The possible choice of Spain as the site of MG's first European factory It's one of the most closely watched industrial developments in the automotive sector. The Chinese group SAIC Motor, owner of the historic British brand, is finalizing the design of a project that could change the automotive landscape in the Iberian Peninsula, which is currently undergoing a transition to electric vehicles.
According to various reports leaked to international and national media, the Chinese company has decided to invest in produce within the European Union to circumvent the impact of new tariffs on Chinese electric cars. Spain has positioned itself ahead of other competing countries, with Galicia and Asturias as the leading candidates to host a plant that aspires to function as a true European hub for MG. Attention…
MG, the Chinese brand from SAIC that has already conquered the Spanish market…
In a very short time, MG has gone from being a virtually nonexistent brand to becoming one of the best-selling brands in Spain by volumeThanks primarily to a strategy based on competitive pricing and a range focused on the entry-level and mid-range segments, the brand registered 45.163 vehicles in Spain in 2025 alone, representing a growth of nearly 47%, positioning it as a key player in the popularization of electric and electrified cars.
This strong commercial pull in the Spanish market This has not only strengthened MG's brand awareness among drivers, but has also provided a compelling argument for positioning Spain as an industrial base. For SAIC, producing where it already has a presence is key. a significant market share It facilitates logistics, adapting products to local tastes, and strengthening a consolidated supplier network.
Why SAIC wants to manufacture on European soil…
The trigger for SAIC Motor's strategy came from Brussels. After months of investigation, the European Commission concluded that Chinese electric vehicle manufacturers receive public subsidies which distort competition, and decided to apply additional tariffs to the import of battery electric vehicles (BEVs) from China. In the case of the SAIC group, the surcharge reaches 35,3%, in addition to the general 10% applicable to all cars.
Given this scenario, continuing to export directly from China becomes much less attractive. Therefore, the company has activated a plan to fully engage in local production: assemble and, in a later phase, manufacture in Europe to avoid tariffs and maintain its aggressive pricing policy, one of the pillars of its recent growth.
Chinese brands have basically found two ways to circumvent tariffsSAIC is considering either building complete factories in Europe or shipping cars as CKD (completely disassembled) kits for assembly in European plants. SAIC is considering combining both approaches, starting with the assembly of disassembled vehicles and leaving the door open to deeper industrialization if the project reaches sufficient scale.
Spain, an industrial powerhouse, and Galicia as the preferred candidate against an Asturias that refuses to give up…
Spain has consolidated its position as the second largest vehicle manufacturer in Europe, reaching a production of 2,3 million units. This industrial potential, combined with public incentives, positions the country as the ideal candidate to host the new MG plant. The arrival of SAIC Motor would represent a vital boost for the electric mobilityThis will allow traditional factories to make the necessary transition away from combustion engines. Securing this investment is essential to protect jobs and strengthen the automotive sector's contribution to the national Gross Domestic Product.
Galicia is currently leading the race to attract this project thanks to its strong tradition in the car manufacturing and a highly developed supplier ecosystem. The Galician government has intensified contacts with the Chinese giant, highlighting the logistical advantages of the province of A Coruña and its strategic proximity to the port of Vigo. This location would facilitate export routes to Northern Europe and the United Kingdom. Furthermore, prior experience with large industrial plants gives the region a key competitive advantage in managing infrastructure of this technical scale.
For its part, Asturias remains firm in the struggle, offering the Logistics and Industrial Activities Zone as an enclave prepared for the automotive industry The Principality of Asturias is seeking to leverage its previous negotiating experience to attract SAIC, offering extensive administrative support and institutional backing. Although Galicia appears to be taking the lead after official visits to China, Asturias hasn't ruled out making a surprise move by leveraging its existing infrastructure. Both regions are vying to transform Spain into Europe's leading electric vehicle hub through this historic and strategic Asian investment.
Hungary is losing ground to the Spanish option…
Until recently, Hungary appeared to be the frontrunner to attract new Chinese investment in the automotive and battery sectors. The Central European country has forged a close relationship with Beijing, with Lower labor costs, strategic location in the heart of the continent and a direct connection to China's Belt and Road Initiative. It's no coincidence that major projects by companies like BYD, CATL, and NIO are being established there.
However, in the specific case of MG and SAIC, leaked information suggests that Spain would have overtaken Hungary in the raceIt benefits from a robust automotive industry, experience in integrating Chinese technology into European plants, and above all, a market in which MG has already positioned itself among the top sellers.
A key example is the Figueruelas plant (Zaragoza), where the Vehicle manufacturing by China's Leapmotor will begin in Octobercombining Chinese technology with Spanish production. This precedent demonstrates that the China-Spain industrial cooperation model is viable from both a technical and political standpoint, something SAIC is closely observing as a reference for its own entry into the market.
Planned industrial model: from initial CKD to full production…
MG's project in Spain will begin operations using the CKD assembly system, where components arrive from China for final assembly. This strategy reduces the initial investment and mitigates the impact of the tariffs on electric cars imported. Over time, the factory would evolve towards integrated production, including complex processes such as stamping and painting. This flexible approach aims to optimize operational efficiency while the brand consolidates its presence in the European market, ensuring a swift and competitive entry into the region.
so that the car factory To ensure profitability, SAIC executives estimate reaching a volume of 250.000 units annually. Although there is no official confirmation, it is speculated that the first model will be a compact city car like the anticipated MG2, designed to compete directly with European rivals. This approach will allow the Asian brand to establish a strong presence in the affordable electric vehicle segment, offering advanced technology at competitive prices. The goal is to attract consumers seeking sustainability without sacrificing excellent value for money.
The planned schedule places the launch of the first vehicle manufactured in Europe in 2027. This requires the selection of the final location and the signing of the engine aids These steps must be finalized in the coming months to begin construction. Meeting these deadlines is vital for the plant to be operational according to the company's strategic roadmap. If achieved, Spain would reinforce its leadership in the global automotive industry, ensuring a successful transition to electromobility and attracting new, high-value-added technology investments.
Negotiations are still ongoing with significant risks on the table…
SAIC's final decision on its new plant is not yet firm, as the company analyzes critical factors such as total investment and tax support. There is a real risk of the project not being built if negotiations with the government do not meet expectations, which could shift the project to other countries. Furthermore, the current economic uncertainty Global and trade tensions will influence the future expansion strategy of SAIC and MG. This scenario necessitates caution, as any disruption to the agreed-upon terms could drastically alter the industrial plans for Spain.
The success of the factory also depends on the evolution of the demand for electric vehicles in the European market, which is proving to be uneven. External factors such as energy prices, charging infrastructure, and the continuation of public subsidies are crucial to ensuring a return on investment. SAIC is closely monitoring these indicators to adjust its production capacity and avoid excess inventory. A slower adoption of sustainable mobility in Europe could delay the project's timeline, directly impacting the financial viability of this ambitious international undertaking.
Spain occupies an enviable strategic position and, if the investment is confirmed, it will consolidate its position as a benchmark in the car industry Electricity. Galicia and Asturias are competing fiercely to host this plant, which would serve as a bridge for the arrival of Chinese technology on the continent. Even if the talks don't come to fruition, the demonstrated interest sets a valuable precedent for attracting future technology investments. The country faces the challenge of transforming its automotive sector, demonstrating its capacity to lead the transition to a more innovative, efficient, and sustainable production model.
