The MG brand, owned by the Chinese giant SAIC-Motor, is considering building an electric vehicle factory in Spain to supply the European market. The deal, which is not yet finalized, is part of a strategy by several Asian manufacturers to produce within the European Union to mitigate the impact of tariffs on electric cars from China.
Industry sources and various reports indicate that Spain has reportedly emerged as one of SAIC's top choices for its first major production plant in the EUWithin the country, Galicia is gaining ground as a possible location, supported by its automotive tradition, its port logistics and the availability of large areas of industrial land.
MG and SAIC Motor focus on Spain
According to Bloomberg News, SAIC Motor's MG division is working on plans to establish a European factory in Spain dedicated to electric vehiclesThe agency quoted people familiar with the talks, who stressed that the decision is not yet final and that there are details to be worked out internally and with the authorities.
The information could not be independently verified by other agencies, but This fits with the general trend among Chinese manufacturers.which are accelerating their industrial expansion into Europe following the European Commission's investigations into state aid in China and the subsequent tariff measures. This phenomenon coincides with examples such as other Chinese manufacturers in Spain.
Meanwhile, SAIC executives in the Iberian market have been hinting that The company sees a plant in the EU as viable if a certain turnoverMG's growth in Europe in recent years has been remarkable, placing it on the radar of major traditional manufacturers and forcing them to rethink pricing and range strategies in the electric segment.
Galicia is positioning itself as a candidate location
Within the Spanish map, Galicia has positioned itself as one of the best candidates to host the eventual MG factory.The community has a long industrial tradition linked to the automotive industry, a consolidated supply chain, and previous experience in large-scale projects.
The Xunta has offered as its main asset the logistics and industrial platform of Salvaterra de Miño and As Neves (Plisan), a large industrial park in the Vigo metropolitan area. In this area, approximately half a million square meters of land would be available for industrial use, enough to build an assembly plant and its associated services.
Besides the soil, The proximity of the port of Vigo is considered a key factorThe port enclave offers maritime connections with the United Kingdom, Northern Europe and other Atlantic markets, which would facilitate the shipment of finished vehicles and the arrival of components imported from Asia in the initial phase of the project.
SAIC technical delegations have already visited these lands to assess their suitability, analyzing both the logistical aspects and the processing times and the possible public aidIn these types of investments, the ability of the administrations to expedite permits and offer a stable framework is usually almost as important as the location itself.
European tariffs and MG's industrial strategy
The possible step of MG cannot be understood without the new trade context between the European Union and China regarding electric carsBrussels has decided to impose additional tariffs on certain Chinese manufacturers, after concluding that they benefit from state aid that distorts competition. Meanwhile, debates are ongoing in Spain regarding subsidies for electric cars and its impact on the local industry.
These tariffs have increased the cost of directly importing electric vehicles produced in Chinese plants, calling into question the medium-term sustainability of a model based exclusively on importing finished carsFor companies like SAIC, building factories within the EU has become a way to avoid some of these additional costs.
Industry sources point out that Tariffs halted the factory's first attempt at an announcementwhich was expected to be made public around the summer of 2025. The tightening of the commercial climate would have forced a recalibration of the project, temporarily shelving the decision while negotiations were reopened and financial scenarios were reviewed.
Currently, the company has reportedly resumed those contacts. with a view to ensuring that any industrial investment in Europe has a sufficient level of production to recoup the effortTherefore, planning the volumes and models to be assembled is one of the most delicate points of the negotiation.
Factory model: CKD assembly and 2027 horizon
The company itself has hinted that, in the first phase, The plant would operate under the CKD (Completely Knocked Down) schemeIn this model, the main components of the vehicle are manufactured at the source and shipped disassembled to the new factory, where the final assembly takes place.
This formula allows start production in a shorter timeframe and with a lower initial investment than if a fully integrated manufacturing chain were installed from the outset. Over time, and depending on the evolution of demand, more local content and additional lines could be incorporated, including key suppliers such as battery suppliers, according to the guide on batteries.
Leo Zhang, the head of SAIC for Spain and Portugal, has even stated that The profitability of a European plant would be achieved starting from around 250.000 units per yearBelow that threshold, the fixed costs of investment and operation make it more difficult to justify the project compared to the alternative of continuing to import.
Regarding the schedule, there is a possibility that The facility could be operational by 2027Provided the investment decision is made well in advance, these dates are subject to change depending on regulatory factors, the pace of negotiations with government agencies, and the evolution of the European electric vehicle market.
MG in Europe: growth that drives investment
MG's interest in producing on European soil is closely linked to its rapid commercial expansion on the continent in recent timesThe brand has managed to carve out a niche for itself with a range of electric and electrified cars at competitive prices, forcing established competitors to react, as shown by market movements, for example. in the sales of other Chinese brands.
The company's internal forecasts indicate that SAIC could close 2025 with more than 300.000 MG cars sold in EuropeThis figure, if confirmed, would support the idea of ​​having a local production base in the region. As the electric vehicle fleet grows, so do the demands in terms of delivery times, after-sales service, and compliance with local regulations.
Having a factory within the European Union would not only mitigate the impact of tariffs, but also This would allow for better adjustment of production to the demand of each market., reduce logistics times and improve brand perception by associating it with local employment and investment.
For Spain, and especially for Galicia if it were ultimately chosen, A project of this magnitude would entail an investment of several hundred million euros.In addition to a significant impact on direct and indirect employment, it would also reinforce the country's role as one of Europe's leading automotive hubs during its transition to electric vehicles.
All this movement is taking place while political and business talks continue between Spain, Galicia and the heads of SAIC Motor, in a delicate balance between economic interests, European industrial strategy and the relationship with ChinaThe potential MG factory in Spain has thus become a clear example of how geopolitics, trade regulations and the energy transition intersect in the automotive industry.
