(Yicai) Feb. 9 -- Shares in Sunwoda Electronic and Geely Automobile jumped today after the Chinese power battery supplier said it has reached a settlement with the car giant, ending a lawsuit worth CNY2.3 billion (USD336 million) over quality issues.

Sunwoda’s share price [SHE:300207] closed up 4.5 percent at CNY25.19 (USD3.64). Earlier in the day it soared 7.8 percent to hit CNY26. While Geely’s share price [HKG:0175] ended the day up 1.7 percent at HKD16.59 (USD2.12) after soaring 3.7 percent to reach HKD16.91 in mid-day trading.

Sunwoda has agreed to pay Viridi E-Mobility Technology CNY608 million (USD 87.8 million) in compensation, on top of costs already borne as a result of the battery quality issues, the Shenzhen-based firm said on Feb. 6, citing the settlement that both parties reached in the first instance of the lawsuit. The two sides will also share, according to an agreed ratio, any new costs incurred from Jan. 1, 2026 onward for battery testing or replacements.

The Geely subsidiary, which is responsible for the Three Electric Systems, namely the battery, motor and electronic controls, in the Hangzhou-based firm's new energy vehicles, will withdraw its lawsuit once payment is made.

In December last year, Sunwoda was sued by Ningbo-based Viridi over alleged quality issues with battery cells supplied by a Sunwoda unit between June 2021 and December 2023. The amount involved in the lawsuit was more than CNY2.3 billion (USD320 million).

The settlement is expected to slash Sunwoda’s net profit attributable to shareholders by between CNY500 million (USD72.1 million) and CNY800 million in 2025, the firm said.

Sunwoda supplied battery cells for Viridi’s Pure Electric Module Architecture from June 2021 to December 2023. One of the models affected was Geely’s luxury all-electric Zeekr 001 WE86. As the vehicles aged and mileage increased, some owners reported slower charging speeds and inaccurate battery level readings.

To address the issue, Zeekr launched a special battery health monitoring program in December 2024 and began offering free replacement battery packs for faulty vehicles. More than 10,000 autos had their batteries replaced, an informed source said. Viridi subsequently filed the lawsuit late last year, demanding Sunwoda bear the costs of the battery replacements and compensate it for losses caused by the battery cell quality issues.

Editors: Tang Shihua, Kim Taylor