Chery, Leapmotor and now MG have all chosen Spain due to a mix of existing infrastructure and positioning inside the EU single market. By Stewart Burnett
SAIC-owned MG is the latest Chinese automaker to lock in its European manufacturing plans, confirming on 3 June that it will build its first plant in Ferrol, a port city in the Galicia region of north-western Spain. The facility, which will see an initial investment of €200m (US$233m), is scheduled to open in 2028 with an eventual annual capacity of 120,000 vehicles and is expected to create more than 2,000 jobs.
The decision is driven by tariff exposure that has become existential for SAIC in Europe. The company faces additional EU anti-subsidy duties of 35.3% on top of the standard 10% import tariff—a combined rate of 45.3% that is among the highest levied on any Chinese automaker and directly threatens the price competitiveness of its battery-electric vehicles (BEVs). Local EU production eliminates that burden entirely. SAIC received the highest individual tariff rates due to an apparent lack of cooperation with EU probes; BYD, by contrast, pays 27% in duties, while Tesla pays 17.8% for its Chinese imports.
MG’s European Managing Director William Wang framed the announcement in strategic terms, saying the investment would accelerate “Europe’s path towards a smarter and more sustainable mobility future”. However, the commercial logic requires a degree less diplomatic packaging: MG sold more than 300,000 vehicles across Europe in 2025, up 26% year-on-year, and its own management had previously said local production would become economically viable once annual European sales reached the 300,000-unit threshold. That line has now been crossed.
Spain’s emergence as a manufacturing destination for Chinese OEMs reflects a specific set of advantages that lower-cost European countries do not fully replicate. Hungary has attracted BYD’s first European assembly plant and is now home to a substantial battery investment from CATL, but its automotive ecosystem functions primarily as a supply and battery hub rather than a finished-vehicle powerhouse.
Serbia and Turkey—also major destinations for Chinese automotive production—sit outside the EU single market entirely, exposing any vehicle produced there to continued rules-of-origin complexity and potential future tariff risk. Spain, by contrast, offers full EU membership, Europe’s second-largest vehicle production base and a mature, integrated supply chain covering stamping, electronics, logistics and a workforce already trained in high-volume automotive assembly. Galicia’s Atlantic ports, crucially, provide direct shipping access to the UK—MG’s single most important European market—alongside broader Mediterranean and continental reach.
The UK is MG’s largest European market
The perception argument matters too: for Chinese brands trying to shed the “imported budget car” association in European consumer minds, manufacturing in an established automotive nation carries weight that a facility in Budapest or Belgrade does not. A similar logic is unfolding around BYD’s tentative plans to establish a manufacturing foothold in Italy via a Stellantis plant.
Of course, SAIC is far from the first Chinese automaker to commit to Spanish production. Chery has been building vehicles in Barcelona since late 2024 through its joint venture with Ebro-EV Motors, using the former Nissan plant that Spanish authorities had been actively seeking to repurpose since Nissan’s 2021 exit. Leapmotor is preparing to launch production of the B10 at a Stellantis facility near Zaragoza later this year. The Spanish government’s PERTE VEC programme—a state-backed strategic fund for electric and connected vehicle investment—has provided a further financial inducement that has been absent from most Eastern European alternatives.
MG has not confirmed which models will be produced at Ferrol, though BEVs are the most likely choice given that the facility’s primary purpose is tariff avoidance. The plant will be built in two phases, with the 120,000-unit capacity figure tied to completion of the second phase, for which no timeline has been given. The first phase is more modest in scope, and the 2028 opening date leaves limited runway before the investment begins generating returns.
The broader context for the Galicia announcement is a Chinese automotive industry under acute domestic pressure seeking to anchor international revenue at sustainable margins. BYD, Chery, MG and others have pursued European manufacturing investment as a hedge against both tariff risk and the margin compression that Chinese domestic price warring has made chronic. The winding down of purchase tax subsidies has also dented domestic sales across the board for Chinese BEV makers.
MG’s hybrid models, which are subject only to the standard 10% EU tariff rather than the BEV-specific surcharges, grew 300% in Europe in 2025 to 137,000 units, illustrating how powertrain diversification has partly insulated the brand while local production infrastructure is built.
For Spain, the investment represents a continuation of a deliberate industrial policy to position the country as the preferred destination for Chinese automotive capital in Western Europe, leveraging the displacement caused by Nissan’s departure and the EU’s own EV transition agenda. The 2,000 jobs projected for Ferrol are politically significant for a region that has struggled with industrial decline, and the Spanish government’s willingness to deploy PERTE VEC funding to attract investment it might otherwise have lost to Hungary signals that the competition for Chinese manufacturing presence within Europe has become a live national priority.