Chinese EV Manufacturers Now Building Cars in Europe — Here Is the Full Picture

Last edited: 11 November 2026, to confirm the start of Leapmotor B10 production in Zaragoza, add GWM’s new Bulgarian plant and the Stellantis and Dongfeng plan for Rennes, add the P7+ and G9L to Xpeng’s Graz line-up, update BYD’s search for a second European plant, reflect Hungary’s new rules for large investors, and remove claims I couldn’t verify against a primary source.

Chinese car manufacturers are not just selling EVs in Europe anymore. They are building them here. Right now, in 2026, factories in Hungary, Austria and Spain are already assembling Chinese electric cars for European buyers. And the reason this is happening comes down to one decision Brussels probably did not anticipate when it introduced tariffs on Chinese EVs back in 2024.

Once a car is built inside the EU, those tariffs simply do not apply. A BYD assembled in Hungary is treated the same as a Volkswagen assembled in Germany, which means the entire price penalty that tariffs were supposed to create disappears the moment production moves onshore.

Eight Chinese manufacturers are now building cars in Europe or have a firm plan to do so, and at least three more are in talks. Some built their own plants. Others partnered with established European manufacturers. And some chose their factory locations with a very specific eye on the politics of the tariff vote, which turns out to be one of the more interesting parts of this story.

Here is exactly what is happening, brand by brand, and what it means if you are buying an EV in Europe right now.

Why Local Production Changes Everything

When the European Commission introduced additional tariffs on Chinese made EVs in October 2024, the logic was straightforward. Chinese cars were arriving in Europe with prices that European manufacturers simply could not match, and Brussels believed state subsidies back in China were a big part of why. So tariffs were introduced to level the playing field, ranging from an extra 17% for BYD up to 35.3% for SAIC, on top of the standard 10% duty that already existed. The full breakdown of those rates also covers the price undertaking scheme, which so far has let only one model, the China-built Cupra Tavascan, swap its tariff for a minimum price.

What happened next wasn’t quite what Brussels had in mind. Chinese manufacturers didn’t absorb the cost or pull back from Europe. They started looking at the map differently, and Hungary, Austria and Spain suddenly became very attractive places for a factory. Once production moves there, the tariff stops applying.

Quick Overview: Who Is Producing Where

BYD in Hungary (Szeged)

BYD’s factory in Szeged is the biggest single manufacturing commitment in this story. The total investment is put at up to €4 billion, and the plant is designed for an eventual capacity of around 200,000 cars a year.

The timeline has slipped since this was first written. Trial production began in January 2026, and series production was originally expected from Q2 2026. In June 2026, BYD’s Executive Vice President Stella Li confirmed that full-scale output had moved to the fourth quarter, which is still the official plan as I write this update. That’s roughly a year behind BYD’s original end-of-2025 target. BYD has also put its planned factory in Turkey on hold before construction even started.

The first model rolling off the Szeged line, whenever full production begins, is the BYD Dolphin Surf, the compact entry level electric hatchback that is already one of the most affordable EVs available in Europe. The Atto 2 follows shortly after, with the Atto 3, Dolphin, Seal and Seal U all planned for the same facility in the future.

Hungary was never meant to be the only European site. BYD wants four European plants in total, three for cars and one for batteries. The shortlist for the second car plant is down to Spain and France, and France is in the running. Unlike in Hungary, where the factory was built from the ground up, BYD would rather buy and refurbish an existing factory than build one. A decision is expected by the end of 2026.

What is interesting about BYD’s choice of Hungary is that it was not a rushed decision driven purely by tariffs. BYD has been operating in the country since 2017, first producing electric buses in Komárom, then adding battery assembly operations in Fót and Páty. In 2025, the company moved its entire European headquarters from the Netherlands to Budapest. Szeged is really just the next logical step in a very patient, long term approach to the European market, even if that approach is currently running behind its own schedule.

Xpeng in Austria (Graz, via Magna Steyr)

Xpeng took a very different approach to European production, and in many ways it is the smarter short term move. Instead of building its own plant, Xpeng uses Magna Steyr’s existing facility in Graz to assemble cars for the European market. Magna Steyr is one of the world’s leading contract vehicle manufacturers, which means Xpeng gets access to world class production quality, existing certifications and a fully running factory without spending years and billions setting one up from scratch.

