MG’s China-Owned Parent Plans First European EV Plant in Spain as EU Tariffs Bite

MG, the fast-growing car brand owned by China’s state-backed auto giant SAIC, is preparing to build its first European electric-vehicle factory, an investment that could reshape the price war for EVs across the continent.

Regional officials in Galicia, in northwest Spain, say the plant would break ground in 2027 and start producing vehicles before the end of 2028. The initial investment: about $215 million (roughly €200 million). The target: up to 120,000 vehicles a year and about 2,300 jobs.

The move is also a blunt response to Europe’s tougher stance on Chinese-made EVs. By building inside the European Union’s single market, MG can sidestep some of the steep import duties now hitting cars shipped from China, and stay closer to customers in a region where the brand has already become a major player.

A $215 million bet on Galicia, and a lot of unanswered questions

Galicia’s government is pitching the MG project as a marquee win for the region, with the proposed site near A Coruña, a coastal city better known in the U.S. as a stop on Spain’s Atlantic edge than as an auto-manufacturing hub.

The planned capacity, 120,000 vehicles annually, would make it a mid-size European plant. It’s nowhere near the mega-factories that can crank out more than 300,000 cars a year, but it’s large enough to supply a dedicated lineup for Europe if demand holds.

Still, the headline number, $215 million, also raises eyebrows in an industry where costs balloon quickly once companies add paint shops, robotics, and battery-pack assembly. So far, officials and the company haven’t spelled out how “complete” the factory would be: a full manufacturing operation or more of an assembly site. That distinction matters for local economic impact, and for how much MG can truly claim to be “made in Europe.”

Europe’s tariffs on Chinese EVs are changing the math

The clearest driver is Brussels’ new tariff regime aimed at EVs built in China. SAIC is among the hardest hit, facing duties cited as high as 45.3% on some vehicles, an enormous penalty for a brand that has leaned on aggressive pricing to win buyers.

For automakers, there are only so many ways to absorb a tariff shock: raise sticker prices, sacrifice margins, or move production. Building inside the EU offers MG a direct path to protect market access, stabilize pricing, and reduce exposure to trade policy that could tighten further.

MG’s broader European sales have surged, topping 300,000 registrations in 2025, according to figures cited in the French report, but its EV-only sales reportedly fell 33% to 48,479 units. That’s the tension at the heart of the Spain plan: MG wants a European EV factory just as its electric momentum has cooled, and competition is getting fiercer.

Spain is becoming a landing pad for Chinese automakers

MG’s announcement lands in a moment when Spain is increasingly positioning itself as Europe’s on-ramp for Chinese car companies.

Chery, another major Chinese automaker, has already taken over Nissan’s former factory in Barcelona, producing models including the Omoda 5 and Jaecoo 7. And Leapmotor is set to build certain EVs in Spain through a partnership with Stellantis, the multinational behind Jeep, Chrysler, Ram, and Dodge, at a facility in Zaragoza.

The pitch is straightforward: EU market access, a deep auto-manufacturing workforce, and regional governments willing to compete with industrial sites and incentives. But there’s a downside, too. If multiple companies scale up at once, they can end up fighting over the same limited pool of skilled workers, engineers, and industrial land, pushing wages higher and eroding the cost advantage that drew them in.

MG already has a big footprint in Europe, now it wants local production

MG isn’t entering Europe as a niche import. The brand reportedly works with more than 1,300 dealer partners across 34 markets, giving it a distribution network that can support higher volumes, if buyers keep showing up.

Industry projections have floated models like the MG4 as potential candidates for European production, though no official lineup has been confirmed. The logic is obvious: build the high-volume EVs that are most exposed to tariffs when shipped from China.

Local production could also help MG tailor vehicles to European tastes and regulations, everything from driver-assistance calibration to trim and equipment packages, while improving parts availability and potentially resale confidence. But the biggest lever remains price. If tariffs force imported EV prices up, building in Europe becomes a way to keep MG’s value proposition intact.

A bigger wave is coming, and Europe could end up with too many factories

MG’s Galicia plan is part of a broader shift: Chinese automakers are moving from exporting into Europe to manufacturing inside it. A sector report cited in the French article estimates Chinese-backed projects could reach about 625,000 vehicles of annual capacity by 2027, rising to roughly 1.35 million around 2028 if investments materialize.

That kind of buildout carries a risk of overcapacity, too many cars chasing too few buyers, setting up a brutal price war that could squeeze margins and put weaker plants on the chopping block.

Spain is also trying to strengthen the supply chain that makes EV manufacturing viable, especially batteries. One major example: battery giant CATL and Stellantis agreed in late 2024 to form a joint venture in Zaragoza that could reach up to 50 GWh of LFP battery capacity, with investment announced up to about $4.3 billion (roughly €4 billion) and production targeted for late 2026.

Europe’s strategy is starting to look like a balancing act: use tariffs to protect domestic industry, but accept that those same tariffs can push Chinese companies to build factories on European soil. For MG, the Spain plan could be a turning point, if the company follows through with a real manufacturing footprint, not just a headline-grabbing assembly line.