China's top-selling automaker is going to build a factory in Europe.

```

Author | Zhou Zhiyu

The center of gravity in China's automotive industry is shifting.

With the release of each automaker’s sales data in May 2026, it’s clear that the overseas sales proportion among leading automakers is collectively rising, and for some, overseas exports now represent over 70% of their volume. Export is no longer a footnote on the sales sheet; it’s becoming the decisive factor for ranking.

Amid this collective shift, SAIC has taken a key step: its first factory in Europe will be built in Spain.

On June 3, WallstreetCN confirmed through sources close to SAIC Group that SAIC’s brand MG will build its first electric car factory in Galicia, Spain, with a planned annual capacity of 120,000 vehicles, an initial investment of about €200 million, and production starting at the end of 2028.

Two years ago, SAIC lost the annual sales crown among Chinese automakers by wholesale volume. In the first five months of this year, it’s regained momentum to reclaim the throne, with overseas markets playing a crucial role. As their factory lands in Europe, China’s #1 automaker officially begins "building a fortress" in the market furthest from home.

Accelerating Overseas Expansion

As early as three years ago, SAIC management stated to WallstreetCN that it was considering building a factory in Europe. There had been buzz about site selection, but no definitive news.

Now, the news is confirmed. SAIC will build its factory in the country where MG sells best.

According to data obtained by WallstreetCN, the MG factory plans an annual capacity of 120,000 cars, a €200 million initial investment, construction beginning in 2027, and production starting in late 2028. The Galicia regional government calls it "the largest industrial project in decades," but it still needs final approval from Spain’s central government.

MG has already achieved annual sales of 45,000 vehicles in Spain, built an extensive dealer network, and established a user base. Setting up a local production line here can meet proven demand nearby.

However, the planned production capacity is conservative, while the industrial support planning is not. MG’s UK and Europe representatives stated on June 2, 2026, that the Galicia project will integrate vehicle R&D, local supply of key components, and intelligent logistics, and significantly expand localized procurement.

Additionally, MG plans to deepen cooperation with European technology partners, research institutes, and local suppliers, with clear plans to include next-generation battery technology.

WallstreetCN learned from SAIC’s battery supply chain that Qingtao Power is cooperating with the MG brand, planning to launch an overseas version MG4 URBAN. By the end of this year, MG SolidCore semi-solid-state batteries are expected to be installed on related models for the European market, with a range expectancy of 400 km (WLTP standard).

Clearly, SAIC is building a full industrial ecosystem to prepare for localizing the supply chain.

SAIC’s entry coincides with a window for redrawing Europe’s automotive industrial map.

Europe’s own production capacity is undergoing deep restructuring. In 2025, Spain’s passenger car output drops 12% year-on-year, with further decline in 2026. Stellantis, Volkswagen, and Ford are pausing production at several European factories, and utilization keeps falling. The gap between the decline of internal combustion cars and the rise of electric ones has created lots of idle capacity.

Thirty years ago, Volkswagen, GM, and BMW entered China to build joint-venture factories, trading China’s market and labor for profits. Now, the direction is reversed: Chinese automakers are establishing factories in Europe, rooting themselves with Europe’s supply chain and industrial workforce.

Idle capacity is an entry point for Chinese automakers. Stellantis gave Madrid plant capacity to its JV with Leapmotor; Geely is negotiating to buy Ford’s Valencia line; Xpeng is talking to Volkswagen about acquisitions. Chinese carmakers are finding gaps in a reshuffled landscape.

However, SAIC’s Galicia factory is a greenfield build. A SAIC Europe market rep told WallstreetCN that SAIC chose Galicia for its industrial capability, mature manufacturing base, and the ability to support quick implementation.

Now, for Chinese carmakers going overseas, accelerating localized production is a must. Economies like the EU continue to ramp up regulations, raising the bar for “local production.” Assembly isn’t enough—hard requirements cover component origin, battery localization, and foreign ownership structures.

Min Gong, UBS Head of China Automotive Research, told WallstreetCN in late May that Chinese automakers’ overseas expansion is moving from 1.0 to 2.0. “If auto exports aim for ten million units, overseas production becomes increasingly urgent. Whether to avoid tariffs or to share interests with the local market, localizing production is a must for Chinese companies going forward.”

He added that local production is just the first step: “the overall industrial chain going abroad”—deeply connecting policy, local sentiment, and dealer confidence—is even more crucial.

