Several businesses are based in the building, including the police analysis centre where seized cars are examined by analysts. No workers were in the warehouse when the fire started.
"It's a major fire producing a lot of smoke. The emergency services say the building can't be saved, so it'll be allowed to burn down," police west region spokesperson Peter Adlersson told news agency TT.
The alarm was raised just before 16:00 on Wednesday about the fire at the warehouse in Mölndal, which is part of the Gothenburg urban area. Police have cordoned off several streets around the building and emergency services workers have advised nearby residents to stay indoors with windows and doors closed, though there are no injuries reported as a consequence of the fire.
No evidence in the form of seized cars has been destroyed by the fire according to police, who have interviewed several people but currently have no suspects.
Firefighting work took place throughout the night and is expected to take significant time to complete, with the building still burning early on Thursday morning. The cause of the fire is currently unknown.