Europe’s automotive industry has long been among its strongest, and apparently unshakeable. Germany was designing the future, Central Europe was assembling it, and the South of the continent was providing necessary labor and industrial capacity. As the EU’s second-largest car producer, Spain was certainly important, but rarely did it take center-stage in Europe’s strategic imagination. And while that gear-box seems complete and well-engineered, the fact is, the automotive landscape is being forced to change.

With the transition to electric vehicles, the factors that determine industrial competitiveness have been rapidly shifting. Today’s European auto remains less dependent on mechanical engineering, combustion-engine supply chains, or the prestige of German brands, but three new pillars are currently guiding the sector: cheap energy, the ability to manufacture affordable electric vehicles, and access to Chinese technology chains. In all three of these areas, Spain is starting to look like one of the best-positioned countries in Europe.

“The future industrial center of gravity of the European electric vehicle could conceivably shift southward”Spain combines several advantages difficult to find together on the European continent: an abundance of renewables, relatively competitive prices for electricity, large automotive plants that are already operational, infrastructure for logistics, and a political relationship with China that’s much less ideological than that of other European partners. In Brussels, Berlin, and Paris, an idea that would have seemed unlikely just a few years ago is now making headway: the future industrial center of gravity of the European electric vehicle could conceivably shift southward.

The logic starts with energy
The electric car is more than a technological revolution; it’s an energy transformation embedded within a new industrial policy. Batteries, gigafactories, and electrified production chains need huge amounts of stable and relatively cheap electricity. Moreover, ever since Russia’s invasion of Ukraine, that factor has become a decisive variable for European competitiveness.

Spain has an advantage that few large European countries can replicate quickly: a combination of solar, wind, and regasification capacity built across many years, which allowed it to cushion the post-2022 energy shock better than others. While Germany has learned the strategic costs of depending on Russian gas, Spain has managed to consolidate a much more favorable energy position for the new industrial economy.

Actors in the sector continue to wonder who produces the best electric cars, but there’s more and more interest in knowing who can produce them at affordable prices. Ignacio Rodríguez Solano, director of Institutional Relations for the Renault Group, summed it up in Agenda Pública: “We’re not going to electrify Europe with €100,000 cars.”

This is where China comes in. In the past, Europe underestimated the speed with which China’s automotive industry was evolving. Many European companies viewed Chinese brands as cheaply constructed and technologically secondary. Today that view is obsolete.

Teresa Ribera, Executive Vice-President of the European Commission, recently put it plainly: “There was fierce opposition to that process of change. Some have even irresponsibly accused those of us who defend such changes and their industrial follow-up of defending ideological positions,” she explained to Marc López Plana. “Suddenly, we’re faced with two very significant factors. First, there are those who have overtaken us, and second, we’re still depending on something we don’t have [fossil fuels].”

“The Asian giant seems to be winning the race to affordable electric vehicles by a landslide”China’s advantage depends on highly automated factories, simplified production chains, integrated digital platforms, and a much faster pace of industrial development than Europe. Even as Europe’s manufacturers find themselves trapped in complex and expensive industrial structures, many Chinese companies are producing fewer models with fewer configurations, using much more efficient processes. As a result, the costs are reduced and manufacturing times are significantly improved as compared to Europe. The Asian giant seems to be winning the race to affordable electric vehicles by a landslide.

The positive news is that Europe’s industrial strategy is being rethought with a new approach. At the heart of that thinking is the question of whether Europe will need to cooperate more closely with China to keep its own automotive industry alive.

Germany is starting to face facts …
In Lower Saxony, political leaders are openly raising the possibility of Chinese manufacturers producing vehicles at Volkswagen’s German plants to avoid closures and preserve industrial jobs. That idea would have been politically explosive five years ago; today it’s part of the public debate.

The change in historical direction is evident. For decades, German technology flowed into China. Now a portion of German industry is starting to wonder how much Chinese knowledge it will need to remain competitive. But Germany also suffers from structural problems that Spain doesn’t feel with the same intensity.

