Sunwoda EVB and VREMS Reach Settlement in RMB 2.3 Billion Contract Dispute

[Corporate Dispute] Sunwoda EVB and VREMS have reached a settlement regarding their contract dispute amounting to RMB 2.3 billion.

Core Development: RMB 608 million to be paid in installments over five years

Sunwoda EVB is required to pay the remaining amount of RMB 608 million to VREMS, settled over five years: 60% in 2026, followed by 10% annually thereafter, with the final payment completed in 2030.

Key Financial Impact: Estimated impact on attributable net profit of RMB 5–8 billion

This settlement is based on actual costs recognized as of December 31, 2025, taking into account previously accrued warranty reserves and the realizable value of battery packs. It is expected to impact Sunwoda’s 2025 attributable net profit by RMB 5–8 billion.

Strategic Rationale: Shared recall responsibilities and enhanced supply chain collaboration

In the event that vehicles equipped with these batteries are subject to a recall due to battery-related issues, both parties will jointly cooperate with automakers to fulfill legal obligations and share the actual costs incurred. The processed battery packs will become the property of Sunwoda, to be used for recycling and cost reduction.