(Yicai) Oct. 28 -- Svolt Energy Technology has confirmed that the major Chinese battery maker will end commercial operations in Europe because the region’s electric vehicle market has failed to meet the expectations of all stakeholders.

Svolt has decided to shut its European headquarters in Frankfurt and its German subsidiary on Jan. 31 next year, the Changzhou-based firm told Yicai on Oct. 26. Svolt will remodel its European business and continue to focus on long-term sustainable opportunities there, it added.

Earlier media reports said Svolt would cease construction work on its plants in Germany because of several factors, including fluctuating sales, international punitive tariffs, market distortions caused by uneven subsidies, and European Union discussions on the possible repeal of its ban on internal combustion engines. Some analysts believe the main reason was the large initial capital outlay needed to build the factories.

Svolt announced in November 2020 that it intended to invest EUR2 billion (USD2.2 billion) to build a battery module and pack plant in Saarland, Germany. Expected to be completed by mid-2024, it had a planned annual production capacity of 24 gigawatt-hours.

In September 2022, the firm said it would also build another plant in Germany. To be located in Brandenburg, it would produce 16 GWh of battery cells a year once completed in 2025.

Svolt, which was spun off from Chinese automaker Great Wall Motor in 2018, was planning to raise CNY15 billion (USD2.1 billion) to finance expansion projects through an initial public offering on Shanghai’s Star Market late last year. But the firm pulled its IPO application soon after.

European battery makers are also struggling due to industry challenges. For example, Sweden's Northvolt said last month that it would lay off 1,600 staff, halt construction of a new factory, lower production and shed workers at its main plant, halt the output of cathode materials, and sell its energy storage business in Poland. The firm also said it had sold a facility in Sweden.

Sales of battery EVs in Europe fell for the fourth consecutive month in August, plunging 44 percent from a year earlier, mainly because of declining subsidies in major European markets, according to Dataforce.

Editor: Futura Costaglione