[Aika Car Aika Perspective Original]
Earlier this month, a piece of news from across the ocean made all of us inadvertently witness to a historical event: the largest electric vehicle battery defect investigation in history will be initiated by the U.S. Government agency, the U.S. Department of Transportation's National Highway Traffic Safety Administration (hereinafter replaced by the English abbreviation NHTSA), and the investigation will be LG Energy Solution, the world's second-largest battery supplier.
The trouble is a bit big
It is not an exaggeration to describe the level of the investigation as "the largest in history", according to the summary of the investigation released by the NHTSA Defect Investigation Office, from February 24, 2020, to March 16, 2022, a total of seven recalls involving LG ES battery defects, involving a total of 138,324 vehicles, covering a number of general (Chevrolet), Stellantis (Chrysler), Hyundai, Volkswagen and Mercedes-Benz car manufacturers, the number of, The scope of the implications is truly staggering.
LG Energy Solution is currently the world's second largest EV battery supplier, accounting for 20.3% of battery loading in 2021, second only to the Ningde era.
A summary of the investigation, released by the National Highway Traffic Safety Administration's (NHTSA) Office of Defect Investigations, shows that the total number of vehicles recalled due to defective LG ES batteries is 138,324, but the actual number is much higher than that.
But in fact, this number is already quite conservative statistics, and it can even be said that NHTSA has "saved face" for LG ES. According to information provided from the websites of relevant U.S. government departments, in November 2020, July 2021 and August 2021, there were three recalls of chevrolet Bolt models alone (Bolt directly announced discontinuation at the same time as the third recall), involving all Bolt models produced in the six years from 2017 to 2022, with a total recall of 11,0324 units, and as of the most recent recall, Bolt has had 10 non-collision spontaneous combustion accidents. At least 2 people were injured. According to GM's official statement, the direct economic damage caused by all recalls is as high as $2 billion.
The Chevrolet Bolt is the model most deeply implicated by LG ES battery defects, with all Bolt models produced in the six years from 2017 to 2022 recalled, and some models even underwenting multiple recalls.
Hyundai Motor, a fellow Korean, is also suffering from LG ES's unreliable batteries, and Hyundai Motor conducted two rounds of global recalls for KONA EV and IONIQ in October 2020 and March 2021, with a total of about 82,000 vehicles and 15 fire accidents. Hyundai motor lost up to $900 million in the recall.
Hyundai Motor, which is also a Korean company, has also suffered from battery defects, and tens of thousands of KONA EVs and IONIQs have been recalled, most of which are KONA EVs.
Although LG ES is willing to bear most of the losses suffered by GM and Hyundai (LG ES will compensate GM for about $1.9 billion and Hyundai for losses of about $630 million), a series of spontaneous combustion accidents and several large-scale product recalls have undoubtedly caused a rather bad and irreparable impact on the reputation of new energy products of various car companies. In response, Hyundai Motor has told the world with practical actions that the 20-year-long close cooperation relationship between the two Korean companies has cracked: not only the batteries of all recalled vehicles have been replaced with products of LG ES competitor SK Innovation, but also new battery suppliers have been selected for a series of subsequent electrification products, including SK Innovation, Samsung SDI and CATL. Although General Motors, Stellantis and several other car companies have not yet expressed their intention to replace LG ES, do not assume that they are more tolerant than Hyundai, in fact, the two car companies with deeper roots in the United States do not want to change suppliers, but blame themselves for having too many bonds with LG ES (we will talk about it later). It is not impossible to do nothing.
Although the two Korean companies reached a compensation agreement, LG ES will bear 70% of the cost of the recall, but the two companies' 20-year-long partnership is close to breaking down, Hyundai has begun to choose new battery suppliers, including CATL.
Chrysler's MPV - Dajielong plug hybrid version is also equipped with LG ES batteries, although the number of recalls is less than 20,000 units, far lower than bolt and KONA EV, but the number of accidents caused by it is not low, according to the proportion of spontaneous combustion / number of sales It is the highest, but also verified the investigation conclusions reached by relevant agencies: the probability of fire in hybrid models is greater than that of fuel vehicles, and greater than pure electric vehicles.
The recall of electric vehicle batteries involving such a wide range and such a bad impact naturally attracted the attention of the "counterpart" regulatory authority, NHTSA, and on the day that NHTSA announced that it would launch an investigation, except for Hyundai Motor, the stock prices of other affected automobile manufacturers fell by 3%-4.5%.
The trouble is a bit big
Where did LG ES come from? What's the problem with the battery?
At present, in China, many media reporting on the investigation will mention the name of LG Chem when mentioning the subject of the investigation, which is actually a conceptual error. The company involved in this case is actually LG Energy Solution, a wholly-owned subsidiary of LG Chemical specializing in battery research and development, whose business mainly covers new energy vehicle batteries, mobile phone and electronic product batteries and intelligent energy storage system batteries. It existed as a subordinate division of LG Chem until December 2020 and did not officially become a subsidiary of LG Chem until December 2020.
