The European automotive industry has been one of the strongest on the continent and for a long time has seemed unshakeable. Germany was designing the future, Central Europe was assembling, and the southern part of the continent contributed labor and industrial capacity. Spain was important —the EU’s second-largest car producer—, but it rarely occupied the center of European strategic imagination. Although the machinery appears complete and well designed, the reality is that it is being forced to change.
With the electric transition, the factors that determine industrial competitiveness are rapidly changing. The new European car still depends, but less so, on mechanical engineering, on the supply chains of internal combustion engines, or on the prestige of German brands. Today, three new pillars guide the sector: cheap energy, the ability to manufacture affordable electric vehicles, and access to Chinese technology supply chains. And in these three areas, Spain is beginning to appear as one of Europe’s best-positioned countries.
“The future center of gravity of the European electric car industry could shift south”
Spain combines several advantages difficult to find together in the continent: abundant renewables, comparatively more competitive electricity prices, large car plants already in operation, logistics infrastructure, and a political relationship with China that is far less ideologized than that of other European partners. In Brussels, Berlin, and Paris, a notion is beginning to take hold that would have seemed unlikely a few years ago: the future center of gravity of the European electric car industry could move south.
The logic begins with energy
>The electric car is not just a technological revolution; it is an energy transformation embedded within a new industrial policy. Batteries, gigafactories, and electrified production chains require enormous amounts of stable and relatively cheap electricity. Moreover, after Russia’s invasion of Ukraine, this factor has become a decisive variable for European competitiveness.
Spain possesses an advantage that few large European countries can replicate quickly: a combination of solar, wind, and regasification capacity built over years that allowed it to cushion better than others the energy shock after 2022. While Germany has discovered the strategic cost of depending on Russian gas, Spain has managed to consolidate a far more favorable energy position for the new industrial economy.
In the sector people keep asking who makes better electric cars, but there is increasing interest in knowing who can produce them at affordable prices. Ignacio Rodríguez Solano, director of Institutional Relations at the Renault Group, summed it up in Agenda Pública: “We are not going to electrify Europe with cars costing 100,000 euros.”
That is where China appears. In the past, Europe underestimated how quickly the Chinese automotive industry was evolving. Many European companies continued to view Chinese brands as cheap and technologically secondary. Today that view has become obsolete.
Recently, Teresa Ribera, the European Commission’s Executive Vice-President, said: “There was fierce opposition to that change process. Some, irresponsibly, accused those of us who supported a planned change process and accompanying the industry of defending ideologized positions. Suddenly we find two very meaningful things. First: there are those who have overtaken us. Second: we depend on something we do not have [fossil fuels],” she explained to Marc López Plana.
“The Asian giant seems to be winning, by a landslide, the race for an affordable electric car”
Consequently, the Chinese advantage depends on highly automated factories, simplified production chains, integrated digital platforms, and an industrial development speed far superior to Europe’s. While European manufacturers remain trapped in complex and costly industrial structures, many Chinese firms produce fewer models, with fewer configurations, and with far more efficient processes. As a result, costs fall and manufacturing times improve significantly compared to European counterparts. The Asian giant seems to be winning, by a landslide, the race for an affordable electric car.
The positive takeaway is that the industrial strategy is already being rethought with a new approach. At its core, there is still debate about whether Europe will need to cooperate more with China to keep its own automotive industry alive.
Germany begins to accept it…
In Lower Saxony, political leaders already openly raise the possibility that Chinese manufacturers could produce vehicles at German Volkswagen plants to avoid closures and preserve industrial employment. The idea would have been politically explosive five years ago. Today it is part of the public debate.
The historical shift is evident. For decades, German technology flowed toward China. Now part of the German industry is beginning to wonder how much Chinese knowledge it will need to stay competitive. But Germany also carries structural problems that Spain does not bear to the same extent.
