China's top-selling automaker is taking its biggest step yet into European manufacturing, betting that local production can lock in the market share its MG brand has captured through five years of rapid growth.
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SAIC to build first European EV factory in Spain with €200 million investment
China's top-selling automaker is taking its biggest step yet into European manufacturing, betting that local production can lock in the market share its MG brand has captured through five years of rapid growth.
SAIC Motor Corp.'s MG brand will build its first European electric-vehicle factory in Spain's Galicia region, with an initial investment of €200 million and annual capacity of 120,000 vehicles, according to a person familiar with the plans. Construction is scheduled to begin in 2027, with production starting by the end of 2028, pending final approval from Spain's central government.
"The Galicia project is the largest industrial initiative in decades for the region," a representative of the Galicia regional government said, adding that the factory will integrate vehicle R&D, local component supply and smart logistics operations. MG's European unit said it plans to significantly expand local procurement and deepen cooperation with European technology partners and research institutions, including on next-generation battery technology.
The factory will be built from the ground up — a greenfield project — rather than acquired from a struggling European incumbent. SAIC chose Galicia for its industrial capabilities, mature manufacturing base and ability to support rapid implementation, according to an SAIC Europe market executive. The region sits on Spain's northwest coast near the port of Ferrol, giving the factory direct access to maritime logistics.
MG's sales in Spain have surged from 746 vehicles in 2021 to more than 45,000 in 2025, making it one of the top five brands in the market. Across Europe, MG sold more than 300,000 vehicles in 2025, with hybrid models accounting for over 140,000 deliveries after surging nearly 300 percent year over year. The brand's European sales reached 150,000 units in the first five months of 2026 alone.
The factory sits at the intersection of two trends reshaping the global auto industry
European automakers are idling capacity as the transition from combustion engines to EVs creates a production gap. Spain's passenger-vehicle output fell 12 percent in 2025, and Stellantis NV, Volkswagen AG and Ford Motor Co. have all suspended production at multiple European plants. Stellantis has allocated capacity at its Madrid factory to its joint venture with ZEEKR, while Geely is in talks to acquire production lines from Ford's Valencia plant and XPeng is discussing a potential acquisition with Volkswagen.
SAIC's greenfield approach differs from these acquisition strategies. The company is building its own supply ecosystem from scratch. Qingtao Power, a battery technology partner, is working with MG to launch the MG4 URBAN with semi-solid-state batteries — branded as MG SolidCore — targeting a range of approximately 400 kilometers under WLTP testing standards for the European market later this year.
"Chinese automakers are moving from version 1.0 to version 2.0 of going global," Gong Min, head of China auto research at UBS, said in late May. "As total vehicle exports approach 10 million units, overseas production becomes increasingly urgent. Local manufacturing is just the first step — the deeper challenge is the full industrial chain going abroad, including policy alignment, local consumer sentiment and dealer confidence."
SAIC's overseas push is reshaping its competitive position at home
The company reclaimed China's wholesale sales crown in the first five months of 2026 with 1.65 million vehicles, nearly 250,000 units ahead of BYD Co. Overseas sales reached 589,000 units, up 45.9 percent from a year earlier, accounting for more than a third of total volume. Autonomous-brand sales hit 1.17 million units, or 71.1 percent of the group total — a reversal from just two years ago when joint-venture partners SAIC-Volkswagen and SAIC-GM carried the bulk of volume.
SAIC's passenger-vehicle division delivered 434,000 units in the January-to-May period, up 42.5 percent. The MG4 has exceeded 10,000 monthly sales for eight consecutive months, hitting 15,000 in May. The IM LS6 extended-range model drove a 114.6 percent year-over-year increase for the IM brand, while the joint-venture Buick E7 from SAIC-GM surpassed 10,000 deliveries in its first month.
The Spanish factory gives SAIC a manufacturing foothold in its most important overseas market at a time when European regulators are tightening local-content requirements for EVs. Assembly alone is no longer sufficient — rules on component origin, battery localization and foreign ownership structure are all becoming stricter. SAIC's bet is that a fully integrated local operation can meet those requirements while protecting the market share it has built.
The path mirrors what Japanese automakers did in the 1980s, when Toyota built its Kentucky plant and Honda opened in Ohio in response to US trade restrictions. Those factories later became some of the most efficient production sites in their global networks. Whether SAIC's Galicia plant follows a similar trajectory will depend on how quickly it can scale capacity and how deeply it can embed local suppliers into its supply chain.
This article is for informational purposes only and does not constitute investment advice.
