Geely Unit Sues Battery Firm Sunwoda for $330M Over Alleged Defects

Vremt, a subsidiary of Chinese automaker Zhejiang Geely Holding Group Co., is suing battery maker Sunwoda Electronic Co. for at least 2.31 billion yuan ($330 million) over alleged product defects.

The lawsuit, filed in the eastern Chinese city of Ningbo, alleges that Vremt suffered damages resulting from quality issues in the battery cells delivered by Sunwoda between June 2021 and December 2023. Sunwoda said in a stock exchange filing on Dec. 26 that it had received notice of the litigation the day before.

Shares of the battery maker tumbled 11% on Monday, the most since April. Sunwoda said in the filing that it wasn’t able to immediately determine the financial impact of the legal action. A representative for the company didn’t immediately respond to a Bloomberg News request for further comment.

The lawsuit is a rare instance of a dispute over product quality spilling over into the public sphere, but comes as China ramps up scrutiny of electric vehicles’ safety record.

Regulators issued more stringent battery safety standards around the same time as a fatal Xiaomi Corp. SU7 crash in March in which the car caught fire after hitting a concrete fencing with its advanced driver-assist system engaged. More recently, Li Auto Inc. recalled more than 11,000 of its flagship Mega EVs after one of its cars caught fire. No one was injured in the incident.

Vremt provides battery packs to Geely brands such as Zeekr and Lynk&Co. The model likely affected was a Zeekr brand, Caixin reported, citing an industry source it didn’t identify. Some Zeekr 001 electric sedans experienced issues such as slower charging speeds and abnormal battery-capacity degradation in late 2024, leading the company to replace the battery packs for those affected at no cost to owners, the media outlet said.

A spokesperson for Zeekr didn’t immediately respond to a request for comment.

Sunwoda only supplies battery cells and doesn’t design or integrate the packs, so the issue likely stemmed from the pack system, according to a note by Jefferies analysts including Kelly Zou. The cells have proven reliable elsewhere and the claim of 2.31 billion yuan is disproportionate to the 600 million yuan purchase value, they said.

Sunwoda’s profit was about 1.5 billion yuan last year and 1.1 billion yuan in 2023. It was the sixth-largest Chinese battery maker by installed capacity in the first 10 months of this year, behind companies such as Contemporary Amperex Technology Co. Ltd. and BYD Co., according to China Automotive Battery Innovation Alliance.