Shares of Hong Kong-listed CALB (03931.HK) experienced significant volatility following the market open on July 20, plunging nearly 13% intraday before paring losses to close down 7.95% at HK$17.36.
The market turbulence is likely linked to an escalating quality controversy surrounding the company's 177Ah lithium iron phosphate battery cells.
The issue centers on widespread failures in vehicles equipped with these specific cells.
Data from a consumer complaint platform shows that since 2026, numerous new energy commercial vehicles using these cells have experienced problems like cell bulging, leakage, and insulation faults.
Multiple third-party inspection reports from vehicle owners confirm that, after excluding external factors like collisions or water immersion, the faults point to internal manufacturing defects within the battery.
Official Response and Aftermath
On the evening of July 18, both CALB and the automaker GAC Aion, which finds itself at the center of the storm, issued announcements.
They proposed a remedial plan involving extended warranties and direct maintenance access for the affected batch of batteries.
As a major player in China's new energy commercial vehicle market, this batch quality dispute not only directly impacts the assets of hundreds of thousands of ride-hailing drivers but also highlights potential quality control risks as battery manufacturers compress validation cycles amid intense price competition.
Widespread Failures Across 213,000 Vehicles
The affected models are primarily concentrated in GAC Aion's AION S Plus, AION S 魅580, and AION S MAX series, all equipped with CALB's 177Ah lithium iron phosphate cells.
The failures exhibit a highly regular pattern, typically occurring when vehicles reach between 150,000 and 300,000 kilometers.
This timing coincides with many commercial vehicles just passing or approaching the end of their original factory warranty period.
The symptoms are remarkably consistent: a significant drop in driving range, followed by an insulation fault warning on the dashboard, ultimately leading to a complete power loss and vehicle stalling while driving.
The technical root causes are attributed to cell bulging, leakage, safety valve ruptures, and severely out-of-spec battery voltage differentials.
In the new energy commercial market, the GAC Aion AION S series was once an absolute sales leader, dubbed the "king of ride-hailing cars."
Insurance registration data shows that in 2023, ride-hailing vehicles accounted for a staggering 72% of the over 440,000 new AION S vehicles sold by GAC Aion.
Industry reports suggest the total number of Aion commercial vehicles potentially affected by this battery issue reaches 213,000 units.
The widespread failures have left some drivers whose vehicles are beyond the original warranty facing out-of-pocket battery replacement costs amounting to tens of thousands of yuan, sparking frequent disputes.
Quality Control Under Pressure from Price Wars
As a core representative of China's second-tier power battery manufacturers, CALB has deep business ties with GAC Group.
Financial reports show that in 2022, GAC Group purchased 8.05 billion yuan worth of power batteries from CALB, accounting for 40% of the latter's total revenue.
In 2023, business with GAC Group still contributed 7.77 billion yuan in revenue to CALB, representing nearly 30% of its total.
Against the backdrop of industry-wide price competition in the power battery sector, this highly concentrated customer base places greater pressure on CALB to balance costs and profits.
Industry analysis points to a conflict between manufacturing processes and intense supply chain competition as the root cause of the failures.
A battery repair engineer in Tianjin, who has handled over thirty cases involving these problematic batteries, suggested the issue likely stems from the design and manufacturing stages.
Due to excessive industry competition, manufacturers rushed assembly to capture market share, drastically shortening validation and testing times.
Issues like uneven electrode coating and failure in electrolyte moisture control led to continuous internal gas generation during long-term charge-discharge cycles, eventually rupturing the pressure relief valve and corroding busbars, causing a cliff-like drop in insulation resistance.
It is noteworthy that on July 1, 2026, a new national standard for power batteries, referred to as the "strictest battery safety standard ever," officially took effect.
This standard significantly raises the bar for thermal runaway testing, requiring no fire or explosion within two hours after a thermal event.
While the new standard sets a safety baseline for newly certified vehicle models, legal experts point out that for a large number of existing vehicles with defects already on the road, batch safety defects are not constrained by contractual warranty periods.
Under China's "Regulations on the Recall of Defective Automotive Products," producers still bear statutory responsibility for remediation and recall.
Ongoing Repercussions
While both companies announced extended warranty and free inspection/repair services for the affected Aion S series commercial vehicles, they have not explicitly addressed responsibility allocation or indicated whether a mass recall will be initiated.
According to reports, GAC Aion's customer service confirmed that the extended warranty activity only covers the Aion S series.
This exclusion of other models like the Aion V and Aion Y, which also use the CALB 177Ah battery and have reported quality issues, has raised questions among owners about differential treatment.
The ripple effects of the quality controversy continue to spread across the industry chain.
On the materials side, lithium supplier Shenzhen Senior Technology Material Co., Ltd. announced an adjustment to its private placement plan on July 14.
A strategic investment participation by CALB and Huayou Cobalt in the fixed-price placement was subsequently terminated.
Although the defect is concentrated in the older 177Ah cell model, the large-scale remediation required for the existing 213,000 potentially affected vehicles remains a severe challenge for both CALB and GAC Aion.
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