Chinese automakers are expanding production in Spain to avoid the EU’s China-specific countervailing duties and make their vehicles more competitive for European buyers. The shift brings jobs and offers factories a lifeline, but tariff savings will not necessarily show up as lower sticker prices: manufacturers can also use the cost advantage to improve specifications or protect margins. Much of the high-value engineering and supply chain may still remain in China.
SAIC, one of China’s automotive giants, has announced plans to build a new factory in Galicia, targeting annual output of 120,000 vehicles and the creation of 2,300 jobs with an investment of €200 million. The project is part of a broader wave of Chinese manufacturers choosing Spain as their European base, reshaping the country’s automotive field.
Leapmotor, in partnership with Stellantis, began producing its B10 electric SUV at Stellantis’s Figueruelas plant in Zaragoza on 16 October 2026. The factory also builds the Opel Corsa and Peugeot 208, with the Lancia Ypsilon among its other models. The Chinese-branded SUV joins an established, multi-brand operation that uses existing production capacity and industrial infrastructure. Leapmotor International, established by Stellantis and Leapmotor in 2024 to sell vehicles outside China, combines Stellantis’s European manufacturing and distribution network with Leapmotor’s vehicle technology. Stellantis described Zaragoza as offering “quality, available capacity and industrial expertise.”
Reported initial capacity for Leapmotor production at the site is about 40,000 vehicles a year. The B10 has fully electric and range-extended versions, while reporting on the Spain-built electric model’s entry specification puts its estimated range at about 420 kilometres, up to 59 kilometres more than the earlier China-imported version, without a reported increase in advertised price. Range and equipment vary by version and homologation. Industry reporting also puts the vehicle’s localized content above 40%, although local-content figures depend on the calculation method. European assembly does not make the vehicle wholly European-designed or independent of Chinese technology and supply chains.
Stellantis’s plans extend beyond the B10. The B05 is planned as a second Leapmotor model for Zaragoza, while industry reporting has also identified the A10 and A05 as possible additions. Stellantis has also outlined a possible Zaragoza production line for an all-electric Opel C-segment SUV using Leapmotor technology, with potential production in 2028. A new Leapmotor model could also be assigned to the Villaverde plant in Madrid from the first half of 2028. These arrangements would deepen the use of Chinese vehicle technology in cars made in Spain, including models sold under European brands.
Meanwhile, Geely has acquired a stake in Ford’s Almussafes plant in Valencia, taking over the Body 3 facility to produce an as-yet-undisclosed electric vehicle. Geely will also supply technology to Ford, signaling a new phase of collaboration between Chinese and Western automakers. Changan, another major Chinese player, is reportedly eyeing Zaragoza as a potential site, again in partnership with Stellantis, though no deal has been finalized.
Tariffs Lead the Shift
The surge in Chinese investment follows the European Union’s October 2024 decision to impose definitive countervailing duties on battery-electric vehicles imported from China. The measures are added to the EU’s standard 10% car import duty, with countervailing rates varying by manufacturer based on the European Commission’s anti-subsidy investigation. Combined import charges can so exceed 45% for some manufacturers. Vehicles made in Spain count as EU-produced rather than Chinese imports and do not face the China-specific countervailing duties.
That difference creates an incentive to move production into the EU, but avoiding tariffs does not automatically translate into a specific retail-price reduction. The claimed saving of up to €5,000 per vehicle depends on the model, applicable duties, production costs and how manufacturers use the cost advantage. The strategy is already reshaping competition as Chinese brands enter Europe with aggressive pricing. Examples include the Omoda and Jaecoo SUVs discussed in our recent analysis of Chinese plug-in hybrids challenging European rivals.
For Spain, the influx of Chinese manufacturers brings immediate benefits: jobs, renewed activity in regions dependent on the auto industry and a lifeline for factories such as Villaverde, which had faced the threat of production moving to Morocco. But the nature of these investments is more complex than it first appears. Existing Stellantis facilities let new models use spare capacity instead of requiring an entirely new factory, while shorter European production and delivery routes can reduce logistics exposure.
Assembly, Not Full Manufacturing
Many Chinese companies entering Spain are investing in existing sites or pursuing rapid deployment instead of building full-scale manufacturing plants from scratch. The dominant model described in this article is SKD (Semi Knocked-Down) or CKD (Completely Knocked-Down) assembly, in which vehicles arrive in parts, sometimes nearly finished and sometimes as kits, for local assembly. The B10 project uses Zaragoza’s existing bodyshop, paintshop and assembly infrastructure. This integration differs from importing finished vehicles, although basic elements such as vehicle architecture and software, along with some drivetrain components, may still depend on Leapmotor’s Chinese engineering and supply chain. SAIC’s Galicia project is the exception described here: it involves constructing a new plant. Its planned 18-month timeline from announcement to operation is ambitious compared with the three to four years typically required for a full manufacturing facility.
This approach gives Chinese brands flexibility. If EU tariffs are lifted or regulations change, a lower initial investment can make a facility easier to repurpose, although it does not eliminate commercial risks. For comparison, Toyota’s new plant in Mexico for the Corolla required nearly $1 billion, while Renault has spent hundreds of millions just to adapt its Valladolid site for electric vehicles. By comparison, the €200 million earmarked by SAIC for Galicia is modest by industry standards.
What Spain Gains-and Risks
The arrival of Chinese automakers is a boost for employment and regional economies, but it also raises questions about the long-term impact on Spain’s industrial base. Where production focuses on assembly, high-value components such as motors and batteries may continue to be made in China, as may software. Spain supplies industrial facilities and labour, while a large share of the technological value can remain with the Chinese company and its suppliers.
As the European car market evolves, Spain’s role as an assembly hub for Chinese brands could prove both an chance and a vulnerability. The country gains jobs and investment, but the long-term industrial benefit will depend in part on whether partnerships expand into deeper local production, supplier development and engineering, or remain concentrated on final assembly. For now, Chinese brands are using Spanish production as a gateway to Europe, where EU-based manufacturing avoids the China-specific countervailing duties applied to imports.
Spain remains one of Europe’s leading car producers, with a strong tradition of automotive manufacturing and exports. The current wave of Chinese investment reflects the country’s industrial strengths and shifting global trade dynamics. Whether the trend brings lasting benefits or ushers in a new phase of competition will play out in the coming years.
