Analysis Report on Sunwoda's Battery Safety Issues and Quality Control System Vulnerabilities

Based on the collected materials, I will provide you with an in-depth analysis report on Sunwoda’s battery safety issues and quality control system vulnerabilities.

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December 26, 2025, Sunwoda (300207.SZ) issued an announcement disclosing that its subsidiary Sunwoda Power was sued by Viridi E-Mobility Technology Co., Ltd. (51% owned by Zeekr) under Geely Holding Group, with a claim amount of up to

[1][2]. This amount is equivalent to 90% of Sunwoda’s combined net profit for 2023 and 2024[3].

• Timeframe
  : Battery cells delivered between June 2021 and December 2023 have quality defects
• Involved Models
  : Zeekr 001 WE86 version (approximately 40,000-50,000 units)
• Quality Issues
  : Abnormally slow charging speed, abnormal battery capacity fading, false range claims

Affected by this news, Sunwoda’s stock price plummeted 11.39% in a single day, with its market value evaporating approximately RMB 6.3 billion[3].

In January 2026, Volvo Cars launched a global recall of the 2025 EX30 model, involving approximately 40 vehicles produced between September 2024 and October 2025[4].

Item	Details
Recall Reason	Manufacturing process deviations exist in Sunwoda’s battery cells
Defect Manifestation	Lithium plating (dendrites) forms inside the battery, which may cause short circuits and overheating
Interim Measure	Limit charging to 70% capacity, prohibit indoor parking
Estimated Defect Rate	100% of affected vehicles have the defect

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According to internal materials of Sunwoda Power Technology, its quality management system has the following significant vulnerabilities[5]:

• When a certain number of abnormal issues accumulate daily, they cannot be effectively tracked and closed
• Difficult to trace historical issues, lack of systematic problem file management
• Unclear issue escalation process, timeliness cannot be guaranteed

• Quality issues occur and are resolved on the production site
• The quality issue management system is on the office intranet
• Lack of a unified platform connecting information data chains, leading to information silos

• Cannot efficiently identify and resolve abnormal issues
• Slow resource mobilization response speed
• Severe flaws exist in issue follow-up and escalation mechanisms

According to documents submitted by Volvo to the National Highway Traffic Safety Administration (NHTSA), Sunwoda’s battery cells have

that lead to lithium plating (dendrites) inside the battery[4]. This defect:

• Continues to grow over time
• May penetrate the separator and cause internal short circuits
• May trigger battery fire risks in extreme cases

According to industry analysis, some batches of cells delivered by Sunwoda have the following issues[2]:

• Inconsistent voltage platforms
  : Significant performance differences among cells in the same battery pack
• Excessive internal resistance differences
  : Lead to uneven charging efficiency and accelerated battery fading
• Abnormal capacity fading curve
  : Some cells age and fail prematurely

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Against the backdrop of the battery industry’s frantic expansion, quality control has become a casualty[3]:

Issue Dimension	Specific Performance
Too rapid technology iteration	Each battery technology iteration means a brand-new production process and quality control system
Compressed verification time	The surging demand from downstream automakers has significantly compressed the verification cycle of battery products
Sacrificed quality control	In the race to be “faster and stronger”, quality control is subordinated to speed

• 2020 domestic power battery output:
  83.4GWh
• 2024 domestic power battery output:
  826GWh
• Output nearly increased 10-fold in 4 years
  [3]

Major manufacturers have aggressively expanded production with a “scale competition” mindset, scrambling for customer resources, leading some enterprises to ignore battery quality issues.

Changes in average energy storage system prices:

• 2022:
  RMB 1.5/Wh
• 2025:
  RMB 0.5/Wh
• Decline of over 66%

Under cost reduction pressure, some enterprises cut corners to reduce costs, breaking through the quality bottom line[3].

