China's Chery to open its first European manufacturing site in Spain

BARCELONA (Reuters) -China's Chery Auto has signed a joint venture deal with Spain's EV Motors to produce cars at its first factory in Europe, EV Motors and the Catalan regional government said on Tuesday.

Cars will be produced later this year at a plant that Japanese carmaker Nissan shut down in 2021, helping to recover some of the 1,600 direct jobs lost as a result.

Chery, the junior partner in the joint venture, will start producing its Omoda vehicles at the plant first, while majority stakeholder EV Motors will start producing its own vehicles in the fourth quarter, the Spanish company said.

"I see the step as a confirmation of Chery's clear commitment to Europe. This decision proves Chery has come to stay," Jochen Tueting, managing director for Chery Europe said in a statement.

An event is scheduled to take place in Barcelona on Friday to formalise the deal.

Spain - Europe's second-largest car producing nation after Germany - launched an ambitious plan in 2020 to attract electric vehicle and battery production to the country using European Union pandemic relief funds. Volkswagen and Renault are among companies that have announced investments since then.

The electric car market is in the midst of an aggressive price war while the European Union is investigating whether Chinese EV makers benefit from unfair government subsidies.

Authorities did not disclose if they had offered public aid to Chery, though Catalonia's government said it would finance training programmes for Nissan's former workers to facilitate a quick transition.

"Chery's arrival to Barcelona will help Catalonia remain one of the main car producers," said the region's top business official Roger Torrent who recently met Chery executives in China.

Chery's interest in Nissan's former plant started in 2022, the regional government said.

The 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.

(Reporting by Joan Faus; additional reporting by Nick Carey, Editing by David Latona, Aislinn Laing, Kirsten Donovan)