SVOLT to Cease European Operations by January 2025

A leading Chinese electric vehicle battery manufacturer, SVOLT, is preparing to close its European operations by January 2025. This decision highlights a broader trend of Chinese companies scaling back overseas ventures in response to escalating trade tensions and a decline in electric vehicle sales across Europe.

According to sources familiar with the situation, SVOLT will end its operations in both SVOLT Energy Technology (Europe) and its German subsidiary, although the exact number of layoffs remains unclear. This announcement comes as the company strives to launch its battery production plans in Germany. SVOLT has recently abandoned its plan to establish a factory this year, and the construction of two additional plants has been either delayed or challenged legally.

Several factors, including sluggish electric vehicle sales in Europe and ongoing financial pressures, have driven SVOLT to shutter its European operations, including its office in Frankfurt, Germany. Consequently, the company will terminate contracts with all employees at SVOLT Energy (Europe). Some employees at the German office have received notifications in recent days, informing them of opportunities to apply for positions at the company's headquarters in China. The number of affected employees is currently unclear.

In 2020, SVOLT announced plans to invest up to €2 billion (approximately $2.01 billion) in two battery plants in Saarland, Germany, aiming to create up to 2,000 jobs. The company has also signed an agreement with Stellantis to supply battery cells starting in 2025.

Earlier reports indicated that SVOLT's President for Europe, Kai-Uwe Wollenhaupt, mentioned in May that the company had halted its plans to construct a battery cell factory in the Lauchhammer area of Brandenburg, citing the loss of a major customer and tariff-related market threats. Additionally, ongoing lawsuits against SVOLT have raised doubts regarding its proposed factory in Überherrn, Saarland. Last year, the company revealed that protests in the area would delay the factory's opening until 2027.

SVOLT currently operates a facility in Hoyerswerda, Saarland, where it converts battery cells into packs and modules. According to information on the company's website, production at this facility was expected to commence on July 1, but the current operational status remains uncertain, with reports suggesting that SVOLT has ceased all production in Germany.

SVOLT is not the first Chinese company to reduce its European operations. In August, Great Wall Motors closed its European headquarters in Munich due to poor sales performance, resulting in the layoff of all 100 employees. Additionally, in December 2023, CATL abandoned plans to expand its first overseas battery factory in Arnstadt, Germany.

Chinese manufacturers are facing increasing resistance in Europe due to recently imposed tariffs, with a slowing sales environment potentially exacerbating their challenges. According to data from the European Automobile Manufacturers Association, new car sales in the EU fell by 18% year-on-year in August, with Germany experiencing a 28% decline. The market share of electric vehicles also dropped by 44%. In August, BYD sold only 218 vehicles in Germany, accounting for a mere 0.1% of the country’s total electric vehicle sales.

SVOLT was spun off from Great Wall Motors in 2018 and counts several major Chinese electric vehicle brands among its clients, including Geely and XPeng. However, the company has struggled to achieve profitability in China's highly competitive renewable energy market, with reported cumulative losses of ¥4.4 billion ($618 million) from 2019 to 2022, as disclosed in its prospectus submitted to the Shanghai Stock Exchange.

SVOLT attempted an initial public offering (IPO) on the Shanghai Stock Exchange in November 2022, aiming to raise ¥15 billion ($2.1 billion), but ultimately terminated the plan a year later.