A 2.65 billion yuan investment from Li Auto has intensified the spotlight on Sunwoda's electric vehicle battery business, months after a rival automaker walked away from a massive legal claim against the unit.
On the evening of September 4, Sunwoda Electronic Co.,Ltd. (300207.SZ) announced that Li Auto (2015.HK) plans to inject 2.65 billion yuan in cash into its subsidiary, Sunwoda Power, in exchange for an 8.79% direct stake. Combined with shares previously held by Li Auto's affiliate, Chongqing Chezhiyuan, Li Auto-affiliated entities will own 11.17% of Sunwoda Power, making the automaker the second-largest shareholder after Sunwoda itself. This is not a mere financial play. The two companies have collaborated since 2017, and in 2022, Li Auto participated in Sunwoda Power's Pre-A funding round with a 400 million yuan investment through a related entity. Now, with this latest capital injection, Li Auto has elevated the relationship from supplier-customer to deeply intertwined equity partners.
For Sunwoda Power, the timing is critical. In 2025, the unit generated 20.09 billion yuan in revenue but recorded a net loss of 3.17 billion yuan. In the first half of 2026, revenue reached 15.53 billion yuan, with the net loss narrowing to 324 million yuan. As of the end of June, total liabilities stood at approximately 57.24 billion yuan, pushing the debt-to-asset ratio to nearly 84%. Prior to this round, Sunwoda Power had already completed Series C and C+ funding in May and July 2026. With Li Auto's 2.65 billion yuan, the company has raised over 5.1 billion yuan across three rounds in just four months.
While industrial capital lines up, the company's valuation has yet to recover to previous highs. The Series C round in May was conducted at a pre-money valuation of 25 billion yuan, a drop of 11.4 billion yuan, or roughly 31%, from the previous round's approximately 36.4 billion yuan valuation. Sunwoda attributed the decline to capital market conditions and the subsidiary's operational performance. Sunwoda Power remains in a strategic investment phase, with significant capacity ramp-up and R&D spending. Continued losses and heavy capital expenditure have weighed on its valuation. After Li Auto's investment, Sunwoda Power's post-money valuation is approximately 30.14 billion yuan, still about 6.27 billion yuan below the prior round.
The funding influx comes as the company navigates the aftermath of a legal dispute. In December 2025, a subsidiary of GEELY AUTO (00175.HK), Viridi E-Mobility Technology (Ningbo) Co., Ltd., filed a lawsuit against Sunwoda Power, claiming that battery cells supplied between June 2021 and December 2023 failed to meet agreed specifications. The claim sought approximately 2.31 billion yuan in compensation plus interest. The parties reached a settlement in February 2026, with Sunwoda Power agreeing to pay 608 million yuan to Viridi over five years. Sunwoda expects the settlement to impact its 2025 net profit attributable to shareholders by 500 million to 800 million yuan.
The high capital intensity of the battery business explains the urgent need for funding. Sunwoda Power's total assets reached 68.15 billion yuan at the end of June 2026, against total liabilities of 57.24 billion yuan, leaving net assets of 10.91 billion yuan. The company has stated that the new capital will strengthen its financial position, lower its debt ratio, and reduce debt burden.
This strategic investment reflects a broader trend in the EV industry. Automakers are increasingly seeking to secure their battery supply chains through equity stakes, moving beyond traditional buyer-supplier relationships. With batteries accounting for 30-50% of a vehicle's total cost, securing supply and gaining technological insight have become vital. For Sunwoda, the influx of capital from Li Auto is a vote of confidence, but it also brings dilution. Sunwoda's indirect stake in Sunwoda Power will fall to 24.06% after this latest round, down from 27.18% after the Series C round. Founder Wang Mingwang must now balance the need for capital against maintaining control.
The move raises a key question: is Li Auto locking in a crucial supply chain partner, or is Sunwoda Power securing a critical financial lifeline amid losses and high debt? The answer likely lies in the ongoing evolution of their partnership. For Li Auto, the investment secures access to battery technology and production capacity at a time when competition in the EV market is fierce. For Sunwoda, the capital injection provides breathing room to scale up and turn a profit. Both sides have clear incentives, but execution will determine whether this alliance delivers on its promise.
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