MG’s parent company SAIC is building in Europe because it has to — the EU handed it the highest tariff rate of any Chinese automaker, and a 45.3% combined levy on imported BEVs is not a business model.
MG has officially confirmed its first mainland European manufacturing facility, to be built in Ferrol, a port city in Galicia, north-west Spain. The investment is approximately €200 million, production starts in 2028, and the facility will have annual capacity for up to 120,000 vehicles. More than 2,000 jobs are expected across Europe.
The tariff problem SAIC had to solve
SAIC faces EU anti-subsidy duties of 35.3% on top of the standard 10% import tariff — a combined rate of 45.3%, among the highest levied on any Chinese automaker. For context, BYD pays 27% in total duties, while Tesla pays 17.8%. SAIC received that elevated rate largely due to its limited cooperation with the EU’s anti-subsidy investigation. At 45.3%, importing BEVs from China into Europe is not viable at competitive price points, but local EU production eliminates that burden entirely.
SAIC’s plans to establish European production have been known since 2023, before the EU introduced the special tariffs. By mid-2024, north-west Spain had emerged as the preferred location, partly due to the region’s strong shipping connections to the UK, which remains MG’s most important European market. Hungary was also considered before Spain was finalised.
Why Galicia
Galicia already hosts Stellantis’ major vehicle manufacturing plant in Vigo, one of the largest automotive production facilities in Spain. More recently, Stellantis announced plans to work with Chinese EV manufacturer Leapmotor on European vehicle production, further strengthening Galicia’s links to Chinese automotive investment.
The project benefits from access to port infrastructure, an established supplier base, and proximity to existing automotive operations. Regional authorities highlighted the area’s industrial capabilities, skilled workforce, and logistics connections as key factors behind the decision. The Spanish government’s PERTE VEC programme, a state-backed strategic fund for electric and connected vehicle investment, provided a further financial inducement absent from most Eastern European alternatives.
The specific site sits between Ferrol and the nearby town of As Pontes. The factory will be constructed in two phases. Which models will be produced there has not been confirmed, though BEVs are the logical priority given where the tariff pain is. One report suggests the upcoming MG2, a B-segment EV smaller than the current MG3, could be a candidate with a design study due at the 2026 Goodwood Festival of Speed.
MG is not alone in Spain
SAIC is far from the first Chinese automaker to commit to Spanish production. Chery has been building vehicles in Barcelona since late 2024 through its joint venture with Ebro-EV Motors using the former Nissan plant that Spanish authorities had been seeking to repurpose since Nissan’s 2021 exit. Leapmotor is preparing to launch production of the B10 at a Stellantis facility near Zaragoza later this year.
Spain has become the preferred landing zone for Chinese manufacturing investment in Europe and the EU’s own tariff regime is the main reason why. The tariffs were designed to give European manufacturers time to compete. What they have actually done is accelerate the establishment of Chinese manufacturing capacity inside the EU’s borders where the tariffs do not apply. A Chinese carmaker building in Spain is a European manufacturer by definition.
The honest questions
MG is upfront that making cars in Europe costs more. Regional boss William Wang has acknowledged the brand will have to rely on its image and perceived value rather than low prices, because production costs will inevitably be higher. That is a real tension for a brand that built its European foothold largely on competitive pricing.
Whether 120,000 units annually is achievable by 2028 is also worth watching. The 120,000-vehicle capacity figure applies once the second phase is completed and it remains unclear when that will happen. Phase one numbers have not been specified publicly.
MG also noted in its announcement the launch of its first mass-produced SolidCore semi-solid-state battery and its Hybrid+ and PHEV portfolio. Those are genuine technology milestones but their relevance to the Ferrol plant is unclear for now, no powertrain decisions for the facility have been confirmed.
Where MG stands in Europe
The timing of the factory announcement coincided with MG reaching a significant milestone: the brand celebrated its one-millionth sale in the European market. In the UK alone, MG’s market share stands at 4.04% year-to-date through April with close to 31,000 sales. The UK remains the brand’s strongest single European market and Ferrol’s port access to Britain is not accidental.
The Galicia factory is not the end of MG’s reliance on Chinese production, the MG4 Urban and other models will still be imported. But it is the clearest signal yet that SAIC is treating Europe as a long-term manufacturing base, not just an export market.
