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Less than a month after Funeng reported a big annual loss, the company was asked by regulators whether its products were still at risk. It means that this Science and Technology Innovation Board's "first power battery" Funeng technology has been hit again.

On March 23, the State Administration of Market Supervision and Administration announced that BAIC New Energy vehicle Changzhou Co., Ltd., Beijing Automobile Co., Ltd., and BAIC (Guangzhou) Automobile Co., Ltd. will recall a total of 31963 EX360 and EU400 pure electric vehicles produced from November 1, 2016 to December 21, 2018, starting from March 24.

The reason for the recall is the consistency difference of the power battery system of some vehicles, which may lead to the deterioration of the performance of individual single battery cells and occasional failure in extreme cases, resulting in the risk of power battery fire and safety risks due to long-term continuous and frequent fast charging in the high temperature environment.

The solution of the three companies is to carry out free testing and maintenance of vehicle power batteries within the scope of the recall, replace modules or battery packs if necessary, and upgrade control strategy software to eliminate safety risks.

It is understood that as the above two models related to the recall are equipped with Funeng technology power batteries. Funeng Technology announced on the same day that according to the previous agreement between the company and BAIC, Funeng Technology will bear the costs involved in the recall, which is expected to be between 30 million and 50 million yuan. However, the cost will be borne by the quality guarantee provided by the company in the early period and will not have a significant impact on the net profit in 2021.

Not only that, after promising to "pay the bill" for the three BAIC companies, the regulatory department of the Shanghai Stock Exchange Co., Ltd. issued an inquiry letter to Funeng Technology, asking it to disclose the specific model, delivery time and quantity of power battery products matched with EX360 and EU400 models, whether matching models of other customers, and whether there is also a risk of recall.

And asked Funeng Science and Technology to explain whether the sharp decline in the purchase amount of BAIC last year was related to the product safety risks involved in this recall.

It is reported that from 2017 to 2019, BAIC, as the largest customer of Funeng Technology, purchased a total of 4.07 billion yuan in three years, about 60% of the company's sales in that three years, but fell by as much as 99% last year, leaving only 1.58 million orders.

In the explanation of Funeng Technology, it is due to the decline in customer sales, which reduces the demand for the company's products.

Similarly, the orders of Great Wall Motor and FAW Group, the other two major customers of Funeng Technology, also fell 99% last year, resulting in a cumulative revenue of only 1.1 billion yuan in 2020, down 54% from a year earlier. Profits increased from 130 million yuan in 2019 to a loss of 300 million yuan last year. It means that the current situation of Funeng Technology has been hit hard.

Some analysts believe that the "joint recall" of BAIC New Energy and Funeng Technology may become a sample of domestic battery recalls, but the premise of this model is that both sides agree on the causes of vehicle defects. At a time when battery safety has become the most important performance standard for electric vehicles, the impact of this recall on Funeng can be imagined.

Data show that, as Science and Technology Innovation Board's "first share of power batteries", Funeng Technology was listed on the Shanghai Stock Exchange in July 2020. its main products are batteries, modules and battery packs of ternary soft-package power batteries, covering battery systems for pure electric vehicles, hybrid vehicles and plug-in hybrid vehicles. Data show that in January 2021, the installed capacity of China's power battery enterprises is 0.4GWh, ranking fifth.

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