Chery established a new joint venture company in Europe.

Local time on April 19, Chinese automaker Chery and Spanish automaker Ebro-EV Motors signed an agreement, and the two sides will establish a new joint venture company in Barcelona, Spain to jointly produce new electric vehicles. The total investment of the project reaches 400 million euros.

Currently, both the Chinese Embassy in Spain and the Wuhu Municipal People’s Government have released the news that Chery and Ebro-EV Motors have reached an agreement, but as of the time of submission, Chery’s official has not officially announced this news.

It is understood that Chery is the second Chinese automaker to set up a factory in Europe after BYD. Different from BYD’s way of building a factory from scratch in Hungary, Chery produces and distributes through the acquisition of existing factories in Spain. The production base is the former Nissan factory that was closed in 2021. At that time, Nissan’s closure of the factory once led to the unemployment of about 2,500 workers. This factory is the Barcelona Zona Franca factory. In March this year, EV Motors obtained the factory property rights. After the signing of the joint venture agreement between the two parties this time, the factory after it goes into production will create 1,250 jobs.

According to the agreement, the factory will start production this year, and it is expected to reach an annual output of 50,000 vehicles by 2027 and increase to 150,000 vehicles by 2029. After production, the pure electric and fuel version Omoda 5 will become the first batch of produced models.

Omoda is a new product series of Chery Automobiles, which was launched in July 2022 and is positioned as a compact SUV. The current price range is 79,900-114,900 yuan. As the first model of Chery’s 4.0 product evolution, Omoda also launched four-wheel drive version, hybrid version and pure electric version models. It is worth mentioning that Omoda’s sales in the domestic market are not ideal. Retail data shows that the cumulative sales of Omoda from January to March this year were 862 vehicles, among which the sales in January to March were 443 vehicles, 226 vehicles, and 193 vehicles respectively. But in the international market, Omoda has been sold in more than 30 countries globally. According to statistics, the cumulative wholesale sales of Omoda in the first half of 2023 exceeded 60,000 vehicles, and nearly 90% of which were contributed by the overseas market.

In addition to the Omoda model, the subsequent joint venture company will also produce plug-in hybrid models Jaecoo 7 (corresponding to the “Exploration 06” model in China), and use the technology and production platform shared with Chery to restart the old Spanish car brand Ebro, which has stopped selling since 1987.

Data shows that China has become the first exporter of passenger vehicles. At the same time, more and more Chinese automakers began to plan to build factories overseas. It is understood that Chinese automaker overseas factories are mainly concentrated in Southeast Asia, Central Asia, Latin America, Africa and other regions, and the total number of factories has reached dozens of them. Among them, Chery is the automaker with the most overseas factories, and it has KD factories in Malaysia, Mexico, Brazil, Argentina, Venezuela, Russia, Iran and Egypt.

Data shows that Chery Group’s cumulative sales in 2023 were 1,881,300 vehicles, a year-on-year increase of 52.6%. Among them, the annual export cumulative sales were 937,100 vehicles, a year-on-year increase of 101.1%, and the growth rate is particularly evident. As a comparison, in 2023, Great Wall Motors and Geely’s overseas markets were 316,000 vehicles and 274,100 vehicles respectively, with year-on-year increases of 82.48% and 38% respectively.

The latest data shows that from January to March 2024, Chery Group’s cumulative sales were 529,604 vehicles, a year-on-year increase of 60.3%. Among them, the cumulative export of automobiles was 253,418 vehicles, a year-on-year increase of 40.9%, accounting for 47.85% of the total sales. From the data, it is not difficult to find that the overseas market is of great importance to Chery, and Chery has become the third largest automaker in China and the largest exporter of passenger vehicles.

As for why Chery chose to establish a joint venture company in Spain to make cars, it may be related to the local automotive development. According to Caixin Lianbo, data shows that Spain is the second largest automobile producer in Europe after Germany, with a production volume of nearly 2.5 million vehicles in 2023 and is expected to reach about 2.3 million vehicles in 2024.

At present, Chery Automobiles is still continuously expanding its overseas scale. According to media reports, the person in charge of Chery Automobiles in the UK said that the company plans to enter the UK market this year and build a factory in the local area before 2030, and it will compete for market share with the Korean automaker Hyundai Kia Group at that time.

For the future sales performance in the overseas market, CITIC Securities predicts that the overseas sales of Chinese automakers may reach 3 million and 5.5 million vehicles in 2025 and 2030 respectively, and the contribution of the overseas market to the sales of the top independent brands and new forces may reach 25%-40% in 2030.

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