MG Motor, owned by China’s SAIC Motor, is preparing for one of its most important moves in Europe yet — setting up its first manufacturing facility inside the European Union. Spain’s Galicia region has reportedly been selected for the project, marking a major step in MG’s transition from being a Chinese export-led EV brand to a more localised European carmaker.
The move comes at a time when Chinese automakers are facing rising tariff pressure in Europe, while also gaining strong traction with value-focused electric vehicles. For MG, which has become one of the most visible Chinese-origin brands in Europe, local production could help protect pricing, improve margins and strengthen its long-term position in the region.
SAIC-owned MG plans local EV production in Spain to reduce tariff exposure and strengthen its European market strategy.
MG’s Europe Factory Plan: What We Know So Far
SAIC’s proposed European manufacturing complex is expected to come up in Galicia, Spain, with Ferrol and As Pontes being linked to the project. The investment is estimated at around €200 million in the initial phase.
The facility is expected to start construction in 2027, subject to necessary approvals, with operations targeted before the end of 2028. Once fully scaled, the plant could produce up to 120,000 vehicles annually.
The project is also expected to generate significant employment in the region, including direct and indirect jobs. Apart from vehicle assembly, the facility is also likely to function as a logistics and industrial hub for MG’s European operations.
Why Spain Makes Sense For MG
Spain has quietly emerged as one of the most attractive destinations for Chinese automakers looking to manufacture inside Europe. Chery has already moved into Spain through its partnership with Ebro at the former Nissan facility in Barcelona, while Leapmotor is expected to use Stellantis’ Zaragoza plant for European production.
For MG, Spain offers multiple advantages. It is an established automotive manufacturing base, has access to European suppliers, provides port connectivity and is strategically positioned to serve major European markets. Galicia also gives SAIC an opportunity to build an integrated logistics-focused operation, which can support both manufacturing and distribution.
The political backdrop is equally important. Spain abstained during the EU vote on additional tariffs on Chinese EVs, making it a more acceptable investment destination for Chinese automakers compared to countries that strongly supported the tariff move.
Tariffs Are The Real Trigger
The European Union imposed additional countervailing duties on battery electric vehicles imported from China after concluding that Chinese EV makers benefited from state subsidies. For SAIC, the additional duty is among the steepest at 35.3%. When added to the existing 10% import duty, China-built MG electric cars face a major cost disadvantage in Europe.
This changes the economics of selling EVs in the region. A car imported from China has to absorb or pass on the tariff cost. A car built within the EU avoids that import duty structure, giving MG far more flexibility on pricing.
That does not automatically mean MG cars will become cheaper overnight. Manufacturing in Western Europe is costlier than manufacturing in China. Labour, energy, compliance and local sourcing costs are higher. However, local production can still reduce the tariff burden and allow MG to either improve margins, sharpen pricing or do a mix of both.
MG’s European Growth Has Made Local Production Viable
MG is no longer a fringe Chinese brand in Europe. The brand crossed 300,000 vehicle sales across Europe and the UK in 2025 and has built a strong dealer network across the region. This scale makes a local manufacturing decision commercially logical.
For any carmaker, setting up a plant requires a certain level of sales confidence. MG now has that. The brand’s portfolio includes EVs, plug-in hybrids and combustion models, and it has gained popularity by offering strong equipment levels at competitive prices.
The MG4 EV has been one of the brand’s most important products in Europe, helping MG establish credibility in the affordable electric hatchback segment. The Cyberster has added a halo effect, while SUVs and plug-in hybrids have widened the brand’s reach.
Europe’s EV Market Is Becoming More Localised
MG is not alone. BYD is setting up manufacturing in Hungary, Chery is using Spain, Xpeng and GAC Aion are using contract production through Magna Steyr in Austria, and Leapmotor is relying on Stellantis’ manufacturing footprint.
This shows that Chinese automakers are no longer treating Europe only as an export market. They are now trying to become part of Europe’s manufacturing ecosystem.
This has three major implications:
-
First, Chinese brands can reduce tariff exposure.
-
Second, they can improve their acceptance among fleet buyers, governments and consumers who prefer locally assembled vehicles.
-
Third, they can shorten supply chains and respond faster to European market demand.
What It Means For European Carmakers
MG’s local manufacturing plan increases pressure on legacy European carmakers such as Volkswagen, Renault, Stellantis, Skoda, Opel and Fiat. These companies are already pushing hard to bring more affordable EVs to market, especially in the sub-€25,000 category.
Until now, tariffs gave European carmakers some protection against lower-cost Chinese EVs. But if Chinese brands start building inside Europe, that advantage reduces sharply.
A Europe-built MG would compete on almost the same regulatory and tariff footing as a Volkswagen, Renault or Stellantis product. The battle would then shift to product strength, pricing, battery technology, warranty, software, dealer reach and residual value.
Why This Matters Beyond Europe
MG’s Spain move also has relevance for markets like India. It shows how global automakers are now rethinking manufacturing footprints in response to tariffs, trade policy and localisation requirements.
In India, MG operates through JSW MG Motor India, and localisation is already a key strategic pillar. The European development reinforces a broader global trend: brands can no longer rely only on exports from one country. To scale sustainably, they need regional manufacturing hubs.
For Chinese-origin brands, this is becoming even more important as trade barriers rise across major markets. Europe is one example. India has its own localisation requirements and cautious approach towards Chinese investments. The US has even stronger barriers against Chinese EVs.
The future of global EV expansion will therefore not be export-led alone. It will be local, regional and politically aware.
Auto Punditz Take
MG’s planned Spain factory is not just a capacity expansion. It is a strategic shield.
The brand has already built strong consumer visibility in Europe. But with steep tariffs on China-made EVs, its cost advantage was at risk. By manufacturing within the EU, MG can defend its value positioning and strengthen its long-term competitiveness.
For Europe, this could accelerate the next phase of EV competition. Chinese brands will no longer be outsiders shipping cars from Asia. They will increasingly become local manufacturers employing European workers, using European suppliers and selling European-built EVs.
For legacy carmakers, that is the bigger challenge. Tariffs may slow Chinese EV imports, but they cannot stop Chinese brands from building inside Europe. MG’s Spain move is a clear signal: the next battle in the EV market will not just be China versus Europe. It will be China inside Europe.
