On Friday, October 25th, according to Nikkei Asia, amid escalating trade disputes between China and Europe, as well as a decline in electric vehicle sales in Europe, Chinese electric vehicle battery manufacturer SVOLT Energy Technology (SVOLT) plans to end its European operations in January next year.
Mainland China’s Caixin reported on Thursday that due to struggles with operating in the domestic market and the inability to afford the substantial funds required for overseas factories, SVOLT Energy has halted two battery factory projects in Germany.
An insider informed Nikkei Asia that SVOLT Energy will conclude its operations in SVOLT Energy (Europe) and its German subsidiary by January 2025, with the exact number of job cuts undisclosed.
The company has abandoned plans to open a factory this year and the construction of the other two factories has been either delayed or faced legal challenges.
SVOLT initially planned to construct two factories in Germany: one in Saarland for battery module and assembly and another in Brandenburg for battery production. The battery assembly project was announced in November 2020 with a targeted completion by mid-2024, designed to have a capacity of 24GWh with a total investment of 2 billion euros. The battery plant project was disclosed in September 2022 with an annual capacity of 16GWh. Caixin reported this as SVOLT’s first overseas battery plant, originally set to commence operations in 2025, but construction has been put on hold since earlier this year.
Citing market sources close to SVOLT, Caixin reported that the construction of both factories is currently at a standstill with no set timetable. An informant cited the challenging domestic market in China as the reason SVOLT cannot afford the costs of overseas factories.
Furthermore, sources told Nikkei Asia that a series of factors, from sluggish electric vehicle sales in Europe to ongoing financial pressures, have led the lithium-ion battery manufacturer headquartered in Jiangsu to shut down its European operations, including its office in Frankfurt, Germany.
It is reported that as a result, the company will terminate the contracts of all SVOLT Europe employees. The exact number of employees affected by this action remains unclear.
SVOLT has not responded to multiple requests for comments from Nikkei Asia.
SVOLT Energy is not the first Chinese company to downsize its European operations. In August this year, Great Wall Motors closed its European headquarters in Munich due to poor sales performance, leading to the dismissal of all 100 employees. Last December, CATL canceled its plans to expand its first overseas battery factory in Arnstadt, eastern Germany.
Chinese manufacturers in Europe face unfavorable factors such as tariffs, but a slowdown in sales could bring even greater challenges.
According to the European Automobile Manufacturers Association, in August, new car sales in the EU dropped by 18% year-on-year, with Germany experiencing a 28% decline. The market share of electric vehicles shrank by 44% year-on-year. BYD sold only 218 cars in Germany in August, accounting for 0.1% of total electric vehicle sales in the country.
Established in 2018, SVOLT Energy is committed to developing and manufacturing automotive batteries and energy storage systems. Bloomberg stated that Great Wall Motors holds approximately 39.4% of SVOLT Energy’s shares with about 76.5% voting rights. SVOLT Energy’s IPO prospectus indicates that Great Wall Motors is not listed as a direct shareholder. However, SVOLT Energy’s largest shareholder, Baoding Rongmao, is a wholly-owned subsidiary of Great Wall Motors’ parent company, Baoding Great Wall Holding Group Co. Ltd. Great Wall Motors does not own shares in SVOLT Energy.