Geely Holding's subsidiary, VREMT Electric, has reached a settlement with Sunwoda's subsidiary, Sunwoda Power, concluding a high-profile legal dispute over battery cell quality. The lawsuit, which initially sought compensation of 2.3 billion yuan, will now be formally withdrawn.
The settlement amount has been significantly reduced from the original 2.3 billion yuan claim to approximately 608 million yuan. The dispute originated late last year when VREMT Electric accused Sunwoda Power of supplying battery cells with serious quality defects. The issue primarily affected the Zeekr 001 WE86 model, a previously popular pure electric coupe built on the SEA浩瀚 architecture platform. Starting in 2024, a significant number of these vehicles reportedly experienced substantially reduced charging speeds and abnormal battery pack degradation.
VREMT Electric contended that the malfunctions stemmed from deviations in the manufacturing process and materials of the supplied cells, contrary to agreement specifications. This allegedly forced Zeekr to replace battery packs free of charge for tens of thousands of owners, incurring substantial costs and brand damage for which the cell supplier was deemed responsible. Sunwoda, in its defense, stated that extensive testing on cells of the same specification had been completed and that products supplied to other clients showed no similar anomalies.
Pursuing the lawsuit to its conclusion was considered detrimental to both parties. The initial 2.3 billion yuan claim equated to roughly two years of Sunwoda's net profit. Furthermore, following VREMT's legal action, some other automakers using Sunwoda products reportedly adopted a wait-and-see approach. For Geely, a protracted court battle was seen as damaging to its brand image, making a settlement the preferable outcome.
Under the new agreement, both parties have consented to assess the expenses related to the battery pack replacements based on actual costs and share them according to a predetermined ratio. For costs incurred before the end of 2025, Sunwoda is required to pay the remaining balance of 608 million yuan, after deducting any amounts already paid. This payment will be structured over five years: 60% in 2026, followed by 10% each subsequent year until the balance is settled in 2030. Ownership of all replaced battery packs will be transferred to Sunwoda, providing the company with opportunities for subsequent echelon use or material recycling.
As a result of the settlement, Sunwoda anticipates recognizing a loss between 500 million and 800 million yuan in its 2025 financial statements. An industry analyst noted that the scale of this lawsuit and its final resolution mark a significant case in the development of China's automotive supply chain. Historically, quality disputes between automakers and suppliers were often resolved privately through informal channels, such as negotiated compensation or adjustments in pricing for future models. While such opaque methods preserved "face," they potentially harmed the industry's foundational integrity by lacking public precedents and clear accountability standards, sometimes leading other manufacturers to repeat costly mistakes.
Geely's decision to file a public lawsuit brought the issue into the open. This action signals that competition in China's new energy vehicle sector has entered a new phase where relying on personal connections to掩盖 quality issues is no longer viable. Automakers typically hold core vehicle performance data, which has sometimes been used defensively. However, Geely's willingness to present this data in court and to professional appraisal bodies breaks the cycle of mutual blame between suppliers and OEMs, setting a new benchmark for transparency.
This public dispute underscores to all participants, from major battery manufacturers to core software providers, that quality must be treated with utmost seriousness. It demonstrates that technical specifications in contracts are not merely legal formalities but are critical lifelines that can determine a company's survival. The settlement between Geely and Sunwoda represents a crucial step towards a more standardized and healthier new energy vehicle supply chain in China.
The deeper significance of this event lies in its potential to promote the establishment of a clearer and fairer mechanism for responsibility sharing. It sends a message to the industry that encountering problems is not the primary issue; the real danger lies in an inability to clearly assign accountability. Through such significant confrontations, China's automotive industry chain is moving away from a period of unruly growth towards a more mature, rule-of-law, and standards-based ecosystem. In the future, looking back on this high-stakes dispute, it may be recognized not as detrimental infighting but as a necessary growing pain on China's path to high-quality development in the new energy vehicle sector. This approach, characterized by openness, transparency, and adherence to legal principles, is an essential pathway for China's automotive supply chain to align with global standards and potentially even export "Chinese standards."