Analysis Report on Sunwoda's Response to Geely's RMB2.3 Billion Claim and Overseas Accountability Actions

Based on the latest information I have collected, I will systematically analyze the comprehensive strategies of

.

---

On December 26, 2025, Sunwoda (300207.SZ) announced in a filing that its wholly-owned subsidiary

was sued by Welly New Energy Vehicle Technology (Ningbo) Co., Ltd., a subsidiary of , for a claim amounting to as much as [1][2]. The case has been accepted by the Ningbo Intermediate People’s Court, but has not yet been heard.

• Delivery Period: Partial batches of power cells delivered from June 2021 to December 2023
• Applied Models: Mainly used in the Zeekr 001 WE86 version
• Problem Manifestations: Significant range degradation, reduced charging efficiency, etc. [3]

Time Node	Event
April 2021	Sunwoda Power obtained the designated development intention for power battery cells of Welly’s PMA platform
June 2021 - December 2023	Mass supply phase of the problematic power cells
Second half of 2022	Car owners began to complain about quality issues
2024	Zeekr launched a battery pack replacement program
August 2024	Sunwoda sued Welly for overdue payment of RMB119 million and won the case
December 26, 2025	Welly sued Sunwoda, claiming RMB2.314 billion [2]

---

Sunwoda clearly stated

in its announcement:

“A battery pack is a complex system-integrated product, and the cell is only one component of it” [1][3]

Sunwoda claims that it is only responsible for cell manufacturing, while Welly is responsible for battery pack system integration (including thermal management and BMS design). This means that the quality issue may stem from the system integration link, rather than the cell itself.

“Similar issues have not occurred with the same type of cells in applications for other customers. Whether there is a quality defect at the cell level still depends on third-party testing and complete causal relationship demonstration” [1][3]

Sunwoda attempts to defend itself through the following methods:

• Provide third-party test reports to prove that the cell quality meets standards
• Demonstrate that there is no direct causal relationship between the losses and cell quality
• Question the rationality of the loss calculation method and amount proposed by Welly

According to the publicly disclosed division of responsibilities, Sunwoda is responsible for cell manufacturing, and Welly is responsible for battery pack system integration [3]. Sunwoda may claim that the problem stems from defects in Welly’s battery pack design or integration process.

Financial Indicator	Data
Total net profit attributable to parent company of Sunwoda from 2023 to 2024	Approximately RMB2.544 billion [1]
Ratio of claim amount to net profit	Approximately 91%
RMB2.314 billion equivalent to parent company’s profit level	Approximately one and a half years of net profit [1]
Market value evaporated after the incident	Over RMB6 billion [2]
Stock price decline	Over 10% [2]

From a financial perspective, although the RMB2.314 billion claim amount is huge, it is still within Sunwoda’s bearable range:

• The parent company’s net profit in 2024 was RMB1.468 billion, and RMB1.405 billion in the first three quarters of 2025 [1]
• The cash on hand is approximately RMB21.5 billion. Although it needs to repay short-term debts of RMB17.3 billion, there is still a certain capital buffer space

• Sunwoda’s power batteries are supplied to 16 automobile brands for 39 models [4]
• Key customers include Li Auto (supporting L6, L7, L8, and Li Auto i6), Dongfeng Group, Leapmotor, NIO Firefly, Xpeng G9, etc.
• Need to maintain the trust of existing customers through active communication and technical support

• Ensure normal delivery of existing orders
• Cooperate with customers (such as Li Auto) to launch extended warranty services to stabilize consumer confidence

---

In addition to domestic litigation, Sunwoda also faces

in the international market:

• In 2025, LG Energy Solution, through Tulip Innovation, a patent pool management company jointly established with Panasonic, filed multiple patent infringement lawsuits against Sunwoda and its affiliated companies in Germany [1][3]
• In July, the Munich Regional Court in Germany ruled on one of the cases, determining that the involved prismatic batteries of Sunwoda infringed the relevant patent
• Court requirements: Stop selling the relevant products in Germany, recall and destroy inventories, and provide accounting information for subsequent damages [1]

• The above ruling mainly involves the relevant battery products used in Renault Group’s Dacia Spring model
• The scope of application is
  limited to the German market
  [1][3]
• It poses a serious obstacle to Sunwoda’s strategy of expanding into high-end overseas markets [4]

• Has filed an appeal against the German court’s ruling
• Simultaneously filed an application with the German Federal Patent Court to invalidate the involved patent [1][3]