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According to Sunwoda’s official Code of Conduct, its claimed quality control measures include[6]:

Official Statement	Actual Implementation
Non-conforming product control process	The Volvo recall incident shows that non-conforming products entered the market
Hazardous substance management and label traceability	Imperfect traceability mechanism, difficult to trace historical issues
Advanced tools such as Lean Six Sigma and QCC	There is still over 60% room for improvement in issue response efficiency
Continuous improvement mechanism	Quality issues still occur frequently

In the prospectus submitted by Sunwoda to the Hong Kong Stock Exchange (HKEX), the company clearly disclosed the following quality risks[7]:

1. Risk of effectiveness of quality control system
   : The effectiveness of the quality control system depends on system design, quality standard implementation, employee training and compliance

2. Consequences of possible product defects
   :
   • Returns, order cancellations, customer complaints
   • Product recalls and high costs
   • Damaged brand reputation
   • Government investigations and stricter regulation

3. Risk of manufacturing process complexity
   :
   • Complex equipment requires regular adjustment and upgrading
   • New manufacturing process technologies may cause production difficulties
   • Delivery delays or reduced output

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Impact Dimension	Specific Performance
Financial Impact	The RMB 2.314 billion claim is equivalent to two years of net profit, and the company may need to accrue a provision for contingent liabilities
Listing Impact	Its Hong Kong stock listing application submitted in July 2025 may be affected
Customer Impact	Existing customers (Li Auto, XPeng, Volkswagen, etc.) may re-evaluate their cooperative relationships
Brand Impact	Consumer trust in second-tier battery manufacturers declines

1. Redefined Supply Chain Responsibilities
   : Automakers are no longer willing to bear the quality “blame” for core three-electric systems alone, and are shifting to legal means to hold upstream suppliers accountable
2. Breaking Unwritten Rules
   : This lawsuit breaks the traditional resolution model of “private negotiation, discounted supply” in the new energy vehicle industry
3. Upgraded Quality Standards
   : Standards jointly issued by seven ministries including the State Administration for Market Regulation have listed “no fire, no explosion” as a mandatory technical requirement[3]
4. Survival Challenges for Second-Tier Battery Manufacturers
   : Brand “deficits” need to be compensated with more hidden costs, and consumers have obvious concerns about models using Sunwoda batteries

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The frequent occurrence of Sunwoda’s battery safety issues exposes the

in its quality control system in the following aspects:

1. Manufacturing Process Control
   : Process deviations in production were not detected before leaving the factory, leading to defective cells entering the market
2. Problem Response Mechanism
   : Imperfect internal issue handling processes, low response efficiency, and inability to quickly close quality anomalies
3. Lack of Traceability System
   : Lack of full-life-cycle quality traceability capability, making it difficult to analyze causes and determine responsibilities after issues occur
4. Disconnection Between System and Implementation
   : Obvious gap between the officially claimed quality management system and actual implementation

This incident is not only a quality issue for Sunwoda as an individual, but also a microcosm of the concentrated outbreak of long-standing quality issues left over from the rapid expansion period of the new energy vehicle industry. With tighter regulation and deeper consumer awareness, battery safety and quality control will become the key bottom line for enterprise survival.

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[1] 21st Century Business Herald - Behind the RMB 2.314 Billion Sky-High Claim: Who Should Pay for the Defects, Zeekr or Sunwoda?

[2] Sina Finance - Sunwoda Hit with RMB 2.314 Billion Sky-High Claim, Uncovering the “Quality Fester” Amid Fierce Involution in the Battery Industry

[3] 36Kr - Sunwoda Hit with RMB 2.314 Billion Sky-High Claim, Uncovering the “Quality Fester” Amid Fierce Involution in the Battery Industry

[4] Carscoops - Volvo Warns 40 EV Owners To Park Outside Now

[5] Feishu - Sunwoda Power: Improve Issue Resolution Efficiency by Over 60%, Launching a Quality Special Acceleration Program

[6] Sunwoda Official Website - Sunwoda Electronic Co., Ltd. Code of Conduct

[7] HKEX - Sunwoda Electronic Co., Ltd. Prospectus