Energy costs are higher in Germany. The industrial transition has been slower. Productive structures are more rigid. And Berlin remains caught between two contradictory impulses: reducing strategic dependencies on China, while at the same time avoiding the competitive collapse of its export industry.

… and Spain operates differently
Madrid has maintained a much more pragmatic, less ideological relationship with China than other large European countries. While Brussels hardens its language on de-risking, strategic autonomy, and economic security, Spain increasingly sees Chinese industrial investment mainly as an opportunity.

Chinese manufacturers looking to establish themselves in Europe need several things at once: access to the European market, ports, industrial land, renewable energy, and governments willing to facilitate investments rather than turning them into a permanent political battle. Today, Spain can meet practically all of those conditions.

“If Europe’s industrial center of gravity starts shifting toward regions with cheaper energy and better maritime access, Spain automatically gains relevance”Likewise, geography plays in Spain’s favor. The Iberian Peninsula occupies an increasingly strategic position on new industrial and energy routes: connection to the Atlantic, Mediterranean access, proximity to North Africa, and growing logistics capacities in ports like Valencia, Barcelona, and Algeciras. If Europe’s industrial center of gravity starts shifting toward regions with cheaper energy and better maritime access, Spain automatically gains relevance.

The industry is already moving in that direction
At the moment, Chinese battery giant CATL is aggressively expanding its European presence. SAIC Motor, owner of the MG brand, is negotiating to build a new factory in Galicia, where the Xunta has offered the Plisan industrial park, although Ferrol has also been cited as a possible location. Stellantis has signed agreements with Leapmotor to manufacture Chinese electric vehicles for the European market: the brand will produce the B10 in Zaragoza beginning this year and could manufacture an electric model in Villaverde from the first half of 2028. Renault has publicly insisted that today’s great challenge is no longer luxury, but the affordable electric car.

All these moves point to the same conclusion: Europe’s automotive future will likely include more Chinese technology, more joint ventures, and many more hybrid production chains than Brussels imagined a few years ago.

“There’s no need to invent an industry from scratch, because Spain already has large facilities utilized by Volkswagen, Seat, Ford, Renault, and Stellantis”And Spain could become one of the main recipients of that transformation. In addition, the country has an asset that Brussels often underestimates: an already consolidated automotive industrial culture. There’s no need to invent an industry from scratch, because Spain already has large facilities utilized by Volkswagen, Seat, Ford, Renault, and Stellantis, along with supplier networks, skilled workers, and entire regions organized around the automobile. What will have to change is the strategic context surrounding those existing assets.

In the old European industrial model, Spain occupied a subordinate position within an architecture centered on Germany. In the new electric model, cheap energy and industrial flexibility carry more weight, which is redistributing power within Europe.

The path is not guaranteed
Without forgetting its most positive aspects, Spain does continue to have some significant weaknesses, including insufficient energy interconnections with Europe, administrative slowness, regulatory fragmentation, and external technological dependence. In addition, the relationship with China could itself become politically complex should Brussels decide to tighten the screws and adopt positions other than those taken by Moncloa.

And then there’s another risk, where Europe could end up assembling Chinese technology without actually building its own capabilities. That debate is already moving through the European institutions. Some believe that the EU could repeat mistakes similar to those made with Russian gas or Asian solar panels. Meanwhile, others believe that rejecting industrial alliances with China would only accelerate European deindustrialization.

“Europe’s next big automotive hub might emerge not from the continent’s old industrial heartland but from the South”The electric automobile will probably serve as the first great laboratory for this contradiction. Because apparently, the central question is no longer whether Chinese investment will arrive in Europe, but rather where it will land. In that competition, Spain seems to be increasingly improving its position, thanks to all of the above: relatively inexpensive energy, existing automotive infrastructure, strategic ports, renewable capacity, and so on.

In the past, Europe’s automotive hierarchy seemed fixed around Germany, but the electric transition is starting to revise that map. In any case, Europe’s next big hub might emerge not from the continent’s old industrial heartland but from the South, powered by solar power, Chinese capital, and a global reorganization that Europe is still trying to understand.