• Actively carry out patent layout and circumvention design
• Adopt a more prudent strategy for overseas expansion, avoiding markets with high patent risks

---

This lawsuit exposes the

:

Enterprise	Financial Status
Sunwoda Power	Cumulative loss of over RMB3.4 billion from 2023 to 2024 [2]
Honeycomb Energy	Cumulative loss of over RMB3 billion from 2019 to the first half of 2022
CALB	Profit scale is more than 70 times smaller than that of CATL
EVE Energy	Non-GAAP net profit dropped by over 22% in the first three quarters of 2025

• Difficulty in passing on raw material cost fluctuations
• Gross profit margin is suppressed below 20% (CATL’s remains stable above 25%)
• The provision ratio of warranty reserves is low (approximately 2%), while that of leading enterprises reaches 3-5% [4]
• R&D investment is more than 7 times lower than that of leading enterprises [4]

Data from JPMorgan Chase shows that the warranty reserve provision ratio of leading battery manufacturers is much higher than that of second-tier manufacturers such as Sunwoda. Against the background of generally providing long-term warranties of over 8 years, a lower provision ratio means insufficient estimation of potential after-sales costs [4].

Sunwoda’s depreciation period for factory buildings is 30 years and 10 years for equipment, while that of leading brands is 20 years and 5 years respectively. Although a longer depreciation period increases the gross profit margin, it may affect product quality and innovation investment [4].

---

Aspect	Impact Analysis
Stock Price	Has plummeted by over 10%, with market value evaporating by over RMB6 billion. Short-term volatility risks persist
Hong Kong IPO	The “A+H” overall listing plan may be hindered, and capital market sentiment is under pressure during the litigation period
Customer Trust	May affect cooperative relationships with major customers such as Li Auto and Xiaomi
Cash Flow	If it loses the case, the RMB2.314 billion compensation will put pressure on cash flow

1. Brand Reputation Risk
   : Once labeled as a “quality risk”, the business reputation will face a devastating blow
2. Hindered Overseas Expansion
   : After losing the German patent lawsuit, the difficulty of expanding into high-end overseas markets increases
3. Accelerated Industry Restructuring
   : Leading enterprises may take this opportunity to strengthen their “safety” label, further squeezing the living space of second-tier manufacturers
4. Declining Supply Chain Discourse Power
   : The bargaining power in front of vehicle manufacturers will be further weakened

---

Scenario	Probability	Expected Impact
Sunwoda wins the case or the compensation amount is significantly reduced	Medium	Stock price recovers, reputation loss is limited
Sunwoda loses the case but pays in installments	High	Cash flow is under pressure but controllable; business structure adjustment is required
Full compensation of RMB2.314 billion	Medium	Short-term financial pressure is high; long-term reliance on consumer battery business for capital support is needed

• Third-Party Test Results
  : Will be the key basis for liability determination
• Causal Relationship Demonstration
  : Determination of the causal chain between cell problems and losses
• Industry Public Opinion Trend
  : Whether it triggers other automakers to re-examine their cooperation with Sunwoda
• Policy Environment
  : Changes in quality supervision policies for the new energy vehicle supply chain

---

• The overall profitability of the parent company is sustainable (supported by the consumer battery business)
• Sufficient cash on hand, with a certain financial buffer capacity
• Has filed an appeal and is actively responding to the lawsuit, striving for time through legal procedures

• The power battery business continues to lose money, lacking self-sustaining profitability
• Lost the overseas patent lawsuit, hindering overseas market expansion
• Low provision ratio of warranty reserves, insufficient preparation for financial risks

1. Case Progress
   : Hearing time and judgment result of the Ningbo Intermediate People’s Court
2. Customer Reactions
   : Whether key customers such as Li Auto and Xiaomi adjust their cooperative relationships
3. Overseas Litigation
   : Progress of the German patent appeal case and its potential impact on other markets
4. Financial Provisioning
   : Whether it is necessary to accrue contingent liabilities for the lawsuit

---

[1] Eastmoney - Geely’s Welly Sues Sunwoda: RMB2.3 Billion Cell Quality Dispute and Supply Chain Risks

[2] Huxiu - Second-Tier Battery Manufacturers Living in the Shadow of Giants

[3] Sina Finance - Geely’s Welly Sues Sunwoda: RMB2.3 Billion Cell Quality Dispute and Supply Chain Risks

[4] Tide News - Sunwoda’s Battery RMB2.3 Billion Claim Hits the “Kill Line”

[5] SLRBS - Sunwoda Caught in RMB2.3 Billion Claim Storm"