China is positioning Spain as a central manufacturing hub for its expanding presence in the European automotive market, according to reporting based on industry sources and analysis of ongoing negotiations. The shift comes at a time when Europe’s car industry is under severe strain from declining sales, electrification pressures, and rising competition from Chinese electric vehicle producers.
Several major Chinese automotive groups are preparing to establish production in Spain, either by taking over underused existing factories or by building new facilities. The strategy would allow them to manufacture within the European Union and avoid tariffs while gaining direct access to one of the world’s most competitive car markets.
Among the most advanced discussions is the Chinese automotive giant SAIC Motor, owner of the MG brand. The company, which already sells one of the best-selling Chinese vehicles in Spain, the MG ZS, is reportedly in talks to build a new plant in the region of Galicia. Local authorities have expressed strong interest, seeing the potential investment as a major industrial opportunity. Galicia already hosts one of Spain’s largest car plants operated by Stellantis, producing hundreds of thousands of vehicles annually.
The move reflects a broader trend in which Chinese manufacturers are targeting Spain for its competitive production costs, existing industrial infrastructure, and strategic access to Europe, Latin America, and Africa. Industry consultants cited in the report argue that Spain offers a rare combination of affordability, logistics advantages, and established automotive expertise within the European Union.
Other Chinese automakers are also advancing plans. Changan, which recently entered the Spanish market with electric SUV models, is reportedly considering production in Aragón. Meanwhile, luxury brand Hongqi is in talks to use Stellantis facilities in Zaragoza, highlighting a growing pattern of collaboration between Chinese firms and established European manufacturers.
A key factor in Spain’s attractiveness is the availability of existing factories that can be adapted for electric vehicle production. In Zaragoza, Stellantis is already cooperating with Leapmotor, a Chinese company in which it holds a stake, to produce electric vehicles and share technology. Leapmotor is expected to manufacture multiple models in Spain, including new electric vehicles scheduled for release in the coming years, while also supporting production at Stellantis facilities in Madrid.
The expansion of Chinese involvement extends beyond assembly plants into the battery sector. CATL, the world’s largest battery manufacturer, is investing heavily in a gigafactory in Zaragoza, reinforcing Spain’s emerging role in the electric vehicle supply chain. Additional Chinese-linked battery projects are also under development in other regions of Spain, signalling a broader industrial shift.
According to industry experts cited in the report, Spain’s appeal lies in its relatively lower production costs compared to northern Europe, its established automotive ecosystem, and its geographic position as a gateway between major global markets. Analysts also note that European manufacturers are increasingly relocating or restructuring operations in response to intense global competition.
The contrast with other European countries is becoming more pronounced. Germany, historically the heart of Europe’s automotive industry, is facing major job losses in the sector, while some companies are simultaneously investing in Spain to build new electric vehicle infrastructure. At the same time, several battery manufacturing projects in other parts of Europe have been suspended or delayed, reinforcing Spain’s emerging advantage.
Chinese manufacturer Chery has already begun production in Spain, using a former Nissan plant in Barcelona in partnership with local firms. However, this model of assembly using imported components has drawn criticism from some industry leaders, who argue that it limits technological transfer and value creation within Europe.
Despite these concerns, analysts believe the most likely short-term outcome is continued growth in assembly-based production, with gradual integration of European suppliers over time. Full transfer of key technologies such as battery systems and software is considered unlikely in the near term, but partial localisation of production is expected as volumes increase.
As Chinese automakers accelerate their European expansion, Spain appears to be emerging as a key battleground in the global electric vehicle industry, with the potential to reshape the continent’s industrial landscape in the years ahead.