Inside MG's €200M Factory: The First Chinese EV Plant in the EU

The timeline, though subject to final approval from Spain’s central government, is ambitious. SAIC submitted its official application on June 1, 2026, with construction expected to start in 2027 . The company is targeting operations to begin before the end of 2028, aligning with a broader industry push to establish local footprints within a narrow window of opportunity .

The Tariff Trigger: Why MG Had to Build

This factory is primarily a survival move against an unprecedented trade barrier. In October 2024, the European Commission imposed definitive countervailing duties on battery-electric vehicles (BEVs) imported from China, concluding that China’s BEV value chain benefits from unfair subsidies that harm EU producers .

SAIC’s MG brand was hit hardest among the sampled companies, facing an additional individual duty of 35.3% on top of the existing 10% import tariff . This brought the total duty to around 45%, effectively stripping MG vehicles of their price competitiveness overnight . The financial impact was severe and immediate: MG’s share of the EU battery-electric vehicle market collapsed from 4.1% to roughly 1% by early 2026 .

By manufacturing inside the EU, MG sidesteps these border duties entirely, enabling it to return to competitive pricing in critical markets like Germany and France . Crucially, local production also future-proofs the brand against emerging “local content” requirements. EU regulations are moving toward mandating that at least 70% of components in state-supported EVs be sourced from within the bloc, a threshold that an import-only strategy would never meet .

The Broader Landscape: Chinese OEMs Colonize Europe’s Factory Floor

SAIC’s move does not occur in a vacuum. A structural wave of Chinese automotive localization is sweeping across Europe. During 2025, the top three Chinese automakers in Western and Central Europe—SAIC Motor, BYD, and Chery—collectively registered 617,600 passenger vehicles in the region, up from just 25,900 in 2020 .

To sustain and grow that presence beyond a single-digit market share, industry analysts argue localized assembly is no longer optional but mandatory . The competitive landscape is now defined by a race to build:

• BYD is the pacesetter. It is constructing an EV factory in southern Hungary, with production starting by the end of 2025, and a separate plant in Turkey set to produce vehicles by 2026. BYD’s executive vice president, Stella Li, has stated the company plans to produce all its European-sold EVs locally by 2028 .
• Chery is building from multiple angles. It has already begun producing vehicles at a former Nissan plant in Barcelona and has launched its Omoda and Jaecoo brands across several European markets. The company is also aggressively exploring additional production sites for its main Chery and Jetour brands in markets including Poland and Britain .
• Stellantis and Dongfeng forge a new path. In May 2026, the two companies agreed to a joint venture where Stellantis handed over its Rennes factory in France to Dongfeng for local production of the premium Voyah brand, a creative and mutually beneficial model for tariff circumvention .
• Others are scouting. Geely is launching its brand in Britain and actively evaluating factory locations, while Changan and Leapmotor are openly considering sites in Slovakia, Germany, and elsewhere .

SAIC’s Ferrol facility, which is the largest single EU greenfield investment announced by a Chinese automaker to date, sends a clear signal. Even the brand facing the highest possible tariff has opted against retreating. Instead, it is digging in. The Ferrol plant marks the moment when, for Chinese electric vehicle manufacturers, “Made in the EU” became a necessary strategic imperative rather than a distant ambition.