How Chinese automakers are reshaping Europe's manufacturing footprint
From Hungary and Spain to the UK and Slovakia, Chinese vehicle manufacturers are accelerating investment across Europe through new factories, production partnerships and acquisitions as regulatory changes drive localisation
Chinese vehicle manufacturers are on the cusp of transforming Europe’s vehicle manufacturing sector. Collectively, they are building new plants, taking over unwanted plants, using spare capacity in others and will do more of each of these in the coming years.
There are many drivers behind this move but changing EU policy, notably the supplementary tariffs on Chinese-made EVs announced in late 2024, and now by the incoming Industry Accelerator Act (IAA). Together these are encouraging Chinese companies to accelerate plans to make vehicles in the EU and, potentially, the UK as well. For now, Turkey, which had been expected to be a recipient of Chinese investment, appears to have lost out: BYD has cancelled plans to build a factory there, much to the annoyance of the Turkish authorities.
Current Chinese OEM European production footprint
This consists of the following:
BYD, which has just started full production in an all-new factory at Szeged in Hungary; this has been built with an initial annual capacity of 150,000 units.
Chery, which has just started production of Omoda 5 vehicles at the former Nissan factory in Barcelona; this factory has experienced several delays, although it has made a few utility vehicles for the Spanish-only brand Ebro in the meantime. Chery has said it wants this factory to play a global export role, with production capacity of 150,000 vehicles a year; it remains to be seen how this plant’s role changes if and when production of Chery models at Nissan in Sunderland starts.
Leapmotor, which has started production of the B10 compact SUV at Stellantis in Zaragosa; it will also make a model for Opel using the same platform and production line. A second Leapmotor model, B05, will start production in 2027.
Xpeng and GAC have low volume assembly undertaken by Magna in Austria; together these are unlikely to exceed 25,000 a year across the two companies.
Future Chinese OEM European production footprint
This will change rapidly in the next couple of years, with some projects confirmed but not yet started and with much detail to be confirmed, and others strongly rumoured but not 100% confirmed.
Confirmed Chinese investment
MG (part of SAIC) will open a plant in Galicia, in northern Spain, opening in 2028; capacity of 100,000 units a year has been announced, but not which models will be made there.
Leapmotor will play an increased role at Stellantis and take over the operation of the Stellantis factory at Villaverde in Madrid; the transfer of this factory may not be complete until the current Citroen C4/C4X range ends in 2028-29.
Polestar will use the new Volvo factory in Kosice in Slovakia; Volvo has said this factory will make models based on the new SPA3 platform but has not yet said which Volvo models will be involved. However, the Polestar 7 will be made there from 2027.
Chinese vehicles will also be made at Santana, Linares, Spain. In the 1980s, the plant produced the Suzuki Samurai; however for the last three decades this factory has either not produced any vehicles or made just a low volume of off-road vehicles for the Spanish market. The plant has a new lease of life, producing a pick-up based on the Zhengzhou Z9 and SUVs based on the BAIC BJ40 SUV; volumes have not been confirmed but are unlikely to be more than 50,000 a year.
Possible further Chinese investment
In addition to the confirmed programmes above, there are several highly likely programmes including:
BYD to takeover an existing plant
BYD had been due to build a factory in Turkey, but this did not stop speculation that it was also looking at a third site, inside the EU, to run alongside its Hungarian factory. No definite location was ever confirmed and potentially taking its lead from Leapmotor and Dongfeng, BYD has said it wants to take on an existing plant, with Spain the preferred location.
However, which Spanish plant this might involve is not clear. Renault has said it does not need a partner while Volkswagen’s Spanish plants have full model allocations and recent investment in EV production coming on stream. Stellantis’ Spanish plants are spoken for, as would the Ford Valencia plant appear to be. If BYD really wants to take over an existing facility, it will either have to usurp one of the other Chinese companies or perhaps turn its attention to Stellantis’ factories elsewhere; there is unused capacity at Stellantis in Italy, Germany and France.
Chery to take over Line 1 at Nissan Sunderland
Nissan will consolidate production on Line 2 in its Sunderland plant; Line 1 is now “free”, and Chery and Nissan are working through plans to bring Chery production to Sunderland. A non-binding memorandum of understanding has been signed but industry insiders suggest that the potential deal is proceeding at pace and production of Chery models from 2028, if not by Q3 2027, is likely. How much local content there will be or whether this will be essentially a kit production operation remains to be seen. Chery will need to reach local content levels not achievable with kit production to successfully sell into the EU in the long term.
Dongfeng to use spare capacity at Stellantis Rennes
Just ahead of its recent Investor Day in June, Stellantis announced plans for Dongfeng to make up to 40,000 Voyah SUVs at the Rennes factory which currently just makes the Citroën C5 Aircross; this would not begin until 2028 and indeed the agreement for this to happen has reportedly not yet been signed.
Geely to use spare capacity at Ford Valencia and at Volvo Ghent
Ford has spare capacity of over 150,000 units a year at its Valencia factory in Spain; Geely is in pole position to take on a spare assembly hall there. Confirmation has been expected for some time, but recent news has been scarce. There is also an expectation that Geely or other brands from the Geely group, such as Lynk&CO, could see some production shift from China to the Volvo Ghent plant. This possibility has increased with news that the Belgian government is prepared to support the Ghent factory to secure its future.
