Automotive News Europe — 2026-08-24
Automotive Industry
Chinese automakers are betting big on European production with plans to build as many as 1.5 million vehicles a year in the region by 2035. But economists warn that Europe could risk becoming a final assembly destination without capturing the higher-value manufacturing and supply chain jobs that drive real industrial growth.
BYD, Chery, Leapmotor and others are building new plants or taking advantage of underutilized production lines at European manufacturers. The ramp-up begins this year and will become increasingly significant by 2030.
Chinese brands will produce about 90,000 vehicles in Europe this year, according to Henner Lehne, vice president at Mobility Global, the research firm spun off from S&P Global on July 1. That number is expected to reach 1 million by 2030 and 1.5 million by 2035, he said.
China’s car companies are rushing to secure local production as the European Union prepares its Industrial Accelerator Act (IAA), which is aimed at strengthening manufacturing in the bloc.
The legislation, now under discussion in the European Parliament and among member states, is expected to include requirements affecting industrial value creation and foreign investment.
The rules could have a significant bearing on how much of the Chinese auto industry’s supply chain moves to Europe — and how many jobs follow.
From the Chinese manufacturers’ perspective, the IAA is “huge,” said Gregor Williams, a China expert at the Rhodium Group think tank. For highly vertically integrated manufacturers such as BYD, the question is whether the investment will be worthwhile. “To qualify as ‘Made in Europe,’ large parts of the components, including the battery, would also have to be produced locally,” Williams said.
Sander Tordoir, chief economist at the Centre for European Reform, sees a risk that Chinese automakers will mostly open factories in the EU for Chinese components, with minimal economic value added for Europeans.
Spain emerges as main manufacturing hub
The investment landscape is already taking shape.
BYD plans to start production at its Hungarian plant this autumn. A second European plant in Spain is increasingly likely.
Chery will start production this year of Jaecoo and Omoda vehicles in Spain completely knocked down (CKD) kits in a former Nissan plant in Barcelona.
Leapmotor plans to use Stellantis’ plant in Zaragoza, Spain to build the B10 compact SUV from CKD kits.
Geely is forming a joint venture with Ford to manufacture vehicles in Ford’s Valencia factory in Spain.
SAIC’s MG Motor will establish its first assembly plant in Europe in Spain’s Galicia region, with production starting in 2028.
Spain is expected to become by far the largest production base for Chinese automakers in Europe, followed by Hungary, the U.K., where Nissan’s Sunderland plant will produce cars for Chery, and Austria, where contract manufacturer Magna Steyr is building cars for Guangzhou Automobile Group and Xpeng.
Mobility Global forecasts that about half of all Chinese-brand vehicles built in Europe in 2030 will be built in Spain. By 2035, Spanish production could approach 1 million vehicles, or about two-thirds of the 1.5 million Chinese-brand cars expected to be built in Europe.
EU rules will determine supply chain localization
The Industrial Accelerator Act could determine how much production Chinese companies ultimately localize.
Xing Zhou, managing director at AlixPartners, said Chinese automakers are reassessing their European strategies. He expects as many as five new greenfield factories — plants built from scratch — to be operating by 2035.
For companies such as BYD, which controls much of its own supply chain, the economics of local production will depend heavily on the final rules.
European suppliers face opportunity and risk
Mobility Global expects full vehicle production in Europe to increasingly replace CKD assembly of imported components.
By 2035, almost 90 percent of Chinese-brand vehicles produced in Europe could be fully localized. That could provide a boost for European suppliers — but also create another potential risk.
“European suppliers are naturally hoping to benefit from Chinese production,” Lehne said. But Chinese companies could also acquire European suppliers, potentially accelerating the transfer of industrial know-how out of Europe.
He pointed to the acquisition of Germany robot company Kuka as a warning of what could happen if Chinese ownership expands further into strategic European industries.
Kuka, a manufacturer of industrial robots and factory automation systems used by automakers including BMW, Volkswagen and Mercedes-Benz, was acquired by the Chinese appliance manufacturer Midea Group in 2016 despite opposition from politicians and labor leaders worried that high-end industrial automation and robotics knowledge would leak to China.