Spain is turning to Chinese investment as it seeks to strengthen its automotive sector and accelerate the transition to electric vehicles. A government report highlights Madrid’s strategy of attracting major Chinese-backed projects while aiming to create jobs, develop local suppliers and build long-term industrial capabilities.

The country’s largest Chinese investment is a €4.1 billion battery factory being developed by CATL and Stellantis. According to the report, construction of the facility will initially rely on workers brought from China, with expatriate employees expected to remain involved until the end of 2028.

The project is one of three major Chinese-backed automotive ventures Spain considers examples of successful foreign investment. The others include Chery’s partnership with Ebro Motors at the former Nissan plant in Barcelona and BAIC’s collaboration with Santana Motors. Together, the projects are expected to create nearly 6,000 direct jobs.

Spanish officials argue that cooperation with Chinese companies is necessary because China currently leads in key electric vehicle technologies, particularly batteries, software and manufacturing efficiency. Madrid hopes these investments will help establish a stronger European EV supply chain.

However, concerns remain over technology transfer and local economic benefits. Initial production will depend heavily on imported components, while key technologies will be licensed rather than transferred to Spanish ownership. There are also limited commitments to establish local research facilities.

The move comes as Europe struggles to compete with China’s EV dominance. Spain believes partnerships offer a middle ground between protectionism and unrestricted market access, but the success of the strategy will depend on whether Chinese investment creates lasting industrial value within Spain.