In late June 2025, sources revealed that Volkswagen (VW) has awarded a new battery contract for its range-extender (PHEV) vehicles to Jiangsu ZENERGY Battery Technologies from China, marking the company’s first confirmed entry into VW’s supply chain.
The breakthrough comes amid VW’s strategic push to strengthen local sourcing in China, with ZENERGY joining established partners like CATL, Gotion, and LG Energy Solution. ZENERGY is one of several battery suppliers now supporting VW’s electrification roadmap .
ZENERGY, founded in 2019 and headquartered in Changshu, Jiangsu Province, is a publicly listed player—having gone public in April 2025—focused on lithium‑ion power and energy‑storage batteries. It ranked among China’s top ten battery installers in 2024, with a growing roster of major clients including First Auto Works (FAW), GAC, Leapmotor, SAIC‑GM‑Wuling, and SAIC‑GM .
Industry insiders note that ZENERGY’s cost-competitive pricing—reported at under ￥0.35 per Wh—was instrumental in winning VW’s order amid intense pricing pressures. Strikingly, ZENERGY managed to outperform more established peers to supply the battery modules for VW’s upcoming ID.ERA and other PHEV models slated for production in China.
To meet VW’s new contract, ZENERGY is accelerating its Changshu manufacturing base. A Phase I facility (10 GWh capacity) is expected to begin pilot production in November 2025, while Phase II (15 GWh) is due online in 2026. Altogether, the plant is planned to reach 50.5 GWh annual capacity by the end of 2026, up from about 25.5 GWh now.
For Volkswagen, this new partnership enhances its “Made in China, Made for China” strategy. The company is set to launch 40 new models in China from 2025–2027—over half of which will be electrified—as it seeks to regain market share and profitability after a 10% drop in sales and a 35% decline in profits in 2024. Establishing multiple local battery sources reduces cost pressure, supply risk, and dependency on a single vendor.
Should the ZENERGY‑VW deal fully materialize, it will mark a major milestone for a smaller battery maker breaking into the supply chain of a major German automaker. It not only deepens VW’s local supplier diversification but also signals confidence in Chinese battery technology’s competitiveness on the global stage.
In short, Volkswagen’s addition of ZENERGY New Energy to its PHEV supply chain underscores a broader industry shift toward diversified, localized, and cost-effective battery sourcing in China.