China-based automaker BYD is considering Spain as its leading candidate for a third European car factory, two sources with knowledge of the matter told Reuters.
The automaker, which is pursuing faster sales growth across the continent, could add a Spanish assembly plant to its planned facilities in Hungary and Turkey.
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This move would support Spain’s ambitions to become a prominent electric vehicle (EV) manufacturing hub.
One source said BYD prefers Spain owing to its comparatively low production costs and a clean energy network.
Alberto De Aza, BYD’s country manager for Spain and Portugal, told Reuters last month that industrial framework and inexpensive electricity of Spain rendered it a favourable option for expanding the company’s production capacity in Europe.
A third source added that no final decision has been communicated and that other countries remain under consideration.
Any formal approval of the site will require sign-off in China and needs to be completed before the end of 2025, the sources added.
The automaker has previously examined locations including Germany, but that option has been debated internally owing to higher labour and energy costs.
The company intends to manufacture all cars destined for the European market locally within three years.
BYD’s Europe sales rose 280% in the first eight months of the year compared with the same period in 2024, following an expansion of its product range to include plug‑in hybrids alongside fully electric models.
In April, BYD reorganised its operations in Europe, recruiting additional managers and expanding its dealership network.
Spain has been a focus for investment in recent years.
Since announcing a €5bn ($5.8bn) plan in 2020 to attract EV and battery manufacturing using EU pandemic recovery funds, the country has drawn investment from firms including Volkswagen, Chery and CATL.
Spain and China have deepened diplomatic and trade relations; Spain abstained in an European Union (EU) vote last year on tariffs targeting Chinese-made EVs.
BYD’s Hungarian factory is under construction but the company has delayed the start of mass production until next year, while the Turkish plant is scheduled to launch in 2026.