Xpeng began European production of the G6 and G9 in Graz in September 2025. The line-up has grown since then. The P7+ saloon joined in 2026, and in October Xpeng completed the first trial build of its G9L flagship SUV in Graz, which makes it the fourth Xpeng model built in Europe. For Xpeng, building in Austria means these cars avoid the 30.7% total tariff (20.7% plus the standard 10%) that applies to its models imported from China. Whether any of that saving reaches buyers is up to Xpeng, and the same goes for every other brand in this piece.

The G6 in particular has been one of the more talked-about Chinese EVs in Europe this year. If you’re cross-shopping in the mid-size SUV space, my Xpeng G6 vs Tesla Model Y comparison shows the gap is smaller than many people expect. There’s also a Volkswagen connection. VW invested around €630 million in Xpeng in 2023, and the two companies agreed to develop cars together for China, which gives Xpeng engineering credibility with a European carmaker that few Chinese rivals can match.

GAC Aion in Austria (Graz, via Magna Steyr)

The same Graz plant that builds Xpeng models is also home to GAC Aion, which makes Magna Steyr’s site the most important single location in this story.

GAC and Magna announced their production partnership in November 2025, and the GAC Aion V went straight into series production at Graz from that point. Just five months later, in March 2026, the Aion UT joined the lineup. The Aion UT is a compact electric hatchback with up to 430 km of WLTP range and 30 to 80 percent fast charging in just 24 minutes, designed specifically with European urban drivers in mind.

What stands out about GAC’s European approach is how thorough it is beyond just the assembly plant. The Aion UT was designed at GAC’s European design centre in Milan. European headquarters are based in the Netherlands. Roadside assistance across Europe is handled through a partnership with Allianz. That’s a fuller commitment than a single assembly contract.

Chery and Ebro in Spain (Barcelona)

Chery’s story in Spain is slightly different from the others because it comes with a genuinely interesting piece of automotive history attached to it. Ebro was a Spanish vehicle brand that disappeared back in 1987, and the joint venture between Chery and Spanish company Ebro-EV Motors has brought it back to life at the former Nissan plant in Barcelona’s Zona Franca industrial area.

Production of the first models, the Ebro S700 and S800, began in late 2024. Both are SUVs based on Chery’s Tiggo 7 Pro and Tiggo 8 Pro, sold under the revived Ebro name. Chery claims this makes it the first Chinese carmaker to produce vehicles in Western Europe.

The next phase is Chery’s own Omoda and Jaecoo models at the same site. After repeated delays, production is due to start this year, beginning with the Omoda 5 and followed by the Jaecoo 7. At first, these cars will be put together from kits shipped from China, the same way the Ebro models are. Chery also plans to use Barcelona as a shipping hub for Latin America.

Leapmotor and Stellantis in Spain (Zaragoza)

Leapmotor’s European production story has had more turns than most, and the reason why tells you a lot about how political this whole situation has become.

Stellantis acquired a 21% stake in Leapmotor in 2023 for €1.5 billion, and the two companies set up Leapmotor International, a joint venture with Stellantis holding 51% and Leapmotor holding 49%, to handle all manufacturing and distribution outside China. The first European production site was a Stellantis plant in Tychy, Poland, where the compact Leapmotor T03 started rolling off the line from June 2024.

That production ended abruptly in March 2025, with no detailed explanation from either side. But the timing made the reason fairly obvious. Poland had voted in favour of EU tariffs on Chinese EVs. Shortly after that vote, China instructed its automakers to pause major investments in countries that had supported those tariffs. The Tychy plant quietly became a casualty of that pressure, and Leapmotor’s Polish chapter closed without ceremony.

The replacement is Stellantis’s Figueruelas plant near Zaragoza. Spain abstained in the tariff vote, which made it a safer choice in Beijing’s eyes, and I explain why that matters in the political section further down. Stellantis and Leapmotor officially started B10 production there in October 2026, on a site that also builds the Peugeot 208 and Opel Corsa. Battery modules come from a new Leapmotor workshop in nearby Mallén, and chassis parts from a supplier in Borja. The B10 is a car I rated as the best buy SUV EV you can get right now in Europe, so a locally built version matters for anyone considering one.

