China's Chery to Set up Shop in Europe

Chinese automaker Chery is planning to make cars in Spain, where the EV market is at just 12%, half that of Portugal and France. This would be Chery’s first manufacturing site in Europe.

It’s all part of the Chinese brand’s ambitious plan to set up three brands in Europe and launch three new models for each brand, all by 2026 – yet, unfortunately, Chery wants to bring ICE vehicles along with its low-cost EVs, including a luxury gas-burning SUV brand that it already sells in China. The automaker plans to launch its first EV in Germany by the first half of this year: the Omoda 5 EV, which is set to start at €37,000 (about $39,750).

Spain’s Industry Ministry said in a statement that the agreement would be formalized in the next few days, with Chery planning to start production in Barcelona, according to Reuters. Given the slow uptake of electric vehicles in Spain, Chery says it plans to make combustion engine, hybrid, and electric vehicles there.

According to Automotive News Europe, the talks are centered around Chery producing its cars at the former Nissan plant, which shut down in 2021 and where 1,600 people lost their jobs, with the plan to bring at least some of those jobs back.

Whether or not Spain has offered any special public aid to sweeten the deal, they haven’t said, but Catalonia’s regional government is sending its senior business official to China to meet with Chery executives this week. Spain is also opening two tenders this year for EV companies to request a total €1.7 billion in loans and grants for EV production, which is part of the PERTE scheme of incentives that rely on European pandemic relief funds, according to Automotive News Europe.

The former Nissan plant was partially handed over to Spanish electric motorcycle company Silence, along with local engineering groups QEV and EV Motors, which planned to transform the factory into a hub for EVs. EV Motors now has full corporate control of the hub and is involved in the talks with Chery, with sources telling Reuters that EV Motors also plans to produce EV trucks and vans under its Ebro brand there alongside Chery.

Back in March, Chery was reportedly in talks with Italy – another European country where EVs have an incredibly low market share – about building a plant there, but sources say that those plans stalled and the company is moving ahead with Spain.

Electrek’s Take

Chery has said that offering a mix of ICE and EVs is part of its business plan in Europe, giving the company flexibility in the varied markets where EV uptake lags behind, mostly because governments have offered only minimal incentives compared to say, Germany.

Still, while Europe certainly doesn’t need ICE vehicles from China, Chinese EV expansion is well on its way, with BYD pushing international growth with its plans to build an EV factory in Hungary, and other automakers are looking to set up production in Europe as well. Chinese companies MG, BYD, and Chery have also been scouting sites in Mexico and talking to officials for better access to the North American market. MG is planning to build a $2 billion factory, while BYD is ramping up investments worth hundreds of millions for its own factory – actions which have set off alarm bells in Washington.