG was a “valued and respected supplier to GM”, and it was pleased to reach the agreement.
“Our engineering and manufacturing teams continue to collaborate to accelerate production of new battery modules,” Amin said.
Amin added that repairs on customer vehicles should begin in October.
With the total recall cost around $2 billion, LG will effectively foot 95% of the bill.
The recall came after several reports of Bolt vehicles catching fire with no wrongdoing through no part of the owners.
GM initially believed only select models from earlier years were affected but later recalled all Bolt EV and Bolt EUV models after discovering a battery defect might be at fault.
It was later determined the fires were caused by the folding of the anode and cathode-anode separators.
GM stopped production of the Bolt models in late August following the recall, with the repair process also being placed on hold.
At the time, the company said it wanted to ensure all the batteries it received from LG were defect-free.
LG has since implemented a new manufacturing process to ensure the replacement batteries would not suffer the same issues.
GM also plans to introduce new diagnostic software in November to help it prioritise vehicles it must service sooner.