China’s automotive giant SAIC Motor has selected Spain as the location for its first manufacturing plant within the European Union, ending speculation that Hungary could secure another major Chinese investment in its rapidly expanding automotive sector.

The company, best known in Europe through its MG Motor – which has British origins and heritage – and Maxus brands, will build the new electric vehicle (EV) factory in the north-western Spanish region of Galicia. The decision represents a setback for Hungary, which had reportedly been among the final contenders to host the project.

Hungary misses out on EUR 200 million investment and thousands of jobs

SAIC plans to invest around EUR 200 million in the facility, which is expected to create more than 2,300 jobs. Construction is scheduled to begin in 2027, with vehicle production starting by the end of 2028.

The plant will be located between the port of Ferrol and the town of As Pontes and could eventually produce up to 120,000 vehicles annually. As part of the development, a vehicle assembly and logistics hub will also be established near the port, strengthening Galicia’s position as an emerging automotive centre.

Regional authorities have classified the project as strategically important and pledged to accelerate the permitting process to help bring the factory online as quickly as possible, writes Portfolio.

Strategic move amid EU-China trade tensions

The Spanish government also played an active role in supporting the investment. According to reports, the project gained momentum following Spanish Prime Minister Pedro Sánchez’s visit to China earlier this year, which helped reinforce industrial ties between Madrid and Beijing.

For SAIC, the factory carries particular significance as it will become the company’s first wholly owned production site within the EU. Manufacturing vehicles inside the bloc would allow the Chinese carmaker to reduce its exposure to the European Union’s additional tariffs on Chinese-made electric vehicles.

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BYD is already here, but there could have been another big carmaker settle in Hungary

The decision comes as Chinese manufacturers continue to expand their European presence through new production facilities and sales networks. While Hungary has successfully attracted several major Asian automotive investments in recent years, including BYD’s upcoming plant in Szeged, SAIC ultimately opted for Spain.

Even though the European Union put heavy sanctions on electric cars that are produced in China, there is a growing competition among European countries seeking to attract Chinese carmakers, as governments across the continent offer more and more attractive conditions to secure investment, jobs and a place in the future of electric vehicle production.

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