China's SAIC plans to produce 120,000 vehicles annually at its Ferrol plant in Spain to circumvent EU tariffs on Chinese-made cars, raising national security concerns
Executive summary: SAIC announced plans to produce 120,000 vehicles annually at its Ferrol facility in Spain, positioning the output as 'Made in Spain' to evade EU tariffs on Chinese imports. The scheme highlights how Chinese automakers are adapting to protectionist trade measures by establishing local EU production, while triggering national security alarms over the facility’s proximity to Spanish naval bases.
Who is involved: SAIC (China), Spanish National Intelligence Center (CNI), Spanish Ministry of Defense, European Union (trade policy), Galician regional authorities.
Likely next: Spanish and EU officials will likely conduct deeper security assessments of the Ferrol plant; SAIC may proceed with expansion pending regulatory clearance, potentially prompting similar moves by other Chinese automakers in Europe.
SAIC, the Chinese automotive giant behind the MG brand, has outlined a strategy to manufacture 120,000 vehicles per year at its newly operational facility in Ferrol, Galicia, labeling them as 'Made in Spain' to avoid EU import duties on Chinese electric vehicles. The plan has drawn scrutiny from Spain's National Intelligence Center (CNI) due to the plant's proximity to naval arsenals and military installations, raising concerns about potential dual-use risks and technology transfer. While the Spanish government has defended the investment as economically beneficial and subject to security review, the move reflects broader geopolitical tensions over industrial policy, supply chain resilience, and the strategic competition between China and the EU in the automotive sector. The development underscores how trade barriers are reshaping foreign direct investment patterns, with Chinese automakers increasingly localizing production in Europe to maintain market access.
Timeline
- — El plan de la china SAIC en España que preocupa al CNI: 120.000 coches ‘made in Ferrol’ para esquivar los aranceles (El País — Economía)
- — La fábrica de la china SAIC en Galicia enciende las alarmas en el Ministerio de Defensa (Expansión)
Analysis — what this means
Likely next events
- Spanish Ministry of Defense to complete security risk assessment of SAIC Ferrol plant by September 2026
- EU to evaluate whether 'Made in Spain' labeling meets substantive transformation rules under customs code by Q4 2026
- SAIC to begin local supplier onboarding in Galicia for Ferrol plant production ramp-up by October 2026
Sectors affected
- Automotive manufacturing (EU)
- Electric vehicle supply chain
- Customs and trade compliance
- Defense-related industrial security
Regulatory implications
- Customs authorities may increase verification of origin claims for vehicles assembled in EU with high Chinese component content
Historical parallels
- Japanese automakers established EU plants in the 1990s to avoid voluntary export restraints (e.g., Toyota UK, 1992)
- Chinese solar panel makers shifted production to Southeast Asia after 2018 EU anti-dumping duties to bypass tariffs
- Tariff circumvention via final assembly in Mexico prompted USMCA rules of origin tightening in 2020
Key entities
Sources
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