Automotive News Europe — 2026-06-14
Automotive Industry
Chinese automakers are racing against the clock to secure European factory space before new European Union rules that could make it far harder to invest go into place. The moves could reshape the bloc’s industrial footprint and cement the presence of Chinese brands in Europe.
Experts and executives say the sudden wave of deals is partly connected to the proposed Industrial Accelerator Act (IAA), an EU measure that aims to preserve Europe’s industrial base by imposing conditions on foreign direct investment and “Made in Europe” local-content rules.
Chinese automakers would also benefit by avoiding EU tariffs on imports that start at 10 percent and go up to 45 percent for EVs for certain brands.
Recent announcements include:
Chery and Nissan are exploring the possibility of Nissan building the Chinese company’s cars in its factory in Sunderland, England; Leapmotor plans to build at least one model in Stellantis’ Madrid factory.
Dongfeng will build models in a Stellantis plant in Rennes, France, starting in 2028; SAIC, whose MG is the top-selling Chinese brand in Europe, plans to build a factory in Galicia, Spain. It’s scheduled to start production in 2028.
Under the proposed act, foreign investments exceeding €100 million from countries holding more than 40 percent of global manufacturing capacity in key sectors would require regulatory approval.
Sectors relevant to the auto industry are EVs and battery supply chain. Though the proposal doesn’t name countries, it would clearly affect Chinese EV and battery production.
To win approval, an investment would need to meet most of these conditions: joint ventures with no more than 49 percent foreign ownership; intellectual property licensed to the EU entity; at least 50 percent EU employees; and local sourcing of manufacturing inputs. Only the EU worker threshold is non-negotiable under the proposal.
The EU is seeking to preserve the bloc’s industrial base and employment, which in the auto sector is under threat from Chinese automakers, whose sales have surged in the past five years.
European production lifts tariff burden but increases costs
Chinese automakers have gone from a 0.5 percent collective market share of the European market in 2021 to nearly 10 percent in the spring of 2026 — with nearly all of their sales coming from exports, which are subject to EV tariffs ranging from a 10 percent base rate to nearly 45 percent for specific manufacturers. Producing in Europe would lift the tariff burden, although it could increase labor and component costs.
“The Chinese always wanted to localize in Europe, but now they see the door closing a little bit” with the IAA proposals, said Philippe Houchois, analyst at Jefferies. “I think they’re rushing to take positions before things change,” Houchois said at the Automotive News Europe Congress on June 10. Experts estimate that the IAA will be put in pace no earlier than mid-2027.
A Jefferies report in May estimated that automakers could eventually build more than 2 million cars in Europe annually based on announced and reported agreements.
The timeline pressure is real, said Alfredo Altavilla, BYD’s special adviser in Europe and a former Fiat Chrysler Automobiles executive. “There is no time to start a greenfield plant today” before the IAA could potentially be enacted, Altavilla told Reuters. “All you can do is find a brownfield, take it over and refurbish.”
BYD first to open large-scale factory in Europe
BYD is the first Chinese brand to open a large-scale factory in Europe; its newly opened plant in Szeged, Hungary, has a potential capacity of 300,000 vehicles a year and is set to begin mass production in the fourth quarter – a year later than initially planned.
The automaker has halted plans for a second regional factory, in Turkey, and is now scouting space in existing factories in southern Europe, with Spain the leading contender.
For their part, European automakers are seeking to boost their utilization rates and preserve jobs — a major goal of the Industrial Accelerator Act. As of December 2024, Jefferies found that Stellantis accounted for about 1.6 million units of unused capacity compared to 2019 output levels, with Volkswagen Group adding an additional 800,000.
Recent European plant closures include Audi’s Brussels factory, Nissan’s Barcelona site, and Ford’s Saarlouis factory in Germany. Stellantis’ Poissy, France, facility will stop make cars after 2028 to move to recycling activities, following a similar move by Renault in 2024 at its Flins site in France.
Who’s making moves
Here is a list of confirmed and reported deals in recent months:
BYD: The automaker, which ranks second in sales in Europe among Chinese brands, aims to produce all of its EVs for Europe locally by 2028. In addition to starting production in its factory in Hungary, BYD confirmed in May that it was in talks with Stellantis and other European carmakers to take over underutilized facilities. According to two people familiar with the discussions, the company is actively scouting locations in Spain and Italy.
Chery: Chery operates in Europe through its eponymous brand and subsidiaries Jaecoo, Lepas, Jetour and Omoda, and is now the third-ranked Chinese automaker. It has a 40 percent stake in a joint venture with Spanish carmaker Ebro that is building cars from kits at Nissan’s former plant in Barcelona. Chery plans to start production of models under its own brands there at the end of this year or the first quarter of 2027, Ebro chairman Rafael Ruiz told reporters in May, adding the targeted production level of up to 30,000 cars this year could include Chery models. In addition to its Barcelona plans, Chery is exploring a separate arrangement: In June 2026, Chery and Nissan signed a non-binding memorandum of understanding to explore the possibility of Nissan building Chery vehicles at its factory in Sunderland, England.
Dongfeng: Stellantis will build cars for Dongfeng’s Voyah premium brand in its Rennes, France, factory, which currently builds only one model, a Citroen SUV.
FAW: FAW’s Hongqi brand is negotiating with Stellantis to use a Spanish plant for production, Reuters reported in April, citing five sources familiar with the discussions. The luxury brand plans to launch more than a dozen EV and hybrid models in Europe by 2028.
Geely: Geely, which owns Volvo, Polestar, Lotus, Zeekr and Lynk & CO among other brands, launched its eponymous brand in Europe in 2025. It also owns 50 percent of Smart, with the Mercedes-Benz Group owning the other half. The parent company plans to buy part of a Ford factory in Valencia, Spanish trade publication La Tribuna de Automocion reported in May. The automakers were also considering having Geely build a model for Ford, the report said.
SAIC: SAIC announced in June that it will set up a factory in Spain’s northwestern region of Galicia with capacity of 120,000 units a year that would be its first production facility in the EU.
Xpeng: Xpeng is in talks with Volkswagen and other automakers about buying a factory in Europe, the Financial Times reported in May. Volkswagen owns a stake in Xpeng. Supplier Magna said in September 2025 it had been chosen by Xpeng to assemble cars in Graz, Austria, for the European market.
Leapmotor: Leapmotor and Stellantis plan to start joint car production in Europe, deepening their tie-up from distribution into manufacturing, Stellantis said in May. Stellantis bought a 21 percent stake in Leapmotor in 2023 and formed Leapmotor International, a largely commercial joint venture through which it sells Leapmotor EVs outside China. Stellantis holds 51 percent, with Leapmotor owning 49 percent. Stellantis will build models for Leapmotor and Opel in its Zaragoza plant and is discussing the transfer of ownership of its Madrid plant to its Chinese partner.