Geely has reached a settlement with SUNWODA

Author | Zhou Zhiyu

At the end of last year, Geely Holding's subsidiary, Weirui Electric, filed a lawsuit against SUNWODA, claiming damages of up to 2.3 billion yuan due to battery cell quality disputes. This amount broke the record for claims in the domestic battery supply chain.

Recently, this game has finally seen a turning point. On February 6, Wall Street Insight learned that SUNWODA's subsidiary, SUNWODA Power, has reached a settlement with Geely's Weirui Electric, and the 2.3 billion yuan compensation lawsuit will officially enter the withdrawal process. The amount SUNWODA needs to pay has changed from 2.3 billion to approximately 608 million yuan.

At the end of last year, Weirui Electric accused SUNWODA Power of serious quality defects in the battery cells it supplied.

The center of the issue was the once-star product—the ZEEKR 001 WE86 version model. This pure electric coupe, built on the SEA architecture platform, was a pioneer for ZEEKR in the market. However, entering 2024, this model began to experience significant declines in charging speed and abnormal battery pack degradation.

Weirui Electric believes that the faults stem from the battery cells provided by SUNWODA, which deviated from the agreed requirements in terms of process and materials, leading ZEEKR to replace battery packs for tens of thousands of car owners for free, with the costs and brand losses to be borne by the battery cell manufacturer.

SUNWODA's defense is that it has conducted extensive experiments on battery cells of the same specifications and that the products supplied to other customers have shown no abnormalities.

If the lawsuit were to go to the end, it would be detrimental to both parties. The 2.3 billion yuan compensation amount is equivalent to SUNWODA's two years of net profit. Wall Street Insight has also learned from industry chain insiders that after Weirui Electric's claim, some OEMs purchasing SUNWODA products are also in a wait-and-see state. For Geely, prolonged court debates are not beneficial to its brand image.

This led to the settlement. According to the latest settlement agreement, both parties agreed to recognize the expenses incurred for replacing battery packs based on actual amounts and to share them according to an agreed ratio. For costs incurred before the end of 2025, SUNWODA, after deducting the amounts already paid, needs to pay the remaining 608 million yuan. This amount will not be paid in one lump sum but will be settled over five years. In 2026, 60% will be paid, followed by 10% each year until 2030.

All assets of the replaced old battery packs will belong to SUNWODA, leaving room for subsequent cascading utilization or material recycling. Ultimately, SUNWODA expects to recognize a loss of 500-800 million yuan in its 2025 financial statements after the settlement.

An industry analyst pointed out that both in terms of the amount involved in this lawsuit and the final result, it is a case worth noting in the development of China's automotive supply chain.

In the past, when quality disputes occurred between OEMs and suppliers, the usual solution was to settle privately. An industry insider stated, "Previously, compensation was either discussed over drinks or deducted from the pricing of the next model. This lack of transparency in handling, while preserving everyone's 'face,' has harmed the industry's 'substance.'"

Due to the lack of public precedents and standards for accountability, car companies can also fall into the same quality pitfalls, paying expensive tuition fees repeatedly.

Geely's choice to publicly sue has brought the issue to light. This also indicates that the competition in China's new energy vehicle sector has entered the second half, and the era of covering up quality defects through personal connections is over The core data of vehicle operation has always been in the hands of the original equipment manufacturers (OEMs), which in the past often served as a shield for car companies to shift blame. However, Geely's willingness to present this data in court and to professional appraisal agencies breaks the deadlock of mutual evasion between suppliers and car manufacturers, setting a benchmark for transparency in the industry.

This publicized game compels all participants, whether they are major battery manufacturers or core software providers, to develop a genuine respect for quality. It conveys to everyone that the technical indicators in contracts are not just for legal review, but are the lifeline that truly determines the survival of a company.

The reconciliation between Geely and SUNWODA is a key step towards a more regulated and healthier direction for China's new energy vehicle industry chain. The deeper significance of this incident lies in its promotion of a clearer and fairer responsibility-sharing mechanism. It tells the industry: problems are not frightening; what is frightening is the inability to identify accountability. Through this clash of major principles, China's automotive industry chain is bidding farewell to the barbaric growth of the wild era and moving towards a mature civilization characterized by the rule of law and standardization.

In the future, when people look back at this 2.3 billion yuan lawsuit, they may realize that it was not an internal conflict between brands, but an inevitable growing pain on the path of China's new energy vehicles towards high-quality development. This open, transparent, and rule-of-law handling logic is the necessary path for China's automotive industry chain to align with global standards and even export "Chinese standards."