SAIC's MG is reportedly set to build its first European EV factory in Spain rather than Hungary, in a move designed to sidestep EU tariffs on Chinese-made cars.

MG picks Spain over Hungary for new European EV factory

April 28, 2026 Richard Alvin

SAIC Motor’s MG brand is poised to establish its first European electric vehicle plant in Spain, in a move that would help the Chinese state-owned giant dodge punishing EU tariffs on cars shipped in from China.

According to people familiar with the matter, the carmaker has settled on Spain as its preferred location, effectively ruling out Hungary, which had been the other front-runner. The sources, who asked not to be named because the deliberations remain private, cautioned that the decision has yet to be formally signed off and that crucial details, including the scale of investment, production capacity and start-of-build timing, are still being thrashed out and could yet shift.

A Spanish base would mark a significant about-turn from the assumption that Hungary, which has hoovered up Chinese EV and battery investment in recent years, would once again come out on top. Budapest has built a compelling pitch on the back of an expanding supplier network, strong logistics links and its position as a key node in China’s Belt and Road Initiative, with BYD already committed to building cars in the country.

SAIC and MG declined to comment when approached.

The move underlines how building locally is fast becoming a non-negotiable for Chinese marques hoping to sustain growth in Europe, as Brussels ramps up its scrutiny of state subsidies and competitive practices in the EV sector. By assembling cars on EU soil, SAIC-MG would side-step the additional duties imposed last year on Chinese-built electric models, restoring the brand’s price advantage in one of its most important export markets.

Spain has been working hard to position itself as a magnet for EV investment, dangling government incentives and trading on its long-established automotive heritage. Zaragoza, already home to substantial Stellantis production, is among the locations offering a deep pool of skilled labour and the logistical clout that a major new plant would demand.

For MG, which has enjoyed runaway success in the UK with models such as the MG4 and the new IM-developed range, a European factory would mark the brand’s most significant industrial commitment on the continent since SAIC acquired the badge in 2007. It would also represent a notable vote of confidence in Spain’s ambitions to become southern Europe’s electric vehicle capital.