EBRO Motors has announced a financing facility of up to c. € 200m with the Anhui Branch of the Export-Import Bank of China for its subsidiaries EBRO SUV, S.L. and EBRO Factory, S.L., with an initial drawdown estimated at c. € 35m. The CNH-denominated facility carries an indicative euro value. According to EBRO, the proceeds will finance the upgrade of the painting plant (c. € 100m eNuW) and new production lines ahead of the group's international expansion. EBRO will guarantee 60% of drawdowns, matching its ownership of both subsidiaries, with Chery holding the remaining 40%. The financing terms are highly attractive, comprising a 10-year tenor, including a three-year grace period, at a fixed interest rate of 2.65%.
Plans for new production lines reinforce the potential for substantial Chery allocations. Following the M1 launch, annual capacity stands at c. 130k vehicles across three shifts, versus expected FY26 assembly of c. 32k units. Further expansion therefore points to volumes beyond the current ramp-up as import restrictions increase the need for European localisation.
Based on Chery's 2026 sales volumes, its European localisation requirements could exceed 80-100k vehicles annually. The reported 350k annual quota on China-built HEV/PHEV imports (EU-assembled vehicles reportedly excluded) compares with c. 800k expected imports in 2026. Chery registered c. 116k EU vehicles in 8M26 (c. 174k annualised), of which we estimate 85-90% were hybrids. A proportional quota allocation would leave c. 83-88k vehicles p.a. requiring alternative production to sustain current sales (excl. UK).
A less favourable quota allocation could push this requirement above 100k vehicles, before further growth. An allocation favouring other Chinese manufacturers or based on 2025 import shares could disproportionately constrain Chery following its strong 2026 expansion. China's Ministry of Commerce referenced 2025 import volumes when describing the agreement, although manufacturer-level allocations remain undefined. According to press reports, implementation could begin as early as December, potentially bringing production-allocation decisions forward.
Barcelona is well positioned to capture these volumes, although allocations remain uncommitted. It represents Chery's only fully operational European production option, while preparations to introduce the electric JAECOO 5 and OMODA 5 could facilitate broader model allocations. If Barcelona absorbed c. 83k Chery vehicles alongside our estimated c. 35k EBRO vehicles in 2027, assembly would reach c. 118k units, approaching its c. 130k three-shift capacity. Chery's exploration of UK manufacturing means that not all localisation volumes would necessarily flow to Barcelona.
Our sensitivity analysis highlights meaningful upside beyond our € 16.50 PT. Our base case assumes 25k Chery vehicles in 2027 and 50k annually from 2028, with EBRO sales reaching c. 42.5k by 2030. Increasing annual Chery assembly to 70k or 80k supports DCF valuations of c. € 18.5 or € 19.3 per share, respectively. Please refer to our latest note for a more detailed sensitivity analysis. The financing strengthens EBRO's ability to fund its industrial expansion; confirmation of Chery models, volumes and timing remains the key catalyst. We reiterate BUY with a PT of € 16.50.
ISIN: ES0105725008