More models are lined up. The B05 hatchback, which featured in my top 10 electric hatchbacks for 2026, is due in Zaragoza from early 2027. Stellantis has also offered its Madrid plant, where a Leapmotor model is planned from the first half of 2028. UK buyers won’t get the Spanish-built cars for now.

GWM in Bulgaria (Bahovitsa)

Great Wall Motor (GWM) looked at Spain and Hungary before settling on somewhere less expected. In November 2026, GWM confirmed a production base in Bulgaria, with a planned capacity of 50,000 cars a year and the Ora 5 as the first model in the first quarter of 2027. The plant in Bahovitsa belongs to Bulgarian Automotive Industry (BAI), which will build the cars under contract before GWM takes the site over. GWM knows the place, because it assembled cars there from 2012 until its former local partner collapsed. Production will start from kits, with some parts sourced locally from day one. That’s still a long way from the 300,000 cars a year GWM said it wanted to build in Europe by 2029. Given that GWM also closed its European headquarters in Munich in 2024, I have my doubts about this second attempt until the brand proves it’s here to stay.

MG and SAIC in Spain (Galicia)

MG has confirmed what had been rumoured for months: its first mainland European factory will be at the port of Ferrol, in Galicia in northwestern Spain. The initial investment is around €200 million, and the plant should create about 1,000 direct jobs, with capacity for up to 120,000 cars a year once a second phase is complete. Spain’s defence ministry has agreed to approve the project despite concerns about the nearby naval base, and the plan is to start construction in 2027 and production in 2028.

SAIC says the site will combine R&D, manufacturing, component supply and logistics, which points to a longer horizon than a plant that only assembles kits to avoid tariffs.

The timing of the announcement is significant too. MG recently delivered its one-millionth vehicle in Europe and operates through a network of more than 1,300 dealer partners across 34 markets, making it by some distance the highest-volume Chinese car brand on the continent. At SAIC’s combined tariff of 45.3% (35.3% plus the standard 10%) on China-made imports, that volume comes with a serious cost for MG on every car, and local production removes it.

For buyers, the effect is less certain. Cars built in Galicia from 2028 won’t carry the tariff, but MG hasn’t confirmed which models it will build there. Whether it passes the saving on, uses it to improve margins, or some combination of both will depend on how competitive things get in each segment by the time production starts.

Geely and Ford in Spain (Valencia)

This is a different structure from every other deal covered so far. Geely and Ford announced a joint venture to share production at Ford’s existing plant in Valencia.

Ford will hold 66% of the new entity and Geely 34%. Pending regulatory approval, the joint venture is expected to become operational in the first half of 2027, with the first vehicles rolling off the line in 2028: three Ford-branded multi-energy models and two Geely-branded electric models. The Valencia plant already has a potential annual capacity of around 500,000 units, making it one of the largest single sites in this entire European localisation story once it’s shared between the two brands.

Ford gets to fill idle capacity at a plant it already owns and share development costs. Geely gets EU-built cars and a partner it has history with, since it bought Volvo from Ford in 2010, and both companies pointed to that relationship when announcing the deal. Whether that goodwill turns into a smooth start in 2028 remains to be seen.

Valencia isn’t Geely’s only route into European factories. Volvo’s Ghent plant in Belgium will also build cars for other brands, with Geely models due there from 2028.

Polestar in Slovakia (Košice)

Volvo and Polestar are also part of the Geely group, so it’s worth addressing them here, even though their story doesn’t quite belong in the same category as everything above. Volvo has manufactured in Europe for decades, at Torslanda in Sweden and Ghent in Belgium, long before Geely bought the brand from Ford in 2010. Its European production has nothing to do with Chinese EV tariffs, it’s simply how Volvo has always built cars.

Polestar is the part of this story that actually connects to the tariff picture. Volvo and Polestar signed a memorandum of understanding in 2025 to build the Polestar 7, a compact electric SUV due in 2028, at Volvo’s new plant in Košice, Slovakia, which is due to start series production in 2027. The plant represents an investment of around €1.2 billion, with capacity for up to 250,000 vehicles a year, and it will be Volvo’s third European factory alongside Torslanda and Ghent. A next generation Volvo model is due to be built there first, ahead of the Polestar 7.

