The plant is expected to begin construction in the port of A Coruna in 2027 and start operation at the end of the following year, with a yearly production target of 120,000 vehicles, said the head of the regional government of Galicia, Alfonso Rueda.
The project will involve an initial investment of around 200 million euros ($215 million) and is expected to create 2,300 jobs, he told a news conference.
Spain is particularly attractive to Chinese investors because its economy is growing at one of the fastest rates in Europe and energy costs remain relatively low due to the country's bet on renewable power.
Bilateral ties have strengthened in recent years, with Spanish Prime Minister Pedro Sanchez visiting China four times over in the past three years,
The closer times some as relations between Europe and the United States have strained under President Donald Trump.
Chinese carmakers have quickly built up their presence in the lucrative European auto market, buoyed by technological advances and EU rules that call for 90 percent of all cars sold in the bloc to be electric by 2035.
SAIC has been selling hybrid and EVs in Europe under the MG brand for several years.
In recent weeks, several Chinese car brands have said they plan to manufacture in Europe, a move that would allow them to avoid EU customs duties and reduce transport issues.
rbj-al/ds/rl