SAIC Motor to Build $232M Plant in Spain, Bypassing EU Tariffs

Chinese state-owned automaker SAIC Motor Corp. Ltd. has announced plans to invest approximately €200 million ($232 million) to build its first European Union manufacturing facility in the Galicia region of northwestern Spain, a strategic move designed to bypass escalating EU tariffs on Chinese-made electric vehicles. The plant, which will produce vehicles under SAIC’s British-heritage MG brand, is slated to begin production in 2028 with an annual capacity of 120,000 vehicles.

A Strategic End Run Around Trade Barriers

The investment comes as SAIC faces the steepest EU tariff burden of any Chinese automaker. After the European Union designated the company as “uncooperative” during an anti-subsidy probe, SAIC was hit with a maximum supplementary tariff of 35.3% on top of the standard 10% import duty — bringing the total levy on its Chinese-made EVs to a punishing 45.3%, as Caixin Global reported.

By manufacturing locally within the EU, SAIC can sidestep these tariffs entirely, selling vehicles produced in Spain at standard market rates. The strategy mirrors the playbook used by Japanese and Korean automakers decades ago, when they established European factories to overcome trade barriers and deepen market integration.

The Galicia Project: By the Numbers

The facility will be split across two sites in Galicia: a production plant at the Outer Port of Ferrol and a separate industrial and logistics hub in As Pontes de García Rodríguez. According to CnEVPost, the complex will combine vehicle production, research and development, component supply, and intelligent logistics into a modern industrial hub.

Key details include:

• Investment: €200 million ($232 million)
• Annual capacity: 120,000 vehicles (first phase target before end of 2028; second phase timeline unclear)
• Job creation: Approximately 2,300 positions (1,000 direct and 1,000 indirect in Ferrol; 300 at As Pontes logistics center)
• Timeline: Construction slated for 2027; production expected to begin in 2028
• Brand: MG (Morris Garages), SAIC’s British-heritage passenger car brand

“By investing in local skills, a stronger European presence and a more competitive automotive ecosystem, we are accelerating Europe’s path to a smarter and more sustainable mobility future,” said William Wang, Managing Director of MG Europe, as quoted by electrive.com.

Why Galicia Won

Galicia was chosen over alternative sites in Turkey and Hungary. The region offers strong shipping connections to the UK — MG’s largest European market, where it sold 84,500 units in 2025 — along with an established industrial manufacturing base, an existing automotive ecosystem, and a supportive regional government that declared the project a “strategic industrial project.”

Alfonso Rueda, President of the Galicia regional government, confirmed the government’s backing, stating: “It will be the first industrial project of the multinational in Europe,” as reported by just-auto.com. The Galician government has established a dedicated unit within its Economic Office to oversee coordination.

However, the project remains conditional on securing land concessions (port rights), foreign direct investment authorization from Spain’s Council of Ministers, positive economic assessments, and public backing.

MG’s European Success Story

MG has emerged as the most successful Chinese auto brand in Europe by a wide margin. The brand sold 307,000 vehicles in Europe in 2025, up 26% year-on-year, making it the only Chinese brand to rank among the top 20 in European market sales. Hybrid models saw particularly explosive growth, rising 300% to 137,000 units.

MG’s European management had previously stated that local manufacturing would become economically viable once annual sales reached approximately 300,000 units — a threshold the brand crossed in 2025. Earlier this year, MG celebrated the milestone of its one-millionth vehicle delivery in the European market. Since returning to the UK market in 2011, the brand has deployed more than 1,300 dealers across 34 European countries.

A Wave of Chinese Auto Investment in Europe

SAIC’s investment is part of a broader wave of Chinese automakers establishing production footholds in Europe:

• BYD is ramping up production at its new plant in Hungary (trial production began February 2026)
• Chery has been producing vehicles since late 2024 through a partnership with Ebro-EV Motors at a former Nissan plant in Barcelona
• Leapmotor plans to launch production of the Leapmotor B10 at a Stellantis facility near Zaragoza, Spain later this year
• Xpeng and GAC are using SKD assembly at Magna Steyr in Austria
• Geely and Changan are actively securing local facilities

Spain, which boasts one of the largest auto manufacturing industries in Europe, is emerging as a particular hub for this wave of Chinese investment, offering competitive costs within the EU single market and strong logistics connectivity.

What This Means for the European Auto Industry

SAIC’s move signals a structural shift in the global automotive landscape. Chinese automakers are transitioning from exporting to localizing production in Europe, bringing jobs and industrial capacity to European regions while raising questions about technology transfer and competition with established European OEMs like Volkswagen, Stellantis, and Renault.

The decision to build in Spain rather than the UK is notable given MG’s British heritage and the fact that the UK is its largest European market. However, the UK’s departure from the EU single market made it less attractive for a factory serving the entire European continent.

The Road Ahead

With construction set to begin in 2027 and production targeted for 2028, SAIC’s Spanish plant represents a long-term bet on the European market. Key questions remain: Which specific MG models will be produced at the facility? Will the second phase expand capacity beyond 120,000 vehicles? And how will European OEMs respond to the accelerating localization of Chinese automotive manufacturing on their home turf?

What is clear is that the era of Chinese automakers simply exporting to Europe is giving way to a new phase — one in which they are becoming European manufacturers in their own right.