Energy costs are higher. The industrial transition is slower. Production structures are more rigid. And Berlin remains torn between two contradictory impulses: reducing strategic dependencies on China while, at the same time, avoiding the competitive collapse of its export-oriented industry.
… and Spain moves in a different direction
Madrid has maintained a much more pragmatic and less ideological relationship with China than other major European countries. Brussels tightens its language on de-risking, strategic autonomy, and economic security while Spain increasingly considers Chinese industrial investment mainly as an opportunity.
Chinese manufacturers seeking to establish themselves in Europe need several things at once: access to the European market, industrial land, ports, renewable energy, and governments willing to facilitate investments rather than turning them into a permanent political battleground. Today, Spain nearly meets all of those conditions.
“If the European industrial center of gravity begins to shift toward regions with cheaper energy and better maritime access, Spain automatically gains relevance”
Moreover, geography plays in its favor. The Iberian Peninsula occupies an ever more strategic position in the new industrial and energy routes: Atlantic connectivity, Mediterranean access, proximity to North Africa, and growing logistical capacity in ports such as Valencia, Barcelona, or Algeciras. If the European industrial center of gravity begins to shift toward regions with cheaper energy and better maritime access, Spain automatically gains relevance.
Industry is already moving in that direction
Right now, China’s battery giant CATL is aggressively expanding its European footprint. SAIC Motor, owner of MG, is negotiating the construction of a new factory in Galicia, where the Xunta has offered the Plisan industrial park, though Ferrol has also been mentioned as a possible location. Stellantis has sealed deals with Leapmotor to manufacture Chinese electric vehicles destined for the European market: the brand will produce the B10 in Zaragoza from this year and could build an electric model in Villaverde from the first half of 2028. Renault publicly insists that the great challenge is no longer luxury electric cars, but affordable ones.
All these moves point to the same conclusion: the future of European motoring will likely include more Chinese technology, more joint ventures, and much more hybrid production chains than Brussels imagined a few years ago.
“There is no need to reinvent an industry from scratch because Spain already has major plants of Volkswagen, Seat, Ford, Renault, or Stellantis”
And Spain could become one of the main recipients of this transformation. Moreover, the country possesses an asset that Brussels tends to undervalue: a well-established automotive industrial culture. There is no need to reinvent an industry from scratch because Spain already has major plants of Volkswagen, Seat, Ford, Renault, or Stellantis; supplier networks; skilled workers; and entire regions organized around the automobile. What changes is the strategic context surrounding those assets.
In the old European industrial model, Spain occupied a subordinate position within an architecture centered on Germany. In the new electric model, cheap energy and industrial flexibility carry more weight. That redistributes power within Europe.
The path is not guaranteed
Beyond the more positive aspects, Spain still faces important weaknesses. Among them are insufficient energy interconnections with Europe, administrative delays, regulatory fragmentation, and external technological dependency. Moreover, the very relationship with China can become politically complex if Brussels decides to tighten the screws and adopt positions at odds with Moncloa.
There is also another risk: Europe ending up assembling Chinese technology without really building its own capabilities. The debate already runs through European institutions. Some believe the EU could repeat errors similar to those made with Russian gas or Asian solar panels. Meanwhile, others argue that rejecting industrial alliances with China would only accelerate European deindustrialization.
“The next great European automotive hub could emerge not from the continent’s old industrial heart, but from the south”
The electric car is likely to be the first major laboratory of this contradiction. Because the central question no longer seems to be whether Chinese investment will reach Europe, but where it will land. In that contest, Spain appears increasingly well placed given all of the above: relatively cheap energy, existing automotive infrastructure, strategic ports, renewable capacity, etc.
In the past, European automotive hierarchy seemed fixed around Germany. The electric transition is beginning to break that map. Nonetheless, the next great European automotive hub could emerge not from the continent’s old industrial heart, but from the south, powered by solar energy, Chinese capital, and a global reorganization that Europe is still trying to understand.
