SVOLT cancels Germany gigafactory amid permitting and policy challenges in Europe

News Analysis




SVOLT cancels Germany gigafactory amid permitting and policy challenges in Europe

Chinese battery manufacturer SVOLT has abandoned plans for its Gigafactory in Brandenburg, Germany following significant challenges in the European market. As a result, the company is reassessing its location and end-market strategy within Europe to circumnavigate these difficulties.

The highly volatile automotive market and a lack of planning and legal security for the construction of gigafactories are cited as the key reasons behind the change in plan. In addition, SVOLT stated that the “renewed discussion about the end of the combustion engine in the EU are counterproductive to the planned localisation efforts”. SVOLT has said is now primarily focused on the stationary storage market within Europe in response to the automotive challenge and increasing demand from the ESS sector.

Despite the cancellation of the Brandenburg project, SVOLT is still continuing with its Saarland project in Germany, although this was supposed to be operational by the end of 2023. The project has been repeatedly delayed due to planning permission issues and legal cases against the construction of the project. Even once these are resolved, the project will only then begin an economic feasibility study. A timeline for when the project will begin production is therefore difficult to predict, although at this pace it is not likely to start before the end of 2027, at least four years after the initial start date.

The challenging permitting and policy environment is consistently cited as a primary cause for increased project risk within Europe. Although it has now been brought to forefront with this latest announcement, it is not a recent issue amongst battery manufacturers. Many have stated that sluggish permitting for Gigafactory and CAM projects are a major risk factor when it comes to investing in Europe, resulting in a scale-back of ambition. It therefore raises the immediate concern for an alteration of the permitting system and more stable EV targets in order to cater for the pace at which the industry needs to move. If this problem persists, Europe could face missing out on further investment in favour of lower risk regions and fall further behind the curve and domestic targets.