China's SAIC plans to build first EU car plant in Spain's Galicia

June 1 (Reuters) - China's SAIC Motor Corp plans to set up a car factory in Spain's northwestern region of Galicia that would be its first production facility in the European Union, the regional government said on Monday.

Galicia's leader Alfonso Rueda said his administration had given strategic priority to the project, with an initial investment envisaged at around €200 million.

The project, which includes a logistics hub, still requires the central government's approval for foreign direct investment.

SAIC owns the MG brand, which is popular in Europe and prioritises electrified powertrains.

The plant in the port of Ferrol should create about 1,000 direct jobs and more indirect ones, and will use many locally produced components, the government said in a statement. 

Provided all necessary approvals are in place by then, construction should start next year and the plant would become operational in 2028, according to Rueda.

When a second phase is complete, the plant will be able to produce 120,000 cars a year.

Several Chinese car manufacturers are planning to start production in Spain, which has one of Europe's largest car-making industries. Chinese carmakers have gained market share in Spain amid an aggressive price war by EV makers worldwide.

China's Chery <9973.HK>, in a joint venture with Spanish carmaker EBRO, plans to start making cars at a former Nissan plant in Barcelona at the end of this year or the first quarter of 2027. The Chery-Ebro venture said in 2024 it would aim to produce up to 150,000 vehicles a year by 2029.

(Reporting by Andrei Khalip)