SVOLT Lands Its Second Overseas Factory in Germany as It Sprints Towards 600GWh Capacity Target

published: 2022-09-30 9:30 | editor: | category: News

As the global NEV market maintains fast-pace growth, Chinese battery suppliers have begun overseas expansions in order to round out their development strategies and gain more market share. After CATL had announced on September 5 that its second factory in Europe will land in Hungary and entail an investment of CNY 50.9 billion, SVOLT confirmed on September 9 that its second overseas factory will be located in Germany.

SVOLT already unveiled a plan to establish two production sites in Germany in 2020. The development of the first factory began in November of that year. Located in Heusweiler, Saarland, this plant is still being built and will be used to assemble battery packs once it is fully set up. As for the second factory, SVOLT said it will be located Lauchhammer, Brandenburg. The site for this plant was actually formerly used to manufacture wind turbines. SVOLT will transform the defunct facility buildings so that they will manufacture battery cells instead.

The decision to place the second factory in Brandenburg has to do with the formation of a local EV industry cluster in the recent years. BASF and many other companies that are involved in the supply chain for Li-ion batteries have all set up shops in the state. In 2021, SVOLT and BASF formed a strategic partnership in the fields of battery materials and battery recycling.

According to the company’s plan for Germany, the factory in Brandenburg will supply battery cells to the factory in Saarland, where the assembly and installation of EV battery packs will take place. SVOLT pointed out that both plants have a geographical advantage. They are thus able to serve European customers more effectively with respect to project implementation. The two plants will also enable SVOLT to rapidly scale up its production capacity in Europe.

Established in December 2016, SVOLT was originally a business unit under Great Wall Motor. It was formally separated from its parent and became an independently operated company in 2018. Due to the rapid growth of its EV battery business, SVOLT at the end of 2021 rolled out the target of attaining a global total production capacity of 600GWh per year by 2025.

Hence, SVOLT has been very aggressive with respect to capacity expansion. Earlier on, the company made plans to build battery production bases in the Yangtze Delta, South China, and West China. Now, it set sights on Europe. The latest project in Brandenburg represents another big step forward in its global expansion.

Looking at other suppliers for EV batteries, CATL has also recently unveiled its plan for a second factory in Europe. On September 5, CATL and the government of Debrecen, which is the second largest city in Hungary, inked a land pre-purchasing agreement. With this deal, CATL has officially initiated the construction of its second battery factory in Europe. CATL’s first factory in the region is in the German state of Thuringia. Its construction phase began in 2019, and its operation phase is scheduled to commence before the end of this year. As for the second factory, it will be located in the Debrecen Industrial Park, and its construction phase will begin this year. CATL said the total investment in the second factory will reach around CNY 50.9 billion (EUR 7.34 billion). Spanning an area of 221 hectares, the second factory will have a production capacity of 100GWh per year. Carmakers including BMW will be among the customers first served by this plant.

Market intelligence firm TrendForce points out that in addition to CATL and SVOLT, many other Chinese battery suppliers have made plans to build overseas factories. EVE will build a factory for manufacturing cylindrical batteries in Hungary. Envision AESC will build a factory for manufacturing EV batteries in Spain. BYD, too, is raising funds to set up its first overseas battery production plant, which is intended to be located in Europe. Likewise, CALB, Gotion High-Tech, Farasis Energy, and Sunwoda have either launched or considering overseas manufacturing projects.

Besides Europe, North America is also getting increasing attention from Chinese battery suppliers. Envision AESC has presented a plan for a gigafactory in the US. Gotion High-Tech is reported to be in discussion to set up a joint venture through which it will build a factory in the US. CATL previously expressed interest in building a factory in Kentucky, but this project has been postponed.

There are several factors motivating Chinese battery suppliers to set up production capacity outside their home country. First, the rapid growth of the global NEV market has been beneficial for Chinese battery suppliers and is encouraging them to pursue overseas expansions in order to improve their international competitiveness. Moreover, having a presence in other countries will generate more brand recognition and thereby create opportunities for gaining more market share. Lastly, Chinese battery suppliers want to have battery production sites near their major overseas clients. This will lower the cost of transporting products and put suppliers in a more proactive position in contract negotiations and capturing orders.

While building overseas factories could result in gaining a greater share of the global market, TrendForce notes that are there also risks, including unforeseen ones, with this approach. Investment cost, geopolitics, environmental regulations, industrial policies, and cultural differences are some of the many issues that Chinese battery suppliers need to consider when planning to set up shops in other countries.

This article is a translation of a Chinese article written by Marry at TrendForce. It contains information that is either sourced from other news outlets or accessible in the public domain. Some Chinese names are transcribed into English using Hanyu Pinyin.

(Image: SVOLT)

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