Spain is betting big on Chinese capital to reindustrialise its automotive and battery sectors, even as it urges the European Union to harden investment rules to avoid a “race to the bottom” and preserve strategic autonomy. The result is a high-stakes balancing act: regional governments compete to attract EV and battery plants, while Madrid pushes for EU-wide “Made in Europe” standards that would bind such deals to local content, employment, and ownership thresholds.
The investment surge and the “gateway to Europe” pitch
Spanish regions are actively courting Chinese EV and battery manufacturers to revitalise their industrial base, leveraging Spain’s position as Europe’s second-largest car producer and a hub with relatively low labour and energy costs. In 2025, Chinese EV-related investment commitments in Spain rose 147% year-on-year, making Spain the third-largest European destination for such capital. Across all sectors, Spain accounted for 8.9% of Chinese FDI into the EU in 2025 (€642m).
The flagship project is the €4.1bn CATL–Stellantis joint venture in Aragon (Zaragoza), a lithium iron phosphate (LFP) battery gigafactory expected online by late 2026, with 50 GWh annual capacity and plans to produce one million EV batteries a year by 2028. CATL executives said the plant “will train up to 4,000 employees” for what will become Spain’s largest battery facility, underscoring the skills-transfer narrative. During construction, up to 1,700–2,000 Chinese workers are expected on site at peak, with visa and work-permit timing governing arrivals; officials initially denied large-scale Chinese labour inflows before later confirming the figure.
Other major deals reinforce the pattern. Geely and Ford announced a manufacturing joint venture at Ford’s Almussafes plant near Valencia to co-develop and produce four new EV models, with operations starting in the first half of 2027 and first vehicles in 2028; ownership is set at Ford 66% and Geely 34%. The strategic logic is explicit: use underutilised capacity and pre-position ahead of emerging EU local-content rules. In Galicia, SAIC (MG) is planning its first EU car plant in Ferrol, with an investment around €197m, roughly 1,000 direct jobs (about 540 in production and 460 in logistics), and regional plans for a supplier hub in As Pontes with 300+ additional jobs.
In Extremadura, Envision AESC’s LFP gigafactory in Navalmoral de la Mata (Cáceres) is being supported by Spain’s PERTE VEC II (€200m grants plus €100m loans). Earlier announcements cited up to 30 GWh and ~3,000 jobs; later reporting emphasises a first-phase maintenance workforce of ~320 highly qualified staff, with training for ~1,500 professionals. Documents seen by Reuters indicate commitments to 40% European employment and 40% Spanish management by 2030, alongside worker training programmes. In Navarre, Hithium signed a €400m investment agreement for a battery gigafactory, promising around 700 direct jobs by 2027.
Autonomous communities from Catalonia to Extremadura are branding themselves as China’s “gateway to Europe,” with dedicated China desks and outreach offices in China to court manufacturers. This competition is visible in the rush to secure battery and EV plants, even as some regional deals omit binding local-content or employment clauses, deferring those questions to the future EU law. Jorge Azcon, President of Aragon, said of the CATL–Stellantis plant, “It is evident the autos sector will change. Adapting will allow us to have many more years of production.” The message is clear: regions see Chinese capital as essential to maintaining industrial relevance, but they also recognise the need for EU-level safeguards to prevent a subsidy war and dependency trap.
The push for EU rules: “Made in Europe” and the Industrial Accelerator Act
This investment wave is unfolding alongside a parallel push from Spanish officials for tougher EU-wide investment rules. Mikel Irujo, Navarre’s business development chief, said,
“We are hugely worried for the future of industrial manufacturing in Europe because we are not competitive with China on any level.”
He is advocating a “Made in Europe” law and warned,
“We can’t be competing between member states – we need common norms for everyone.”
The draft “Made in Europe” / Industrial Accelerator Act (2026) proposes that when public money supports strategic technologies, a minimum share of products must be “made in Europe.” For public procurement or leases of EVs, vehicles would need to be assembled in the EU and 70% of components (excluding the battery) made in Europe. The rules cover batteries, solar, wind, hydrogen, and nuclear sectors.
