Chinese Carmakers Are Quietly Racing Each Other to Buy Up Idle Car Factories Across Europe

Chinese carmakers are looking across Europe for existing vehicle production sites as they expand their manufacturing footprint on the continent. BYD is currently searching for a location for its second European passenger car factory, with Spain and France among the leading options.

Alfredo Altavilla, BYD’s European adviser and a former Fiat Chrysler executive, told Reuters that Chinese automotive executives are regularly visiting the same factories while looking for suitable production sites. He keeps encountering representatives of rival Chinese manufacturers in airport lounges as they travel around Europe inspecting potential facilities, to the point where he now half expects to see the same faces at the same gates.

An existing car factory comes with buildings, production infrastructure, workers, logistics connections and supplier networks that would otherwise take years to build. That’s what BYD is after: facilities it can acquire and refurbish to get production up and running as quickly as possible.

Spain and France Are Winning the Search

Several Chinese manufacturers are already in full swing in Europe: Leapmotor leases space inside a Stellantis plant in Zaragoza, and Xpeng builds under contract at Magna Steyr’s factory in Graz, where it’s moved past the G6 and G9 to pilot production of the P7+ too. BYD sees that approach as an unnecessary complication, which is why it wants full ownership of whatever plant it buys. At the same time, it’s after something cheap that can be back in production fast.

That search keeps landing on Spain and France mostly. Both countries give companies fewer practical obstacles than the alternatives, which is largely why they lead the shortlist. Spain in particular has become the default landing spot for Chinese production. Leapmotor and Stellantis expanded their Zaragoza partnership to include the Madrid plant too in May, Chery is targeting up to 30,000 vehicles this year at its Barcelona site with 50,000 as a medium term goal, and Ford and Geely’s joint venture in Valencia has potential capacity for around 500,000 vehicles a year once it’s running.

Italy gets a much smaller role in anyone’s plans, for one simple reason: Stellantis is the country’s only major carmaker, and right now it has no interest in selling off any of its factories, which leaves Chinese manufacturers with limited room to move there. Even though its plants there are running below capacity, Stellantis has since laid out an industrial plan that keeps every Italian plant open with a defined role for each, leaving the competition with very little left to actually buy in a country it might otherwise prefer.

BYD expects to need three vehicle assembly plants and one battery factory across Europe over the long run, according to Bloomberg, a figure that shows just how far its European ambitions extend. The company is currently in the early stage of production at its first European car plant in Hungary, and plans to pick the site for its second European factory by the end of this year. Add a second plant in Spain or France, a possible third somewhere else, and a battery factory to feed all of them, and BYD’s European footprint by the end of the decade starts to look a lot closer to Volkswagen’s.

The EU Rule Pushing Everyone to Move Faster

The EU already applies extra duties to Chinese made electric vehicles on top of the standard 10 percent import tariff, ranging from 17 percent for BYD up to 35.3 percent for SAIC, with Geely sitting in between at 18.8 percent, covered in more detail in this breakdown of EU tariffs on Chinese EVs. Building or buying a plant inside the EU avoids all of that.

The tariffs alone are a weight around manufacturers’ necks, and there’s a further complication looming on the horizon. Brussels is also finalising a new law, the Industrial Accelerator Act, proposed by the European Commission in March this year, that would tie public subsidies and government fleet purchases to a minimum share of European content, provisionally set around 70 percent of a vehicle’s value, excluding the battery. Volkswagen, Stellantis and Renault, who between them build 60 percent of the cars made in the EU, have pushed for exactly this kind of rule and want it linked directly to each brand’s CO2 targets through a system of super credits for qualifying models.

This new law puts real pressure on Chinese manufacturers, because simply assembling a car inside the EU border isn’t automatically enough to clear a 70 percent local content bar if most of the components still arrive from China in kit form. Buying an existing European plant, with a base of local suppliers already plugged into it, solves a good part of that problem, though not all of it. Even buying an existing factory doesn’t guarantee production will run as fast or as smoothly as it does at their home plants in China. All of that adds to the complexity of the situation, and it’s the quiet reason behind the airport lounge scramble Altavilla described.

Beneath the Calm Surface, a Real Storm Is Brewing

BYD might be the one making headlines because of what Alfredo Altavilla told reporters, but plenty of other Chinese manufacturers are quietly touring the same factories, working out the real condition, the possibilities and the price of every potential acquisition. China’s domestic car market isn’t the cash cow it used to be, which is pushing the search for alternatives into overdrive. Hongqi is negotiating with Stellantis over the same Zaragoza site earmarked for Leapmotor, GWM is weighing Spain and Hungary for a plant of its own, and Changan is scouting northern Spain for a factory it wants to own outright. Stellantis and Dongfeng went a step further in May, agreeing to a joint venture covering sales, distribution, manufacturing, purchasing and engineering, with talks now underway about building Dongfeng’s new energy vehicles at Stellantis’s Rennes plant in France.

Chery, which already builds in Barcelona, is chasing capacity outside the EU too. Nissan confirmed this week it’s putting around €200 million (£170 million) into building the Kicks e-POWER hybrid SUV at its Sunderland plant, alongside the Qashqai, Juke and Leaf, and separately continues to weigh leasing one of the plant’s two production lines to Chery, with production potentially starting in 2027. Nissan says Chery remains one of several options still on the table, so nothing there is settled yet, but the shortlist of underused European factories keeps getting shorter regardless.

For Europe’s legacy manufacturers, that’s an uncomfortable economic dilemma. Turn down the Chinese offers, and they’re left with underused factories that keep generating fixed costs and pulling the balance sheet into the red. Take the deal, and they hand production capacity straight to a direct competitor, helping it grow sales in the very same market. It creates a weird paradox: by renting out their own spare capacity, European manufacturers end up profiting from the production of the very cars that are taking their market share.

FAQ

Why is BYD trying to buy existing European car factories instead of building new ones?
Buying and refurbishing an existing plant is far faster than building one from scratch. Alfredo Altavilla, BYD’s special adviser for Europe, has said the goal is to buy something cheap and get it back into production quickly, rather than spend years and billions on a new site.

What is the EU’s local content rule, and why does it matter here?
The Industrial Accelerator Act, still being finalised in Brussels, would tie public subsidies and fleet purchases to a minimum share of European content, provisionally around 70 percent of a vehicle’s value. That threshold is harder to meet by simply assembling imported components inside the EU, which makes buying an existing plant with an established local supplier base more valuable than building a new one from scratch.

How many factories does BYD ultimately want in Europe?
BYD is targeting four facilities in total: three vehicle assembly plants and one battery factory. Its first plant is in Szeged, Hungary, and the company plans to choose a second European site by the end of the year.

Why won’t Stellantis sell its Italian factories to BYD?
Stellantis has committed to keeping every Italian plant open under a new industrial plan that assigns each site a specific role, even where those plants are currently running below capacity. That leaves little for BYD to actually acquire in Italy, which is why the country plays only a minor role in its European plans.

Featured Image: Xpeng