China’s Great Wall Motor (GWM) is moving forward with plans to establish its first full-scale vehicle manufacturing plant in Europe, targeting an annual output of 300,000 cars by 2029. The company is currently evaluating Spain and Hungary as potential locations, with cost factors and EU industrial policies driving the final decision. This expansion is a direct response to the growing presence of competitors like BYD in the European market.
Strategic Response to Rising Competition
GWM’s move reflects a broader trend of Chinese automakers seeking to establish a stronger foothold in Europe. Currently, GWM operates overseas production facilities in Russia, Thailand, and Brazil, but not in Western Europe. The decision to build a factory in the EU is driven by several key factors:
- Cost Reduction: Local production will reduce import costs and tariff exposure, making GWM more competitive.
- Market Access: A European plant will allow GWM to better serve the region’s diverse powertrain demands – from internal combustion engines (ICE) to hybrids and electric vehicles (EVs).
- Competitive Pressure: BYD is aggressively expanding its European operations, with plans for a third factory in Spain. GWM’s move aims to counter this by accelerating its own European production plans.
Addressing Declining EV Sales
The timing of this announcement is also tied to GWM’s recent performance in Europe. Sales of its EV brand, Ora, fell by 41% last year to just 3,706 units. The European factory is intended to reverse this trend by launching more mainstream models, including a compact SUV under the ORA brand (Ora 5) set for release in mid-2026.
Global Expansion Goals
GWM’s European ambitions align with its larger goal of reaching 1 million overseas sales annually by 2030. Last year, the company achieved a record 453,141 overseas deliveries. The company’s international president, Parker Shi, stated that labor and logistics costs are critical considerations in site selection. GWM will initially ship components into Europe for assembly, highlighting the importance of efficient supply chains.
Navigating EU Industrial Policy
The company is also closely monitoring potential shifts in EU industrial policies, including investment conditions and tariff regimes. This proactive approach suggests GWM is prepared to adapt to evolving regulations and ensure long-term viability in the European market.
By establishing local production, GWM can better position itself against established European automakers and emerging Chinese rivals like BYD, while also securing a stronger presence in a critical global market.
The planned European plant represents a significant step for GWM, signaling its commitment to long-term growth in the region. The competition with BYD will be intense, but GWM’s move to localize production is a crucial strategy for success.
