Legal advice for KB Insurance Co., Ltd. with respect to the coverage under the insurer’s Automotive Product Recall Policy for the costs of safety recalls caused by electronic vehicle battery cells malfunction.

L Co., Ltd. (“L”) manufactured battery cells for installation in EVs (e.g., H Kona, Loniq and Elec City Bus) assembled by H. In this connection, since 2019, a series of fire incidents of EVs were reported in several jurisdictions, and thereafter, H made safety recall announcements on October 2020 and February 2021. Following the recall announcements, H decided to replace all the batteries installed in the EVs contained battery cells manufactured from September 2017 to July 2019, and analysis on the cause of the fire has been conducted by the Korean government, L (insured), insurers, and reinsurers.

The main issue in this recall cost has been focused on whether there is any defect(s) in the battery cells produced by L which have actually caused or would possibly cause a fire in the EVs that contain such defect. There are different views between related parties on whether the recall costs will be covered under the Automative Product Recall Policy. 

Lee & Ko was requested to analyze the cause of the incident (being supported by experts in material engineering) and provide legal assistance for the client (insurer). If the case is escalated to formal disputes (potential amount in dispute being USD35,000,000 in approximate), we will act on behalf of the client.