MG thinks of northern Spain for new plant

MG Motor, a brand of the Chinese manufacturer SAIC, is considering Galicia in northwest Spain as the location for its planned European factory. The decision is expected by the end of September, but other locations are also being considered.

As the Spanish portal Europa Press reports, citing sources within the company, the region of Galicia is the carmaker’s favorite. The decision will be made before 30 September, and the first electric vehicles should roll off the production line there three years later, so in the last quarter of 2027. However, locations outside Spain, such as Hungary or the Czech Republic, are also under review.

Avoiding high import tariffs

The plans for MG’s European plant are not directly related to the EU’s (still provisional) special tariffs on Chinese electric cars; they were first announced last year. In the summer of 2023, William Wang, Head of Europe at MG Motor, said in an interview that it was time to set up local production “if you sell 200,000 cars a year.”

It would also save the ten percent import duty, Wang said at the time. As MG’s parent company, partly state-owned Chinese SAIC is most affected by the EU plans with a special duty of 37.6% (i.e., 47.6 percent in total), production in Europe (without import duties) is now likely to pay off sooner.

Why Spain?

Last year, Wang stated that energy costs, labor costs, and other factors would have to be examined to determine which country was best suited. That also includes logistics: labor costs are lower in the Czech Republic, for example, while Hungary offers generous subsidies, as demonstrated by the establishment of BYD, the CATL and Eve Energy battery plants, and the BMW factory currently under construction in Debrecen.

According to Spanish media, one advantage of Galicia’s location northwest of the Iberian peninsula is that it is closer to the UK, which remains MG’s most important market in Europe. It also has better shipping connections.

In addition to Galicia, SAIC is said to have already established contacts in the autonomous regions of Cantabria (around Santander) and Aragon, even if the latter autonomous community is located in the center of the country.

Another factor in Spain’s favor is MG’s already strong presence in the country. Last year, the MG ZS EV was the best-selling electric car in Spain for several months, and this April, the MG4  achieved the same success.

MG targets almost 100 service locations in Spain and operates a logistics center in Barcelona that supplies the southern European region with vehicles.