Chinese battery maker to invest $2.4 billion to build first European factory

China’s SVolt Energy Technology Co. plans to invest about 2 billion euros ($2.4 billion) in Germany to build its first factory in Europe as the battery maker seeks to benefit from surging electric-car demand in the region.

The plant will have the capacity to make as much as 24 gigawatt-hours of batteries to power between 300,000 and 500,000 electric cars annually, the company spun off by Great Wall Motor Co. said Tuesday in a statement. Production is slated to start at the end of 2023 at the site near Saarlouis, along Germany’s border with France.

The project echoes a move by larger Chinese peer Contemporary Amperex Technology Ltd. to open a battery plant on the home turf of German car giants Volkswagen AG, Daimler AG and BMW AG. Domestic European manufacturers including Swedish startup NorthVolt AB and a joint venture between French automaker PSA Group and energy giant Total SA also have started building battery factories in a bid to challenge the dominance of Asian producers.

NorthVolt forged a joint venture with the world’s best-selling automaker Volkswagen to construct a battery factory near the German company’s headquarters in Wolfsburg. VW Chief Executive Officer Herbert Diess said earlier this month German car-parts suppliers have been too hesitant to invest in battery technology.

SVolt said it will employ as many as 2,000 workers at the factory, which will look to take advantage of some of the world’s largest subsidies for EVs. Combined sales of hybrid and fully electric cars topped deliveries of vehicles powered by diesel engines for the first time in September, according to industry researcher Jato Dynamics.

SVolt is in talks with several automakers about battery-supply deals, its sales chief Maxim Hantsch-Kramskoj told reporters. There would be an industrial logic for Ford Motor Co. to purchase batteries for its nearby vehicle factory, but the U.S. automaker would have “to make the first step," he said.

For the German state of Saarland, SVolt’s factory will be the largest industrial investment project since Ford opened its Saarlouis factory half a century ago, Economy Minister Anke Rehlinger said.