It wasn't until December 2020 that LG ES became independent from LG Chem as a wholly owned subsidiary of LG Chem specializing in battery research and development.
If you count from the signing of the memorandum of understanding on the development of automotive power batteries between LG Chem and Hyundai Motor in 2008, it has been engaged in the research and development of automotive power batteries for more than ten years, which can be regarded as an "old brand" in this field, how can there be such a serious quality defect problem?
In 2009, GM launched the Volt with a battery provided by LG Chem.
According to the joint investigation between car companies and LG ES caused by the current recalls, the root cause of the spontaneous combustion accident points to the production process of LG ES, including GM, Hyundai, and Mercedes-Benz, which point out that its soft pack batteries will have internal short circuits, and GM even ruthlessly and publicly claims that LG ES batteries have at least two process defects In the recall of Volkswagen ID.4, the investigation report showed that the internal welding point of the battery was not enough to cause internal connection problems, and there may even be collisions between components to cause failures, and South Korea's largest English-language comprehensive newspaper "Korea Herald" exposed that the LG ES soft pack battery will be charged and discharged many times after the vehicle is charged and discharged, and a large amount of gas cannot be released inside, and the gas slowly accumulates to make the internal temperature of the battery soar to 700 degrees Celsius, thus triggering thermal runaway.
LG ES's batteries for vehicles are soft bag batteries that focus on safety, stability and reliability, but it is precisely at this point that the car has been overturned.
Some investigations believe that the bag battery is easy to produce dendritic crystals after being fully filled, and after piercing the diaphragm, the battery is short-circuited and then causes a fire.
Research reports from the Volkswagen ID.4 recall reported that insufficient internal solder joints in LG ES batteries led to internal connection problems, and that collisions between components could even cause failures. At present, it seems that the cause of the fire incident or the defect in the battery process is likely to be more than one.
More seriously, the problem of process defects is not limited to one of LG ES's battery factories. Until July 2021, GM had believed that the defect was limited to batteries produced at LG ES's Wucang plant in South Korea, but since the third recall, GM has found that batteries produced by LG ES's plant in Holland, Michigan, are also defective.
GM had considered the defective batteries to only come from LG ES's Wucang plant in South Korea at the beginning of the recall, and later found that there were also problems with batteries produced by LG ES's factory in Holland, Michigan, USA.
In recent years, the fire incident of LG ES products is not limited to automotive power batteries, and there have been many cases of fires caused by the failure of household energy storage batteries and ESS energy storage batteries in the United States and South Korea.
LG ES manufacturing process problems are likely to be not limited to automotive power batteries, on the official website of the U.S. Consumer Product Safety Commission (CPSC), there can also be a recall statement about the risk of fire caused by overheating in LG ES home energy storage batteries, which is designed by up to 10,000 units; in South Korea, between August 2017 and October 2019, a total of 27 cases of fires caused by ESS energy storage battery failures, 17 of which were equipped LG ES batteries And in April 2019, the fire caused by the most serious energy storage battery in U.S. history, the post-mortem investigation report also pointed to the lithium battery rack produced by LG ES, which also caused four firefighters to be injured.
Where did LG ES come from? What's the problem with the battery?
The direction of the event - the board is held high and gently lowered
At present, there are voices in the US government department that have begun to compare the LG ES battery defect investigation with the "Takata airbag" incident, but from the scale and influence of the two incidents, as well as the degree of interest bundling between the two companies and the American society, they are not comparable.
Ultium Cells, a joint venture between General Motors and LG ES, will build four Aoteneng super battery plants in the United States.
First of all, compared with Takata's 41.6 million vehicles (this data has a variety of statements, quoted here from Toyota Motor's official website data) recall scale, the number of vehicles involved in the LG ES battery defect is not enough to see, and the market share of pure electric vehicles and plug-in hybrid models in the United States is still small (ev market share in 2022 is only 4%, and this incident does not involve the "big head" - Tesla), so the two incidents are not at all in the order of magnitude from the perspective of influence.
At present, two Aoteneng super battery factories have been completed, each with an investment of more than US$2 billion, bringing a large number of local jobs.
Second, as mentioned earlier, the two main victims of this incident, General Motors and Stellantis, both have fairly deep interest ties to LG ES. Starting with General Motors, GM and LG ES have a battery joint venture in the United States, Ultium Cells (yes, it is the Otone you are familiar with), and Ultium Cells has built two battery factories in the United States, namely Lordsdown, Ohio, and Spring Hill, Tennessee, and the third plant in Lansing, Michigan, will start construction in the summer of 2022 and is expected to be completed in 2024. The fourth plant is still in location. The two battery factories that have been built and the factories under construction each have an investment of between $2.3 billion and $2.6 billion, and the fourth plant is expected to invest the same amount, and the tens of billions of dollars are jointly funded by General Motors and LG ES.
Four Aoteon super battery plants will provide GM with an annual battery capacity of 150-200 GWh, enough to support its ambitious electrification strategy (pictured here is the Aotene Super Battery Plant in Spring Hill, Tennessee).