Some of Polestar’s current lineup, including the Polestar 2 and parts of Polestar 4 production, is built in China and exported to Europe, which falls under the same Geely tariff rate covered earlier in this piece. Moving Polestar 7 production to Slovakia removes that cost for at least one future model, even though it’s arriving through a Swedish run factory rather than a dedicated Chinese brand plant like the others in this piece.

The Political Layer: Where You Build Matters

The Leapmotor situation is the most visible example of something that runs quietly through all of these stories. The choice of where to build is not just an industrial decision, it is a geopolitical one.

Countries that voted for EU tariffs on Chinese EVs have seen very little Chinese automotive investment. Countries that abstained or stayed neutral have attracted billions.

Hungary was the clearest case, and it’s also where the picture changed most this year. Under Viktor Orbán, the government kept unusually close ties with Beijing by EU standards, and the country became the default hub for Chinese automotive investment in Central Europe. BYD chose Szeged, and CATL built a large battery plant in Debrecen. Péter Magyar’s Tisza party won the April 2026 election, and in August the new government scrapped the special status that had exempted projects like BYD’s and CATL’s from standard environmental and planning rules. Budapest says big investors are still welcome, but the rules now apply to them like everyone else.

Spain’s position is different but equally deliberate. National and regional governments there actively went after Chinese automotive investment, and it has paid off in a fairly significant way. Barcelona has Chery and Ebro. Zaragoza has Leapmotor and Stellantis. Valencia now has Geely, sharing Ford’s existing plant, and Ferrol will have MG. BYD, Changan and Hongqi have all been linked with Spain for their next moves.

Austria, with Magna Steyr, sits in a category of its own. It stayed neutral in the tariff debate and offers a plant that already works, which is why Xpeng and GAC Aion went there.

Who Could Be Next?

The list of names in talks keeps growing, even after GWM moved from scouting to a signed plan.

FAW’s Hongqi brand is the most advanced of the remaining candidates, and it’s taking the route Leapmotor opened up. Since April 2026, Hongqi has been in talks with Stellantis to build cars at the Zaragoza plant, with Leapmotor helping to broker the deal. No agreement had been announced by November 2026.

Dongfeng is the newest name to watch. In May 2026, it signed a non-binding agreement with Stellantis for a European joint venture, with Stellantis holding 51%, and the two are exploring Dongfeng production at Stellantis’s Rennes plant in France.

Changan wants a plant of its own and has been weighing a site in northern Spain, with the Aragón region mentioned. Changan has since set up its European headquarters in Madrid, but no factory decision had been announced by November 2026.

Chery, which already builds cars in Barcelona, may also add the UK. Nissan and Chery signed a non-binding memorandum of understanding in June 2026 to study building Chery cars on one of Sunderland’s two lines, with production possible from Nissan’s 2027 financial year. Nothing is final yet, and Nissan would keep full ownership of the plant either way.

What This Means for European Buyers

Most of the practical consequences will become more visible over the next year or two.

The most obvious one is pricing. Models produced in Europe avoid tariff surcharges, which creates structural downward pressure on prices over time. Whether manufacturers pass those savings straight to buyers or use them to improve margins depends on how competitive each segment gets.

Cars assembled in Austria, Hungary, Spain or Bulgaria will be built inside the EU, which matters to some buyers directly. That already applies to the Xpeng G6, G9 and P7+, the GAC Aion V and UT, the Ebro S700 and S800 and now the Leapmotor B10. BYD models from Hungary should follow once series production starts.

There’s one challenge with all this local assembly. Much of it still starts with kits shipped from China, which is true in Barcelona and will be true in Bulgaria. In March 2026, the European Commission proposed the Industrial Accelerator Act, which would tie EV subsidies and public fleet purchases to EU assembly and around 70% EU-made parts, not counting the battery. If it’s adopted in that form, a car assembled in Spain from Chinese parts may avoid the tariff but still miss out on incentives. I’d check where the parts come from before assuming a European factory means the same thing on every car.

