Svolt Cancels Second European Gigafactory Amid EV Market Volatility

Chinese battery maker Svolt has decided to abandon plans for its second European gigafactory as a result of the unstable electric vehicle (EV) market and the cancellation of a major customer project. The plant was initially planned to be built near Berlin.

Why this matters: The cancellation of Svolt's gigafactory plans has significant implications for the European electric vehicle market, which is already facing challenges. This could lead to a slowdown in the adoption of electric vehicles, hindering efforts to reduce carbon emissions and meet climate goals.

Svolt's decision comes at a time when the automotive industry is undergoing a significant transition to electric vehicles, with the aim of drastically reducing CO2 emissions from cars and vans. However, the EV market in Europe is currently facing challenges and uncertainties, including a news of a 29% decrease in year-on-year electric car sales in Germany for March.

The company cited the cancellation of a large customer order as a key reason for halting the project. This move mirrors similar actions by other Chinese battery makers, such as Contemporary Amperex Technology (CATL), which also scrapped plans to expand its lithium-ion battery factory in Thuringia, Germany.

The European EV market has seen a 29% decrease in year-on-year electric car sales in Germany for March, and an 11% decline across the European Union. Factors contributing to this decline include higher EV prices, an abundance of cheaper models, and consumer concerns regarding range anxiety and inadequate charging infrastructure, which is a major news in the industry.

Germany's decision to cut buyers' subsidies for EV purchases in December 2023 has also significantly impacted sales. This sudden policy change has added to the market's volatility, affecting both manufacturers and consumers, and is a major news in the industry.

Chinese companies face additional challenges in Europe as a result of the European Commission's probe into Beijing's subsidies for EV assemblers, initiated in September last year. The EU is considering imposing heightened tariffs on the import of cheap Chinese EVs, which could further complicate the market dynamics, making it difficult for chinese companies to operate in Europe.

Europe remains a vital market for Chinese EV makers. Companies like BYD can sell cars in Europe for more than twice the price they fetch in their domestic market, giving them some latitude to absorb additional tariffs, but the overall market instability poses significant risks, especially for companies that are leaving Europe.

Great Wall Motors (GWM), the parent company of Svolt, is also re-evaluating its European strategy. GWM will shut down its European headquarters in Munich, Germany, on August 1, 2024, and relocate its European parts warehouse from Nuremberg, Germany, to Amsterdam, Netherlands, doubling its size, in a bid to stay competitive in the europe market.

The cancellation of Svolt's gigafactory plans is a significant development in the EV market, which is already facing numerous challenges. The future of the European EV market remains uncertain as companies and policymakers face these turbulent conditions, and it is a major news in the industry.

Key Takeaways

• Svolt cancels plans for 2nd European gigafactory due to unstable EV market.
• European EV sales decline 29% in Germany and 11% across EU in March.
• German subsidy cuts and EU probe into Chinese EV subsidies affect sales.
• Chinese EV makers face challenges in Europe, with some re-evaluating strategy.
• Uncertainty surrounds European EV market, hindering climate goals.