But that's not what this case is about. To use your analogy, imagine KIA were a lock maker such as Kwikset. You bought their lock to install on your front door. You locked your door and left the house. You came back and your TV was gone, with no signs of forced entry. That's when you discover a major flaw in the design of the lock - if you turn the knob the opposite way then the lock will unlock from the outside. It's a flaw in the design. The lock maker is definitely legally liable for that defect, and, this is the important point, the city of Baltimore could sue them claiming damages incurred by having excessive police calls caused by their defective product. Of course every case is different, but Baltimore would be likely to win.
I'd say they're likely to win in this case as well. Since KIA has been aware of this problem for some time and taken no steps to resolve it, I imagine Baltimore is applying some financial incentive. As other cities take note they too may file their own suits and then KIA may realize it's cheaper and better PR to issue a massive and costly recall.