And then there is the bigger picture. One of the EU’s stated goals in introducing tariffs was to buy European manufacturers time to become more competitive in the EV segment. Local production by Chinese brands does not slow that competition down. If anything, it removes one of the last structural disadvantages Chinese brands were operating with, and makes the competitive environment even more intense for European OEMs going forward, especially as the list of manufacturers following this playbook keeps growing.

FAQ

Which Chinese car manufacturers are currently producing vehicles in Europe?
As of November 2026, five Chinese manufacturers build cars in Europe: Xpeng and GAC Aion at Magna Steyr in Austria, Chery through Ebro in Barcelona, Leapmotor with Stellantis in Zaragoza, and BYD, which runs trial production in Hungary ahead of series output planned for Q4 2026. GWM will start in Bulgaria in early 2027, while MG (Galicia) and Geely (Valencia, with Ford) follow from 2028.

Where is BYD building its European factory, and when will it be running?
BYD is building its European passenger car factory in Szeged, Hungary. Trial production started in January 2026, and full series production is planned for the fourth quarter of 2026, roughly a year later than originally planned. The first model is the Dolphin Surf, and the plant is designed for around 200,000 cars a year. BYD is also choosing between Spain and France for a second European car plant, with a decision expected by the end of 2026.

Why are Chinese carmakers building factories in Europe?
The EU introduced additional tariffs on Chinese made electric vehicles in October 2024, ranging from 17% to 35.3% on top of the existing 10% standard duty. By manufacturing inside the EU, or in countries with preferential trade arrangements, Chinese automakers avoid these tariffs entirely, which makes a significant difference to their pricing and competitiveness.

What is Magna Steyr and why are two Chinese brands using it?
Magna Steyr is a contract vehicle manufacturer in Graz, Austria, operated by Canadian automotive supplier Magna International. It is one of the world’s most capable facilities for lower volume production runs, and it allows brands like Xpeng and GAC Aion to manufacture in Europe without the time and capital cost of building their own plants. Xpeng began production there in September 2025 and now builds four models, while GAC Aion followed in November 2025.

Why did Leapmotor stop production in Poland and move to Spain?
Leapmotor’s T03 was assembled at a Stellantis plant in Tychy, Poland from June 2024 until March 2025. Production ended after Poland voted in favour of EU tariffs on Chinese EVs, following which China instructed its automakers to limit major investments in countries that had supported those tariffs. Stellantis and Leapmotor subsequently chose Zaragoza in Spain, which had abstained from the tariff vote, as the new production location. Series production of the Leapmotor B10 started there in October 2026.

Will Chinese EVs produced in Europe be cheaper to buy?
Not necessarily right away, but the removal of tariff costs creates the conditions for lower prices over time. Whether manufacturers pass those savings to buyers or retain them as improved margins will vary by brand and market. The broader pressure on pricing is downward, which is good news for anyone shopping for an EV in Europe.

Are Volvo and Polestar part of this story too?
Partly. Volvo has produced in Europe for decades, since before Geely bought it from Ford in 2010, so its factories aren’t a tariff workaround. Polestar is different: it signed a deal in July 2025 to build the Polestar 7 at a new Volvo plant in Košice, Slovakia from 2028, moving that model away from China-based production that would otherwise fall under the Geely tariff rate.

What did Geely and Ford agree in Spain?
Geely and Ford announced a joint venture to share production at Ford’s existing plant in Valencia, Spain. Ford holds 66% of the venture and Geely 34%. Pending regulatory approval, it’s expected to become operational in the first half of 2027, producing three Ford-branded models and two Geely-branded electric models from 2028.

Which Chinese carmakers could start producing in Europe next?
Hongqi has been in talks with Stellantis about the Zaragoza plant, and Changan is weighing northern Spain, but neither had announced a deal by November 2026. Dongfeng signed a non-binding agreement with Stellantis in May 2026 and is exploring production at Rennes in France. GWM has moved past the scouting stage and will build the Ora 5 in Bulgaria from early 2027.

Is Chery planning to produce cars in the UK?
Nissan and Chery signed a non-binding memorandum of understanding in June 2026 to study building Chery cars at Sunderland, with production possible from Nissan’s 2027 financial year. No final agreement has been announced.

Featured Image Credit: Magna