Sunwoda Pursues Hong Kong IPO Amid Intense EV Battery Price War

Sunwoda Electronic Co. Ltd. has initiated plans for a Hong Kong initial public offering (IPO) as it seeks to secure funding amidst fierce competition in China’s electric vehicle (EV) battery market. The company aims to bolster its EV battery segment, which has been struggling financially, even as demand for electric vehicles continues to rise.

The escalating price war in China’s EV battery sector has created significant challenges for many companies, with established giants like CATL and BYD dominating the market. These two companies collectively control approximately 67% of the market, leaving smaller players like Sunwoda to contend for a shrinking share of profits. As a result, many firms in this space are facing severe financial pressures, prompting a scramble for investment to sustain operations and innovation.

To navigate this tumultuous landscape, Sunwoda filed a preliminary prospectus for its Hong Kong IPO last week, shortly after announcing its intentions. The company hopes to capitalize on the recent upswing in sentiment within the Hong Kong IPO market, which has been buoyed by secondary listings from Chinese firms already listed on domestic markets. Notably, CATL raised a remarkable $4.6 billion in May, marking the largest IPO globally for the year.

While Sunwoda has not disclosed the amount it aims to raise through the IPO, the involvement of prominent underwriters such as Goldman Sachs and Citic Securities suggests that the offering could exceed $100 million. Founded in 1997 by brothers Wang Mingwang and Wang Wei in Shenzhen, Sunwoda originally focused on manufacturing batteries for consumer electronics. It has since evolved into the world’s leading mobile phone battery manufacturer and entered the EV battery market in 2014.

The company has reported significant growth in its EV battery segment, with revenue reaching 15.1 billion yuan (approximately $2 billion) in 2024, up from 12.7 billion yuan in 2022. This segment now accounts for 27% of Sunwoda’s total revenue, increasing from 24.3% the previous year. Sunwoda supplies batteries to several major Chinese EV manufacturers, including Li Auto, Xpeng, Leapmotor, GAC, and SAIC.

Despite these figures, local reports indicate that approximately 40% of Sunwoda’s shipments last year were to a single customer, Li Auto. The competitive landscape is further complicated by the fact that Sunwoda ranks seventh in the market with a modest 2.87% share, overshadowed by the leading players.

Sunwoda has remained profitable, largely due to its successful consumer electronics segment, which boasts a gross margin of 20.2%. In contrast, its EV battery business reported a significantly lower margin of just 12.9% in the first quarter of 2025. Although the company reported a net profit of 387 million yuan for the first quarter, this success has primarily been driven by traditional battery sales, with the EV segment showing consistent losses over the past few years.

In its attempt to pursue an IPO, Sunwoda previously considered spinning off its EV battery business for a listing in Shenzhen but ultimately abandoned the plan after failing to meet profitability requirements. The financial struggles faced by Sunwoda’s EV battery segment are not unique; many competitors have reported similar challenges, with razor-thin margins exacerbated by a price war fueled by losses among EV manufacturers themselves.

Looking ahead, Sunwoda plans to expand its international presence as a means of mitigating the intense competition within China’s saturated EV market. The company has begun to establish a foothold overseas, with a substantial investment in a battery cell production facility in Thailand, set to involve over 10 billion yuan across two factories.

Despite its profitable consumer battery business, Sunwoda must navigate the delicate balance of expanding its EV battery operations while maintaining financial discipline. The company’s future success will depend on its ability to innovate and develop differentiated technologies that command premium pricing, rather than competing solely on cost. As it prepares for its Hong Kong IPO, the focus will be on cultivating a sustainable and profitable EV battery segment that can withstand the pressures of an evolving market.