China is accelerating its car offensive in Europe with the arrival of Chery in Spain

Chinese carmaker Chery formalized its arrival in Spain on Friday, where it will produce cars, mainly electric, by the end of 2024. A new sign of Beijing’s ambitions in the European market, amid a dispute with Brussels.

Chery, known for its affordable cars, is the second Chinese brand to announce a European establishment, after giant BYD, which formalized in February the construction of its first European factory in Hungary. However, the latter will be operational in just three years.

The establishment of Chery, the principle of which was announced on Tuesday, will be carried out in the form of a joint venture with Ebro-EV Motors of Spain, a group specializing in the production of electric pick-ups and founded on the ashes of the old type of trucks and utility vehicles that disappeared in 1987.

This joint venture, majority-owned by Ebro-EV Motors, will be located at the former Nissan site in Barcelona, ​​​​​​which was closed in 2021. It will allow the creation of “1,250 stations”, including “150 in the coming months.”, the partners the two said in a press release on Friday.

Nissan’s site in Barcelona, ​​where 3,000 people worked, was partially sold in 2021 to motorcycle manufacturer Silence and Ebro-EV Motors. But Madrid, in collaboration with the Spanish group, was looking for an industrial partner to fully relaunch it.

According to the agreement formalized on Friday in the presence of the Prime Minister of Spain Pedro Sánchez and the vice president of Chery Guibing Zhang, the Chinese group will assemble in the coming months – thanks to the existing infrastructure – hot and electric cars of its Omoda 5 design.

This production will be supplemented from the fourth quarter of 2024 by electric SUVs sold under the Ebro brand. In their press release, Chery and Ebro say they are betting on a total production of “50,000 cars” in 2027 and “150,000 cars by 2029”.

This project “will lead to the creation of wealth” and “jobs”, welcomed Pedro Sánchez in a speech, seeing the announcement of Chery and Ebro “a sign of the industrial renewal process” at work “throughout Spain”.

Founded in 1997, Chery is a state-owned company. The brand, which it says will have sold 1.88 million vehicles in 2023, was very popular about fifteen years ago in China, mainly with a small petrol city car intended for the domestic market.

If it is not yet one of the most respected Chinese manufacturers in the electric sector, Chery has begun its transition towards this niche and more advanced. It is establishing itself as the largest Chinese car seller in the world (937,000 in 2023).

Chery’s decision confirms the central role played by Spain in the automotive sector. Last year, 1.87 million cars were assembled in the country, the second largest European producer behind Germany (3.96 million), according to the Association of European Automobile Manufacturers.

It comes amid heightened trade tensions between Beijing and Brussels, which opened an investigation in September into public subsidies given by Chinese authorities to the electric car industry, accused of distorting competition.

These subsidies make it possible to display “artificially low” prices, which justified the European Commission, which could impose customs duties on Chinese cars, at the risk of starting a trade war with Beijing.

According to experts, setting up factories on European soil would allow Chinese groups to avoid possible customs duties that Brussels may impose on car imports, and to have better cooperation in the mainland market.

China’s strong electric market has seen the emergence in recent years of several domestic brands such as BYD, Zeeker, Nio, XPeng and Great Wall, which are now competing with America’s Tesla and other foreign manufacturers.

Many of them are now trying to strengthen their presence in Europe, where some already have sales and research and development centers. They complain about the existence of restrictions, imposed according to them at the request of European historical producers.