Chinese EV Battery Manufacturer SVOLT to Close European Operations
Regulatory Conflict and Poor Demand Cause SVOLT to Shut Down
SVOLT, a Chinese electric vehicle (EV) battery manufacturer, has announced its plans to close its European operations. This decision comes in the wake of a longstanding regulatory dispute between European legislators and China-based EV manufacturers. Over the past year, European Union (EU) authorities have taken measures to restrict China-based EV production, fearing that the cheaper models from the East are distorting the European market and disadvantaging domestic producers.
Implications of the Shutdown
SVOLT Energy's decision to shut down its European operations by January 2025 is a clear indication of China's withdrawal from the market and the declining EV sales in Europe, as reported by Nikkei. SVOLT, which is associated with Great Wall Motor, will close its German subsidiaries and lay off employees, according to an inside source. The same report also suggests that poor EV sales and financial pressures have compelled SVOLT to close all its European operations, including its office in Frankfurt.
Employee Layoffs and Unfulfilled Plans
The report by Nikkei states that all SVOLT Europe employees will be laid off, although some have recently been offered positions at the company's China headquarters. The exact number of affected employees remains unknown, and SVOLT has not issued any comments on the matter. In 2020, SVOLT announced plans to invest €2 billion in two battery plants in Germany's Saarland, which would have created up to 2,000 jobs. However, these plans were halted due to the loss of a key customer and concerns over tariffs and subsidies.
Delayed Projects and Market Cooling
A lawsuit and local protests have also delayed a planned factory in Ueberherrn until 2027. SVOLT's Heusweiler plant, which was intended to produce battery packs, was set to open in July, but reports suggest the company has now ceased all production in Germany. Meanwhile, the EV market in Europe is experiencing a slowdown, similar to the U.S. New car sales in the EU dropped 18% in August, with Germany down 28%, according to the European Automobile Manufacturers' Association. The EV market share fell 44%, with Chinese brand BYD selling only 218 cars in Germany, or 0.1% of the country's EV sales.
Financial Struggles and Abandoned Plans
SVOLT, which separated from Great Wall Motor in 2018, counts Geely Auto, XPeng, and Great Wall among its clients but has faced financial difficulties, reporting a cumulative loss of 4.4 billion yuan ($618 million) from 2019 to 2022. The company had plans to raise $2.1 billion through a Shanghai IPO in 2022, but the plan was abandoned a year later.
Bottom Line
The closure of SVOLT's European operations is a significant development in the global EV industry. It highlights the impact of regulatory conflicts and market dynamics on businesses. It also raises questions about the future of EV manufacturing and the balance between domestic and foreign producers. What are your thoughts on this development? Do you think it will have a ripple effect on the EV industry? Share this article with your friends and discuss your views. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6 pm.