SAIC will still need to answer questions about supply chain relocation and capacity expansion timelines.

Returning to Number One

Overseas markets are becoming increasingly important in SAIC Group’s business landscape.

In 2024, SAIC lost its wholesale sales crown among Chinese automaker groups after 18 years. BYD overtook it through explosive growth in new energy vehicles, mainly because SAIC Volkswagen and SAIC GM kept losing ground in the shift to electrification.

Two years later, SAIC is back. In the first five months of the year, SAIC took the lead again with 1.651 million units, nearly 250,000 more than second place BYD. But the way it won is completely different now.

The fundamental change is that self-owned brands have gone from secondary to the main force. From January to May, SAIC’s own brands sold 1.173 million units, breaking 70% of group sales for the first time at 71.1%, up 7 percentage points year-on-year. Previously, SAIC “relied on joint ventures for scale and had self-owned brands follow,” now it’s totally reversed.

Within self-owned brands, the fastest runner is SAIC Passenger Cars, with 434,000 units sold from January to May, up 42.5%. MG4 has sold over 10,000 units per month for eight consecutive months, reaching 15,000 in May. Zhiji’s LS6 range-extended version prompted 114.6% growth year-on-year from January to May. The jointly developed Shangjie H5 with Huawei became a hit as soon as it launched. For the first time, SAIC’s self-owned lines had multiple models simultaneously selling over 10,000 units per month.

Joint venture brands are also stabilizing. Buick’s E7 launched under SAIC GM delivered over 10,000 units in its first month, and SAIC GM’s new energy sales grew 75% year-on-year in May. SAIC Volkswagen’s new energy sales grew 34.3% in May year-on-year.

Self-owned brands rebounding, combined with joint ventures recovering, have secured SAIC’s domestic base. But the final gap was opened by overseas. From January to May, SAIC’s overseas sales reached 589,000 units, up 45.9% year-on-year.

The whole industry is undergoing the same transformation. With domestic organic growth topping out, overseas becomes the variable rewriting rankings. Chery’s exports in May accounted for 73% of total sales, BYD’s overseas sales in a single month surpassed 160,000 units, and Geely’s exports soared 184% year-on-year. SAIC’s 590,000 overseas sales reversed the rankings, but it’s not alone.

The difference is, SAIC’s overseas focus is highly concentrated in Europe. MG sold 150,000 units in Europe from January to May. MG’s trajectory in Spain best illustrates its position: 746 units in 2021, over 45,000 units in 2025—a 60-fold increase in five years.

According to official sales figures from SAIC MG Europe and industry bodies like JATO Dynamics, in 2025 MG’s hybrid (Hybrid+) models saw explosive growth, with sales up nearly 300% year-on-year and cumulative deliveries topping 140,000 units, forming the backbone of MG’s over 300,000 annual sales in Europe for 2025. Dual track of EV and hybrid enabled MG to maintain growth despite tariff pressures.

A Chinese state-owned enterprise, leveraging a century-old British brand, achieved 45,000 annual sales and a top-five brand ranking in Spain. Unlike new players emphasizing pure EV exports, MG’s heritage enabled deeper market penetration.

On May 28, SAIC just held a “Ceremony for Delivering to the First 10 Million Users.” Ten million cars is an achievement from the old coordinates, built from domestic joint ventures. The next phase has changed: self-owned brands take the lead, overseas determines ranking, and Europe is the core of overseas. The way to win “Number One” has changed, and the method to retain “Number One” must change accordingly.

This path is not unfamiliar. In the 1980s, Japanese automakers made similar choices amid US-Japan trade friction—Toyota built in Kentucky, Honda set up in Ohio. The motivation was tariffs and import restrictions. Those overseas factories later became the most efficient production bases for Japanese automakers globally. Whether Chinese automakers’ European factory boom will follow similar tracks is too early to say, but the path is already very clear.

The center of gravity in China’s automotive industry is shifting, export drives growth, localization locks in the market. SAIC has finally taken the most crucial step forward—to build factories in Europe. Whether the Ferrol plant becomes SAIC’s new global benchmark in efficiency remains to be seen, but the path for Chinese automakers “going out” is ever clearer.

Risk Warning and DisclaimerThe market carries risks, and investment should be approached cautiously. This article does not constitute personal investment advice and does not take into account specific investment objectives, financial circumstances, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions in this article suit their particular circumstances. Any investment based on this is at your own risk. ```