LG Faces Tougher U.S. Scrutiny After EV Battery-Fire Recalls

(Bloomberg) -- U.S. regulators have opened an investigation into electric- and hybrid-vehicle batteries made by LG Energy Solution after five automakers issued recalls over fire risks.

The probe covers an estimated 138,324 vehicles that the National Highway Traffic Safety Administration said could catch fire when parked or in use, according to documents posted Tuesday on the agency's website. NHTSA opened the probe, known as an equipment query, on April 1. 

The regulator -- which can deem cars defective and order recalls -- said it launched its probe after receiving complaints about cars made by Stellantis NV, Volkswagen AG, General Motors Co., Hyundai Motor Co. and Mercedes-Benz Group AG. 

The investigation underscores the technical challenges of automotive electrification as the industry spends billions to churn out new models to comply with global emissions regulations and keep up with Tesla Inc. GM recovered $1.9 billion from LG Electronics last year to cover the costs of recalling batteries in Chevrolet Bolt EVs.

NHTSA intends to contact South Korea-based LG and its customers to “notify them of this defect in any vehicles they manufactured, and to ensure thorough safety recalls are conducted where appropriate,” according to the posting.

LG said it is cooperating with the inquiry. “We understand NHTSA's latest request is a follow-up procedure to determine if the same or similar batteries involved in the recalls were supplied” to other carmakers, the company said in a statement.

NHTSA's LG investigation is appropriate, said Michael Brooks, acting executive director of the Center for Auto Safety, which advocates for more stringent safety rules. The probe should avoid the type of circumstance that occurred with Takata Corp. air bags, he said.

“Performing this evaluation now helps ensure that Americans won't end up in a situation like Takata, with tens of millions of defective batteries in our garages,” Brooks said.

U.S. shares of the automakers fell between 3% and 4.5% at 12:47 p.m. amid a broad market slump, except for Hyundai, which was little changed. 

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