Chinese battery maker Svolt to cancel European operations

Chinese battery maker Svolt, a spin-off from Great Wall Motors since 2018, has confirmed to local media Yicai that it will end its European production activities by January 31st, 2025. It will cancel factories it was to build in Germany, in Saarland and Brandenburg, and shut down its headquarters in Frankfurt.

Officially, the difficult decision was made because Europe’s electric vehicle market slowed down, especially in Germany, failing to meet stakeholders’ expectations. Local media quoted sources familiar with the matter as saying the investment needed for the planned battery factories, some 30 billion yuan (3.9 billion euros), was too much for a company of Svolt’s size.

China’s ninth biggest battery maker

Since its independence, Svolt has focused on battery materials, cells, modules, packs, Battery Management Systems (BMS), and energy storage technology. It is one of the largest battery makers in China, ranking number nine, with an installed battery volume of 1.29 GWh and a 2.36% market share.

In the search for suitable locations for the first European factories, Svolt states on its website it examined 32 sites throughout Europe in an intensive selection process between October 2019 and September 2020.

“Germany was ultimately chosen for its central location at the heart of the European economic area, excellent infrastructure, and a flourishing environment with internationally successful companies.” But times are changing; it’s all in the game.

Three German locations

In Heusweiler, 13 km north of Saarbrücken, Svolt started to build its first European module and pack factory on the 157,000 m² site of a former laminate production facility. Here, battery cells to be produced at other European locations (Überherrn and Lauchhammer) should be assembled into battery packs.

The factory required a total investment of €2 billion ($2.16 billion) and was initially expected to be completed by mid-2024, but its completion has been postponed several times.

Batteries for half a million EVs

In Überherrn, a few kilometers from Heusweiler, a battery cell factory with 24 GWh of installed capacity was planned for the final expansion stage. This would equal batteries for 300,000 to 500,000 e-vehicles per year.

In September 2022, another 16 GWh cell factory was announced in Lauchhammer, southern Brandenburg, Germany, on the site of a former wind turbine plant owned by Vestas. Production would eventually start in early 2025.

Close to supplier BASF

One of the reasons for choosing Launchhammer was an agreement with BASF to deliver cathode materials. The German chemical giant started building in 2021 a cathode material factory and a recycling pilot plant in Schwarzheide, less than seven kilometers from that location.

But in May of this year, it became clear Germany, with its drop in EV sales after the government abruptly ended subsidizing, might not be the land of dreams. The factory in Brandenburg was the first to be canceled.

Canceled customer project

According to a Svolt press release at that time, “a significant customer project” had been canceled on top of threats from “international punitive tariffs to market distortions due to protracted and unevenly distributed subsidies.”

Which customer project was canceled wasn’t specified. Still, apparently, according to Chinese media, BMW had signed in October 2023 an agreement with Svolt for a massive contract to supply EV batteries in Europe worth up to €12 billion, starting in 2027. Another client is Stellantis, as Svolt announced in January 2024 to become the official supplier of the LFP batteries for the Citroën ë-C3.

Bad omen

It looks like all these plans are in the air again ‘for reasons beyond Svolt’s control,’ as the company declares while shutting down its European operations. The company “will handle the follow-up appropriately and contact European customers directly and individually.”

It was already a bad omen that Svolts’ former mother company, Great Wall Motors, announced to close down its European headquarters in Munich in August, laying off all 100 employees, including management, “after disappointing EV sales in Europe’s biggest market.”