By Joan Faus
BARCELONA (Reuters) -China’s Chery Auto is nearing a deal to start making cars in Spain, its first manufacturing site in Europe, the Spanish government and lead negotiator EV Motors said on Tuesday.
The Industry Ministry said in a statement it was confident that an agreement to start production in Barcelona, the capital of Catalonia region in the northeast, will be formalised in the coming days.
The deal emerged after a Spanish delegation held positive talks with Chery this week in China, said a spokesperson for Barcelona-based EV Motors.
Chery did not immediately respond to a request for comment.
Catalonia’s regional government said on Tuesday its senior business official would travel to China on Wednesday to meet with Chery executives.
Chery is one of several Chinese automakers selling lower-cost, mostly electric, vehicles to Europe. It began selling cars in Spain earlier this year.
The talks are focused on Chery producing vehicles at the plant that Japanese carmaker Nissan shut down in 2021, helping to recover part of the 1,600 direct jobs lost as a result.
Reuters reported in March that the Italian government was holding talks with Chery as part of its efforts to attract a second major automaker to the country after Stellantis, the multinational group which has operated in Spain for years.
Italy’s Industry Ministry has no information about how Chery chose Barcelona for its new plant, a government official said on Tuesday.
Chery remains in contact with Italian authorities but has received little feedback, said an industry source who requested anonymity and confirmed talks are progressing with Spain.
The Industry Ministry declined to say whether Spain had offered any public aid to Chery.
Spain will open two tenders this year for companies to request a total of 1.7 billion euros in loans and grants for electric vehicle production under the so-called PERTE scheme of incentives that uses EU pandemic relief funds.
Catalonia’s business department did not respond to a request for comment on potential public aid.
Nissan’s main Barcelona plant was partially handed over to Spanish electric motorcycle maker Silence and local engineering groups QEV and EV Motors, which planned to turn it into a hub for electric vehicles.
EV Motors acquired full corporate control of the hub in March, and has played a key role in the talks with Chery because it would operate under the hub’s umbrella.
EV Motors also plans to produce its pickup cars and electric vans under its Ebro brand, which could involve potential production and commercial deals with Chery, said one source with knowledge of the matter, without elaborating.
The electric car market is grappling with an aggressive price war and trade tensions between China and the European Union, which is investigating whether Chinese EV makers benefit from unfair government subsidies.
Establishing manufacturing capacity in Italy or Spain, where electric car sales are relatively low, would fit Chery’s strategy of selling a mix of internal-combustion engine, hybrid and fully electric cars.
(Reporting by Joan Faus, additional reporting by Nick Carey, Giulio Piovaccari and Giuseppe Fonte; Editing by Andrei Khalip and Richard Chang)
