Svolt said it had to make the decision after the development of the European EV market failed to meet the expectations of all stakeholders.
Svolt Energy, a battery maker that was spun off from Great Wall Motor (HKG: 2333), has confirmed that it will terminate its European operations, after a local media report said it had suspended two battery factory projects in Germany.
Svolt will terminate the commercial operations of its European company and its German subsidiary, a decision that will take effect on January 31, 2025, the Chinese battery maker told local media outlet Yicai on October 26.
For reasons beyond Svolt's control, the development of the European electric vehicle (EV) market has failed to meet the expectations of all stakeholders, and the company had to make that difficult decision, it said.
Prior to the decision, Svolt had already made significant investments in Europe, it said, adding that the company will handle the follow-up appropriately and will contact existing European customers directly and individually.
Going forward, Svolt will redesign its European business operations around technical services, engineering services, warehousing and logistics and after-sales operations and maintenance, it said.
The company will continue to focus on long-term sustainable business opportunities in the European market and consider future strategic options for Europe, it said.
Svolt originally planned to build two plants in Germany, a battery module and pack plant in Saarland and a battery cell plant in Brandenburg.
The pack project was announced in November 2020, with a design capacity of 24 GWh and a total investment of €2 billion ($2.16 billion), and was originally expected to be completed by mid-2024.
Plans for the cell plant were announced in September 2022, with an annual capacity of 16 GWh. This is Svolt's first overseas battery cell plant, originally planned for production in 2025.
Local media outlet Caixin said in an October 24 report, citing several people familiar with the matter, that Svolt had suspended the two battery factory projects and has no timetable for resuming work.
That's because Svolt is already struggling to operate in its home market of China, and it can't afford to handle its overseas factories, Caixin said, citing a person familiar with the matter.
To be built, the two European plants would require an investment outlay of RMB 30 billion ($4.2 billion) yuan, which is too big for a lithium battery maker of Svolt's size, the person said.
The decision was made by Svolt based on its own situation, not technical or local policy factors, but mainly because of the scale of the upfront capital investment, another person familiar with the matter said, adding that Svolt has to solve the money problem first.
Svolt, which became independent from Great Wall Motor in February 2018, mainly covers battery materials, cells, modules, packs, BMS, and energy storage technology.
It is one of the largest battery makers in China, with an installed battery volume of 1.29 GWh in September, ranking No. 8 in the domestic power battery market with a 2.36 percent share, according to China Automotive Battery Innovation Alliance (CABIA).
In November 2022, Svolt filed a prospectus to list on China's Nasdaq-style sci-tech innovation board, also known as the STAR market, with plans to raise RMB 15 billion.
However, its initial public offering (IPO) process was terminated last December when Svolt and its sponsor withdrew its listing application.
Prior to Svolt's decision, Great Wall Motor had closed its German office.
Svolt Energy reportedly suspends 2 battery factory projects in Germany
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