European MG plant in Spain, Hungary or the Czech Republic?

Decision on location to be made by the end of September - due to EU punitive tariffs

Photo by: Stefan Leichsenring

By: Stefan Leichsenring

Jul 17, 2024 at 5:46am ET

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Like Chery and BYD, MG also wants to have a plant in Europe. However, the company has not yet decided on a location. Spain, Hungary and the Czech Republic are said to be on the shortlist. The parent company SAIC wants to make a decision by 30 September.

According to Chinese media reports, SAIC is already negotiating with the Spanish Ministry of Industry, reports CarNewsChina. However, Hungary and the Czech Republic are also still in the running, as labour costs are particularly low there.

MG's undisputed bestseller in Europe: the MG4 Electric

SAIC / MG is affected by the EU punitive tariffs as the company has to pay 37.6 per cent. This means that the highest punitive tariff has been imposed on SAIC. According to the report, the company cooperated with the EU but concealed important information, including battery data. In any case, the punitive tariffs are said to be the reason why MG is now pushing ahead with the construction of a plant in Europe. However, the first vehicles are not due to be produced until the fourth quarter of 2027, as the factory has to be built first.

Among the Chinese brands, MG exports the most electric cars to the EU. Around 11,000 new BEVs (battery electric vehicles) were registered in Germany in the first half of 2024. This is significantly more than other brands such as BYD (just under 1,200 units), GWM (just under 900), Nio (around 230), Xpeng (31) or Aiways (23). SAIC CEO Wang Xiaoqiu already said at the last Annual General Meeting that he did not want to give up the European business because of punitive tariffs.

The ID.3 competitor MG4 Electric and possibly also the recently announced SUV model MG S5 are to be built in the new factory. This is a 4.48 metre long electric SUV. The successor to the electric estate car MG5 Electric (which is called Roewe Ei5 in China) is also under consideration.

The EU tariffs came into force on 5 July, albeit provisionally at first. Since then, manufacturers have had to transfer the duties to an EU account, where the money will remain blocked until the final decision is made in November. In addition to Chinese brands, Western companies that produce or have production in China are also affected, including Tesla, Dacia, BMW, Smart, Volvo and Polestar. Depending on the company, the punitive tariffs range between 17.4 and 37.6 per cent which are in addition to the existing import duties of 10 per cent.

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MG recently celebrated its 100th birthday at the Goodwood Festival of Speed. The first model was launched in the UK in 1924. To mark the occasion, the British-Chinese brand presented, among other things, a closed version of the MG Cyberster and the MG HS.

The bottom line

The Chinese manufacturers are probably not interested in a dispute with the EU authorities; in the event of a trade war between China and the EU, both Western and Chinese brands would be affected. But of course they don't want to pay punitive tariffs either, so they are planning new plants in the EU. Perhaps the Commission will take this as a sign of goodwill and refrain from the definitive introduction of tariffs?