Supply Chain Risk Analysis Report on Sunwoda's Battery Quality Dispute

Based on the collected information, I will provide you with a systematic analysis report on the supply chain risks that may be triggered by Sunwoda’s battery quality dispute.

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On December 26, 2025, Sunwoda (300207.SZ) issued an announcement stating that its wholly-owned subsidiary, Sunwoda Power Technology Co., Ltd., was sued by WeRide Electric Vehicle Technology Co., Ltd., a subsidiary of Geely Auto, with a claim amount of up to

[1][2][3]. This amount is equivalent to 90% of Sunwoda’s combined net profit for 2023 and 2024, making it the highest-value lawsuit in the history of China’s new energy vehicle supply chain[1].

Item	Details
Plaintiff	WeRide Electric (Zeekr Auto holds 51% stake)
Defendant	Sunwoda Power (wholly-owned subsidiary of Sunwoda)
Involved Period	June 2021 to December 2023
Involved Model	Zeekr 001 WE86 Version
Key Issue	Battery cells have quality problems, leading to sudden drop in charging speed and abnormal battery capacity attenuation
Claim Amount	RMB 2.314 billion

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Sunwoda’s core customer group includes mainstream automakers such as

[2][4]. This lawsuit may trigger a chain reaction:

• Li Auto
  : Its i6 model has adopted a dual-supplier strategy of CATL + Sunwoda, but consumer concerns about Sunwoda’s batteries are growing. Some consumers have clearly requested “no Sunwoda batteries”, and even some car buyers who found their vehicles were equipped with Sunwoda batteries gave up picking up the cars and demanded a deposit refund[2].

• Xiaomi Auto
  : The Xiaomi SU7 Standard Version is equipped with Sunwoda batteries. Lei Jun emphasized the “robustness and reliability” of the supply chain at the launch event, but negative news about core component suppliers may impact the reputation of Xiaomi Auto, which is in the delivery ramp-up phase[5].

• Geely Group Customers
  : In April 2025, Geely Auto completely withdrew from the joint venture with Sunwoda; when Sunwoda submitted its Hong Kong stock listing application in July, Geely Group had disappeared from its customer list[2].

Sunwoda’s current customer list also includes brands such as

[1]. Zeekr’s public lawsuit has essentially labeled Sunwoda as “questionable in quality”, which may cause other automakers to downgrade or exclude it from new model supplier appointments[1].

As the core component of new energy vehicles, consumers are highly sensitive to battery safety. After the exposure of the dispute between Sunwoda and Zeekr, consumers’ trust barrier for second-tier battery manufacturers has become even weaker[4]. Typical cases include:

• On the Li Auto i6 order interface, it is clearly stated that the delivery cycle for models equipped with Sunwoda batteries is 6 weeks, while that for models equipped with CATL batteries is 19-22 weeks, but some consumers still prefer to wait rather than choose the Sunwoda version[2].

• Consumers have directly linked battery brands to safety guarantees, and a single quality lawsuit is enough to destroy years of accumulated cooperative foundations[5].

From a legal perspective, although indirect losses such as goodwill loss and brand value decline are difficult to quantify, their actual impact is far-reaching[6]. WeRide sued the supplier, attempting to fully attribute the responsibility for brand reputation damage to the supplier and complete liability separation[6].

Financial Indicator	Impact
Claim Amount	RMB 2.314 billion (equivalent to 90% of two years’ net profit)
Stock Price Drop	A single-day drop of 11.39% on December 29, with a market value evaporation of RMB 4.7 billion in two days[2][5]
Market Value Shrinkage	Dropped from the high of RMB 70 billion in October 2025 to RMB 48.3 billion, evaporating approximately RMB 20 billion[5]
Provision for Contingent Liabilities	May need to accrue a provision for contingent liabilities in the 2025 financial report, leading to significant fluctuations in annual performance[1]

Sunwoda submitted its listing application to the Hong Kong Stock Exchange in July 2025, which is in a critical review period. This pending lawsuit may affect the progress of its listing plan, and the Hong Kong stock market is already cautious about the valuation of new energy enterprises[5].

Sunwoda’s core competitiveness is built on a “low-price strategy”. To maintain its cooperation with Li Auto, the unit price of Sunwoda’s power batteries dropped from RMB 0.74/Wh in 2023 to RMB 0.53/Wh in the second half of 2024, a decrease of 28%[5]. However, CATL’s “market sinking moves” have shown deterrence: the cell price provided for Geely Xingyuan is as low as RMB 0.3/Wh[5]. When leading enterprises begin to compete for the low-price market, Sunwoda’s price advantage no longer exists.

As the sixth-largest player in domestic power battery installed capacity, Sunwoda’s installed capacity reached 21.8 GWh in the first 11 months of 2025, accounting for only 3.25%[4]. The power battery market is shifting from “incremental competition” to “stock elimination”, and automakers’ screening criteria for suppliers are becoming increasingly strict. In addition to price, brand strength, technical stability, and capacity guarantee capabilities have become key indicators.

