Automotive News Europe — 2024-05-31
Automotive Industry
A battery plant set to built near Berlin has been called off due to market conditions and cancellation of a big contract, Svolt said.
The Chinese battery maker Svolt has said it will abandon plans to build a second battery cell plant in Europe, citing the volatile EV market as well as the cancellation of a “significant” customer project.
Svolt, a subsidiary of Great Wall Motors, also said in a statement this week that it “wasn’t possible to predict” when the company’s primary battery cell manufacturing facility in Überherrn in Germany’s Saarland region would be ready amid planning issues.
Last year the company said the facility would be delayed until 2027 due in part to local protests. The second factory had been planned for near Berlin.
The company also said it will open a battery module and pack assembly plant in Heusweiler, also in the Saarland, in July.
The canceled plant in Lauchhammer, Germany, was to be built on the site of a former wind turbine plant that Svolt acquired in 2022. Pilot production would start from 2025, Svolt had said.
Svolt did not say which customer project was cancelled, but the German public broadcaster SR Fernsehen has reported it was BMW.
“The automotive market is currently struggling with considerable fluctuations and challenges all over the world, mainly driven by the transformation to electric mobility,” Kai-Uwe Wollenhaupt, president of Svolt in Europe, said in the statement. “This is leading to some drastic strategy adjustments for some car manufacturers.”
Great Wall Motor has said it will close its European headquarters in Munich, citing tough market conditions for its EVs as well as the threat of European tariffs on Chinese imports. A decision on tariffs is expected after next week’s European Parliament elections (6-9 June 2024), according to reports.
Great Wall said a slowdown in EV sales, particularly in Germany, as well as heavy discounting among rivals was hampering its ability to profitably grow sales in the region.
One initial reason given for the establishment of Great Wall’s Munich HQ was to coordinate with Svolt as it expanded in the region.
Ambitions scaled back
Svolt had one of the most ambitious growth plans of any of the Asian battery makers. Last year it said it planned up to five factories in Europe with a targeted production capacity of at least 50 gigawatt-hours in the region by the end of the decade. In 2020, the company predicted it would have global production capacity of 100 gWh by 2025.
The company has struggled with profitability, losing more than 3 bn yuan (€390 m) between 2019 and 2022, according to a report by Haijie Zhao of the department of mathematics at the UK’s University of Liverpool published in January 2024.
Zhao flagged the company’s “low product gross margin, low capacity utilization and high management costs.”
Svolt supplies lithium iron phosphate batteries for the new Citroen e-C3 small budget electric car. It also supplies batteries to Nio as well as Great Wall vehicles, including the Great Wall Ora 03 compact, the automaker’s best-selling European model.
Chinese battery firms eye Europe
Chinese battery makers have been seeking to push into Europe to help supply local carmakers as they seek to expand their EV output.
Contemporary Amperex Technology Co. Ltd (CATL), the world's biggest cell manufacturer, last year started output at its first European plant in eastern Germany and is adding a €7.3 bn facility in Hungary with Mercedes-Benz, BMW and Volkswagen among customers.
Chinese-owned Envision AESC is close to finishing its facility in Sunderland, northeast England, to supply the nearby Nissan plant. It also plans to start production in Spain and France.
Meanwhile, EVE Energy Co., BMW's second supplier for cells produced in Europe, has started construction of a plant in Hungary with production scheduled to start in 2026.