SAIC Motor plans to build MG’s first European electric vehicle factory in Spain. The Chinese state-owned company is choosing Spain over Hungary to avoid the hefty EU tariffs on cars imported from China.
Sources familiar with the decision say Spain has emerged as the preferred location. Hungary was the other top contender for the plant.
The sources requested anonymity because discussions remain ongoing. They cautioned that SAIC hasn’t formally approved the decision yet.
Key details are still being negotiated – including how much SAIC will invest, how many cars the plant will produce annually, and when construction might begin.
Spain Beats Hungary for Chinese Investment
Spain’s selection represents a shift from expectations that Hungary would land another major Chinese automotive project. Budapest has attracted significant Chinese EV and battery investment recently, positioning itself as a key destination for companies expanding into Europe.
Hungary built its appeal through an expanding supplier network and strong logistics connections. The country also benefits from its role in China’s Belt and Road Initiative.
BYD already committed to manufacturing cars in Hungary, strengthening the country’s position as a Chinese automotive hub.
SAIC and MG declined to comment on the plant location decision.
Local Production Becomes Essential Strategy
The planned Spanish factory highlights how Chinese automakers must build cars locally to maintain growth in Europe. Brussels has increased scrutiny of state subsidies and competitive practices in the EV sector.
By assembling cars on EU soil, SAIC-MG would avoid the additional tariffs imposed on Chinese-built electric vehicles last year.
Those tariffs significantly impact pricing competitiveness. A European factory would restore MG’s price advantage in one of its most important export markets.
Spain’s EV Manufacturing Push
Spain has actively pursued EV investment through government incentives and its established automotive industry. The country leverages decades of car manufacturing experience to attract new electric vehicle projects.
Zaragoza stands out among potential locations, already hosting substantial Stellantis production operations.
The city offers a skilled workforce and logistics infrastructure capable of supporting a major manufacturing facility.
For MG, a European factory would mark the brand’s largest industrial investment on the continent since SAIC acquired the nameplate in 2007. The brand has achieved strong success in the UK with models like the MG4 and newer vehicles from its IM division.
The plant would also validate Spain’s goal of becoming southern Europe’s electric vehicle manufacturing center.