This case exposes the huge “legal gaps” in the long-cycle, high-performance component procurement contracts of the new energy vehicle industry chain[6]:

Risk Type	Specific Performance
Difficulty in Quality Identification	How to distinguish “quality defects” from “normal wear/attenuation” during the warranty period
Ambiguous Technical Standards	Whether contract and technical standard documents are described precisely enough to cover complex working conditions
Complex Evidence Appraisal	Feasibility of evidence preservation, extraction and judicial appraisal in complex technical disputes
Quantification of Indirect Losses	Goodwill loss, brand value decline, etc., are difficult to obtain legal support

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Sunwoda's Battery Quality Dispute
       │
       ├──► Tier 1 Supplier Risks
       │      ├── Existing customers (Li Auto, XPeng, Xiaomi, etc.) re-evaluate cooperative relationships
       │      ├── Potential customers (other automakers) downgrade supplier ratings
       │      └── Joint venture (Geely-Sunwoda) cooperative relationship breaks down
       │
       ├──► Tier 2 Supplier Risks
       │      ├── Raw material suppliers may tighten payment terms
       │      ├── Equipment suppliers may extend payment collection cycles
       │      └── R&D partners re-evaluate technical cooperation
       │
       ├──► Automaker Risks
       │      ├── Delivery delay risks (supplier replacement requires re-certification)
       │      ├── Cost increase risks (leading suppliers such as CATL have strong bargaining power)
       │      └── Capacity bottleneck risks (increased reliance on a single supplier)
       │
       └──► End Consumer Risks
              ├── Reduced willingness to pick up vehicles
              ├── Concerns about used car residual value
              └── Decline in brand loyalty

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This case has broken the unwritten rule of “private negotiation and discounted supply” in the new energy vehicle industry in the past[1]. When problems occur in the core three-electric system, automakers are no longer willing to take the blame alone, but instead turn to legal means to pursue accountability upstream. This will prompt automakers to:

• Re-examine supplier access standards
• Strengthen the construction of supplier quality traceability systems
• Clearly refine technical standards, acceptance processes, warranty responsibilities, and breach of contract liabilities in contracts[6]

Challenge	Performance
Upstream Pressure	Raw material prices fluctuate sharply
Downstream Pressure	Automakers continue to pressure for price cuts
Competitive Pressure	CATL forms absolute control with a market share of over 40%
Quality Pressure	Quality control tends to “slacken” during rapid capacity expansion

In the past few years, the new energy vehicle market has boomed, and battery manufacturers have pursued “speed and passion”, with power battery production increasing nearly 10 times in 4 years[2]. Established automakers such as Mercedes-Benz, BMW, Ford, Hyundai, BAIC Group, as well as new car manufacturers such as XPeng, WM Motor, have all been troubled by battery quality problems[2]. The lawsuit dispute between Sunwoda and Geely is just the “tip of the iceberg”, and the quality problems left by the industry’s crazy capacity expansion and price involution are quietly breaking out[2].

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• Stock Price Pressure
  : The lawsuit remains unresolved, and market sentiment continues to be low
• Tense Customer Relationships
  : Major customers such as Li Auto, XPeng may re-evaluate cooperation
• Delayed Hong Kong Stock Listing
  : Regulatory authorities may require additional risk disclosures

• Market Share Decline
  : May be downgraded or excluded from new automaker supplier appointments
• Cash Flow Pressure
  : If losing the lawsuit, it will need to pay high compensation, affecting operations
• Difficulty in Brand Restoration
  : Reconstructing consumer trust takes a long time

• Decline in Industry Status
  : Slide from the top of the second tier to the second and third tiers
• Backwardness in Technical Iteration
  : Capital pressure may affect R&D investment
• Risk of Marginalization
  : Continued decline in the proportion in the supply chain of leading automakers

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Sunwoda’s battery quality dispute is not only a crisis for one enterprise, but also a warning to the entire new energy vehicle supply chain management model. This case may trigger the following supply chain risks:

1. Trust Chain Break
   : The trust relationship from automakers to suppliers faces reconstruction
2. Increased Compliance Costs
   : The industry will be forced to strengthen standardized contract management
3. Reshaped Competition Pattern
   : The living space of second-tier battery manufacturers will be further compressed
4. Consumer Differentiation
   : Battery brands will become an important factor in car purchase decisions

For enterprises upstream and downstream of the new energy vehicle industry chain, they should take this case as a lesson and comprehensively upgrade their supplier management, quality control, contract standardization, data traceability, etc., to cope with increasingly strict industry supervision and market competition.

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[1] 21st Century Business Herald - “Behind the RMB 2.3 Billion Sky-High Claim: Who Should Pay for the Defects Between Zeekr and Sunwoda?” (https://www.21jingji.com/article/20260104/herald/4c8dc2cdf8ec5900a5e1dd2b9fe16050.html)

[2] Sina Finance - “Sunwoda Sued for RMB 2.3 Billion Sky-High Claim, Tearing Open the ‘Quality Fester’ Behind the Fierce Involution of Batteries” (https://cj.sina.cn/articles/view/3656659427/d9f431e3001018n54)

[3] ESM China - “Sunwoda’s Subsidiary Involved in RMB 2.3 Billion Power Battery Quality Dispute” (https://www.esmchina.com/news/13792.html)

[4] Sina Finance - “Claim of RMB 2.3 Billion! Battery Giant’s Crisis, New Energy Vehicle Owners Panic” (https://cj.sina.cn/articles/view/1729575454/67173a1e00101kma4)

[5] Guancha.cn - “RMB 2.3 Billion Lawsuit Hangs Over Sunwoda, Trapped in the ‘Elimination Tournament’ Dilemma” (https://user.guancha.cn/main/content?id=1577717)

[6] Guancha.cn - “Over RMB 2.3 Billion Claim Case: How Big Are the ‘Legal Gaps’ in New Energy Industry Chain Contracts?” (https://www.guancha.cn/qiche/2025_12_31_802308.shtml)