The already completed Tennessee and Ohio plants can provide 35GWh and 30GWh of annual battery capacity respectively, while the third Michigan plant can contribute 50GWh of annual production capacity at full capacity, and when the fourth plant is completed, Ultium Cells can reach up to 200GWh per year (for comparison, CATL's 2021 production capacity is 96.7GWh), which can fully support GM's chevrolet, Cadillac, Buick, The electrification transformation strategy of many brands such as GMC (according to GM's previously announced plan, 30 new electric models will be launched worldwide by 2025, and ensure that electric models are available at different levels and price points).
Looking at Stellantis, a consortium of auto companies that are significantly slower than competitors in electrification, plans to launch as many as 75 pure electric models by 2030, and global sales of pure electric models will reach 5 million. According to Stellantis' strategic plan, its annual demand for batteries will reach 400 GWh by 2030, and a battery plant with a total investment of more than $4 billion in Windsor, Ontario, Canada, jointly invested by Stellantis and LG ES, will play an important role in this ambitious plan, with an annual production capacity of 45 GWh.
LG ES also plays an important role in the plans to launch 75 all-electric new cars by 2030 and more than 25 all-electric new cars in the U.S. market.
Stellantis and LG ES have invested more than $4 billion in a battery factory in Windsor, Ontario, Canada, with an annual capacity of 45GWh.
Also, don't forget LG ES's wholly-owned plant in the United States, in addition to the previously mentioned holland, Michigan, LG ES also plans to invest $1.4 billion in Queen Creek, Arizona, to build a cylindrical battery factory with an annual capacity of 11 GWh; in addition, LG ES also plans to build a 40GWh plant in the United States in a joint venture with Honda.
Seeing this, you must have understood. As half of the U.S. auto industry, General Motors and Stellantis, their respective electrification strategies have been tightly tied to LG ES, the so-called "sitting in the same boat", "breaking bones and connecting tendons"; and at the moment when the supply of new energy parts in the world is extremely scarce, if the U.S. government really kills LG ES, the vacant battery supply will be difficult to find a replacement in a short period of time, and even if there is, the cost will be quite high. A series of chain reactions are likely to cause the two car companies to suffer major setbacks in the electrification process, which is not already leading, and completely lose the initiative in the future market competition.
It can be said that the electrification strategies of both General Motors and Stellantis companies have been tightly tied to LG ES.
Even if the interests of car companies are not considered, behind the list of battery factories above is tens of thousands of real jobs. In terms of the size of many cities in North America, the rise and fall of a factory of this scale can be said to directly determine the living conditions of the city in which it is located. In view of this, it is estimated that the relevant government departments in the United States will inevitably undergo extremely careful consideration before making a penalty decision on LG ES.
For small cities and even small towns, the battery factory built by LG ES is the lifeblood of the local economy, and the rise and fall of a factory determines the survival of small cities. Pictured here is the arizona town of Queen Creek, where the population is less than 30,000, and LG ES plans to invest $1.4 billion to build an 11GWh-per-year cylindrical battery factory here.
The "rat thrower" of the relevant departments does not mean that LG ES can survive the crisis safely. Even if it will not be like the early competitor A123 Systems, because of the high cost of battery recall directly leading to bankruptcy, but it is inevitable to pay huge compensation to partners to make up for the economic and image losses caused by it; and once the survey results are confirmed to be due to its process defects caused by spontaneous combustion accidents, consumers who are injured due to spontaneous combustion accidents and damaged vehicles are bound to claim huge compensation; in addition, the quality problems of LG ES soft pack batteries also need to be solved urgently, in order to ensure the hearts of partners and consumers. This is also likely to be one of its purposes for building a cylindrical battery factory in Queen Creek, Arizona: the main safe, stable, reliable soft pack battery has turned over, and at least in the short term, there are alternative products that can be temporarily "on top".
Conclusion: The whole thing has developed so far, it seems to be just a sad story of "two unlucky American car companies were pit by South Korean partners", but from another point of view, it may present a completely different perception: after experiencing three recalls, General Motors asked LG ES to provide experimental data directly related to battery stability on the grounds of "ensuring battery safety", and according to US media reports, South Korean battery companies have indeed failed to resist the pressure and have shared some relevant data. What is certain is that once the core data of the battery is leaked, GM, which is currently relying heavily on LG ES for batteries, is fully capable of starting from scratch and abandoning LG ES to achieve self-sufficiency of the battery (GM has announced that it will build a joint venture with another Korean chemical company, POSCO Iron Chemicals, to build a factory with the production capacity of the core components of the battery in Quebec, Canada). Such speculation is not unfounded, after all, another US car company has long ago made a strong demand to share battery technology with its battery partner SK Innovation for no reason, and its intentions have been revealed.
In this way, a recall investigation that seems to have a clear and clear responsibility is likely to involve a game between countries and industries, industries and industries, who is the ultimate beneficiary, which is the real victim, it is difficult to distinguish for a while, and we will continue to pay attention to the progress of the LG ES battery investigation.
Lift the board high and lower gently