Geely and Sunwoda have reconciled.

Author | Zhou Zhiyu At the end of last year, Viridi E-Mobility, a subsidiary of Geely Holding, filed a lawsuit against Sunwoda, claiming up to 2.3 billion yuan in compensation due to battery cell quality disputes. This amount set a record for claims in China's domestic battery supply chain. This game finally saw a turning point recently. On February 6, Wallstreet.cn learned that Sunwoda Power, a subsidiary of Sunwoda, had reached a settlement with Geely's Viridi E-Mobility, and the 2.3 billion yuan compensation lawsuit will officially enter the withdrawal process. The amount Sunwoda needs to pay has been reduced from 2.3 billion to about 608 million yuan. At the end of last year, Viridi E-Mobility under Geely accused Sunwoda Power of supplying battery cells with serious quality defects. The center of the dispute was a former star product—the Zeekr 001 WE86 version. This pure electric coupe, built on the SEA Vast architecture platform, was once Zeekr's pioneer in the market. However, after entering 2024, the model faced widespread issues with greatly reduced charging speeds and abnormal battery degradation. Viridi E-Mobility believed that the malfunction stemmed from the supplier's battery cells deviating from the agreed requirements in terms of process and material, forcing Zeekr to replace battery packs for tens of thousands of owners at no cost. The battery cell manufacturer must bear the costs and brand losses. Sunwoda responded that it had conducted extensive tests on battery cells of the same specification, and products supplied to other customers had no abnormality. A full-blown lawsuit would benefit neither side. The 2.3 billion yuan compensation is equivalent to Sunwoda's net profit for two years. According to industry insiders, after Viridi E-Mobility made the claim, some OEMs that purchased Sunwoda products were also in a wait-and-see mode. For Geely, prolonged court debates do not help brand image. Hence, the settlement. According to the latest agreement, both sides agreed to recognize expenses from replacing battery packs by their actual amount and bear costs according to the agreed ratio. For costs incurred before the end of 2025, Sunwoda, after deducting paid amounts, needs to pay the remaining 608 million yuan. This payment will not be made in one lump sum, but will be settled over five years. 60% will be paid in 2026, followed by 10% annually until settlement in 2030. All replaced old battery packs will be owned by Sunwoda, leaving room for subsequent cascade utilization or material recycling. Ultimately, Sunwoda expects to make a provision of 500 to 800 million yuan for losses in its 2025 financial statements. An industry analyst pointed out that in terms of both the amount involved in this lawsuit and the final outcome, this is a case worth attention in the development of China’s auto supply chain. In the past, disputes over quality between OEMs and suppliers were usually settled privately. An industry insider said, "It used to be compensation discussed over dinner, or deductions made in the pricing of the next model. Such non-transparent handling preserved everyone's 'face,' but harmed the 'core' of the industry." Due to the lack of public precedents and standards for assigning responsibility, car companies would fall into the same quality traps, paying the expensive price of repeated lessons. Geely's choice to pursue a public lawsuit brought the issue to light. This shows that competition in China's new energy vehicle sector has entered its second half, and the era of glossing over quality flaws through personal relations has ended. Core driving data of vehicles is always held by OEMs, which in the past was often a shield for car companies to "shirk responsibility." But this time Geely put the data before the court and professional appraisal agencies, breaking the cycle of buck-passing between suppliers and OEMs, and setting a benchmark for industry transparency. Such open contention compels all participants, from major battery makers to key software suppliers, to truly respect quality. It tells everyone that technical indicators in contracts are not just for legal departments—they are the lifeline that determines a company's survival. The Geely–Sunwoda settlement is a key step for China's new energy vehicle industry chain to move towards greater regulation and health. The deeper significance of this event is that it helps establish a clearer and fairer mechanism for sharing responsibility. It tells the industry: mistakes are not frightening, but not being able to determine responsibility is. Through this clash of principles, China’s auto supply chain is bidding farewell to the wild days of unchecked growth and turning towards rule of law and standardized maturity. In the future, when people look back at this 2.3-billion-yuan lawsuit, they may realize it was not internal strife between brands, but an inevitable growing pain on China’s path to high-quality development of new energy vehicles. This open, transparent, and legal way of handling matters is the unavoidable road for China’s auto supply chain to align itself with global standards, and even to export “Chinese standards.” Risk Reminder and Disclaimer The market has risks, investment must be cautious. This article does not constitute personal investment advice, nor does it take into account individual users’ specific investment objectives, financial conditions, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their specific situation. You are responsible for any investment based on this article.