Why Chinese battery maker picked Germany for European production

Battery cell makers are rushing to open factories in Europe, and one of the most intriguing is Svolt, a spinoff of Great Wall Motors that has decided to invest up to 2 billion euros ($2.47 billion) in Germany to create a European manufacturing base.

Executives say Svolt will be the first to bring to series production, around the middle of next year, a high-energy cell that eliminates cobalt entirely in favor of a nickel-heavy chemistry.

Not only does this reduce the price, it also eliminates dependence on a metal largely mined in one central African country, the Democratic Republic of Congo, often under controversial conditions.

Other companies are working on cobalt-free batteries, including China’s CATL. Tesla said at its Battery Day this year that it would build its own electric vehicle batteries with cobalt-free cathodes, but it has not said when it plans to produce them.

Svolt is now the third Chinese cell manufacturer to announce the energy-intensive assembly of cells in Germany, after CATL in Erfurt and Farasis in Bitterfeld-Wolfen, despite the country’s high electricity prices.

There were five core reasons for choosing two areas in the German state of Saarland, across the border from eastern France, out of more than 30 candidates in both high- and low-wage countries across the continent, Svolt said.

The deciding factors were the availability of qualified workers, a sufficient supply of sustainable energy, a location in the heart of Europe, excellent infrastructure and proximity to innovative companies, said Kai-Uwe Wollenhaupt, president of Svolt Europe.

“The logistics mean we can supply all customers in Europe from here easily,” he said. Batteries can be expensive to transport because of their weight, so proximity can be a competitive edge.

The news is a huge boost for the Saarland state, which will acquire the property on behalf of Svolt. Ford of Europe announced last year that it was ending production of the C-Max minivan in its plant in Saarlouis, which builds the Ford Focus.

Last month, the precarious future of Saarlouis prompted labor unions to call for negotiations with management over a successor product to protect thousands of jobs at the plant.

With automakers and suppliers struggling to deal with the transition from internal combustion to electrification, Svolt’s decision to pick Saarland surely came as a relief to the state economy minister, Anke Rehlinger. Svolt said the factory could eventually supply enough cells for up to 500,000 EVs annually.  

“In its final expansion,” she told reporters, “it will certainly be the largest company to locate itself here since Ford.”