Crucially, the Act introduces a foreign investment filter: for investments over €100m in emerging strategic sectors by investors from countries with more than 40% global manufacturing capacity (i.e., China), projects must meet four of six conditions, including at least 50% EU workers, foreign ownership capped at 49%, and technology transfer or licensing to benefit EU investments. Spain is also setting up a national Committee for Strategic Investments to assess such deals more closely, targeted for launch in autumn 2026.
At the national level, Spain already requires non‑EU investors in critical infrastructure and tech to submit detailed forms covering ownership, financing, past screenings or penalties, three-year business plans, management, and employment/investment commitments. Case-by-case conditions on employment, local content, and tech transfer are then negotiated. An Economy Ministry spokesperson said,
“Spain is committed to attracting productive, high-value-added investment that fosters technological development, innovation, and quality employment while establishing long-term local roots and contributing to more secure and diversified supply chains.”
Labour, transparency, and the Human Rights dimension
The CATL plant has been the flashpoint for controversy. Reports that CATL would bring up to 2,000 Chinese workers triggered denials; officials later confirmed a peak of ~1,700 Chinese workers during construction, with visa and work-permit timing governing arrivals. Critics argue this underscores Europe’s dependence on Chinese expertise to build its EV future, with one analysis stating
“Europe’s reliance on Chinese electric vehicle technology is intensifying as battery manufacturer CATL plans to deploy 2,000 employees to Spain.”
From a Human Rights perspective, the influx of foreign labour on large industrial sites raises questions about working conditions, visa regimes, and the extent to which migrant workers are protected under Spanish and EU labour standards. While Spanish authorities emphasise training and local hiring, the temporary dominance of Chinese crews during construction phases risks creating a two-tier workforce, with implications for unionisation, wage parity, and workplace safety oversight.
Transparency gaps persist. Some regional deals, such as SAIC in Galicia, omit binding local-content or employment clauses, deferring those questions to the future EU law. Meanwhile, a 2026 analysis by María Herrero Martínez notes that
“China’s new decree on overseas investment locks in State control over the country’s strategic know-how and calls into question the reindustrialization model promoted by Pedro Sánchez, based on attracting investment accompanied by technology transfer.”
This raises doubts about whether the technology-transfer expectations embedded in Spain’s industrial strategy can be met under Beijing’s tightened controls.
State Policy, strategic autonomy, and the dependency dilemma
Spain’s gambit is clear: use Chinese capital and technology to jump-start its EV and battery ecosystem, while lobbying Brussels to set rules that prevent a fragmented, subsidy-driven race to the bottom. The risk is that without robust EU-wide safeguards, Spain could become a “gateway” in name but a dependency in practice—hosting assembly lines and gigafactories while remaining reliant on Chinese cells, IP, and managerial control.
As State Policy, Madrid’s approach reflects a pragmatic reading of global industrial realities. Spain’s strategy seeks to navigate between these poles, recognising that unmanaged interdependence can generate vulnerabilities and asymmetries, especially given that
“China is not a democracy and will not be one for the foreseeable future, and this represents a strategic challenge.”
The government has therefore welcomed Chinese participation in battery and electric vehicle projects, but under clear conditions: localisation requirements, employment commitments and integration into domestic supplier networks. The aim is not passive assembly, but structured interdependence that generates technological spillovers.
However, policy analysts warn of a deeper strategic risk. ECF/ECipe commentary (2026) argues Madrid is engaging in “self‑deterrence”—softening its stance on EU cybersecurity and industrial rules not because Beijing threatened retaliation, but because Spain fears jeopardising Chinese investment pipelines. The analysis notes Spain is among the most vocal opponents of the new EU Cybersecurity Act (CSA2) alongside Hungary and Slovakia, and that some Spanish amendments resemble leaked Chinese suggestions—though it stresses this is not “coercion,” just risk-averse calculus. The broader concern is that Spain could end up requiring “27 national stress tests on China” before EU regulations advance, effectively letting investment dependence dictate policy.
The “Made in Europe” framework is the test case: if it hardens local-content, employment, and ownership thresholds, Spain’s influx of Chinese investment could be harnessed as a catalyst for genuine reindustrialisation. If it remains weak or fragmented, the country may find itself locked into a model where
“Chinese investors are ‘pre‑positioning themselves’ in friendly countries while EU rules are still taking shape,”
as Frank McCleary put it. For Madrid, the challenge is to ensure that industrial revival does not morph into strategic dependency.