(Yicai) Feb. 10 -- Zeekr, the premium electric vehicle unit of Chinese auto giant Geely Automobile Holdings, is recalling almost 40,000 of its 001 WE models over battery quality issues, China’s top market regulator said yesterday.

Zeekr will recall 38,277 Zeekr 001 WE vehicles produced between July 8, 2021 and March 18, 2024 starting March 6, the State Administration for Market Regulation said.

The battery in some of the recalled vehicles could, in extreme cases, suffer thermal runaway, posing a safety risk. Zeekr is conducting inspections and remote diagnostics and is offering free replacement battery packs for vehicles that have not yet had their batteries replaced to eliminate risk.

Zeekr’s recall is a direct outcome of the legal dispute between Hangzhou-based Geely and its battery supplier Sunwoda Electronic, which recently ended in a settlement, Yicai learned from a source familiar with the matter.

At the end of last year, Geely’s in-house power battery unit VREMT sued Sunwoda’s unit Sunwoda Mobility Energy Technology over alleged quality issues with battery cells supplied between June 2021 and December 2023, seeking more than CNY2.3 billion (USD320 million) in compensation.

Geely’s luxury all-electric Zeekr 001 WE86 was one of the main models affected. In 2022 alone, Zeekr sold more than 70,000 autos, more than 60 percent of which were WE86 models.

Yicai has learned that addressing potential risks in Zeekr 001 WE86 vehicles equipped with Sunwoda battery cells was one of the preconditions for the settlement that was reached by the two parties on Feb. 6.

According to the agreement, Shenzhen-based Sunwoda will pay VREMT CNY608 million (USD87.8 million) in compensation, on top of costs already borne up to the end of 2025 as a result of the battery quality issues. Any costs incurred after that, including recall-related expenses, will be shared by the two sides in line with agreed terms. Sunwoda is required to settle its share of the costs within five years.

Editor: Kim Taylor