Ford and Geely Agree to Share Underused Spanish Auto Factory

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(Bloomberg) — China’s Geely has agreed to take over part of a Ford Motor Co. factory in Spain, according to people familiar with the matter, adding to a string of Chinese investments reshaping the country’s auto industry.

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Spanish Prime Minister Pedro Sanchez is set reveal the deal at the plant near Valencia on Thursday, said the people, who asked not to be named ahead of the announcement. The Chinese automaker will build vehicles on an idle assembly line at the facility, where Ford also makes the Kuga crossover, the people said.

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The collaboration, in the works for months, highlights Sanchez’s determination to increase Spain’s role in European automaking as the segment restructures. The premier has been courting Chinese carmakers by providing a local manufacturing base to sidestep European Union tariffs, while offering a deep supplier network, skilled labor and low energy costs.

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A government spokesman confirmed Sanchez plans to make a statement at the Almussafes plant on Thursday, declining to comment further. Geely declined to comment. Ford representatives didn’t respond to requests for comment.

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Local news outlet Las Provincias reported earlier that Sanchez plans to visit the factory on Thursday to formalize the arrangement. Talks have been underway since earlier this year.

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Chinese Brands

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China’s Chery Automobile Co. and Spanish brand Ebro have revived a former Nissan factory in Barcelona that now employs more than 1,500 people. BAIC Motor Corp. is set to produce off-road cars with resuscitated brand Santana in the Andalusia region. The most ambitious plan is the partnership between Stellantis NV and CATL for a €4.1 billion ($4.7 billion) battery factory in Zaragoza that is set to start operations in 2028.

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Unlike Germany, France and Italy, Spain lacks a major homegrown automaker. Sanchez and his team contend the Chinese investments can help safeguard manufacturing jobs while speeding the transition to electric vehicles.

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The government has said Chinese investments will create thousands of jobs while acknowledging that some projects initially will rely on Chinese workers and technology.

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Ford has a longstanding relationship with Geely, having sold Volvo Cars to the Chinese company 16 years ago.

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Underused Factory

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Bringing Geely in could help boost utilization in Valencia and preserve or restore jobs. The Almussafes plant — once Ford’s largest outside the US — has been running at less than a quarter of its annual capacity of 450,000 vehicles.

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Geely Automobile Holdings Ltd. has been expanding across Europe with models including the EX5 electric sport utility vehicle. Producing cars in the region would help the company avoid tariffs and shipping costs, while signaling to dealers and customers that it plans to remain in the market and provide parts and service support over the long term.

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Factory collaborations are common in the auto industry, allowing manufacturers to spread fixed costs and share established workforces and supplier networks. Stellantis produces Toyota Motor Corp.-branded vans at plants in France, Spain and Italy, for example, while Ford builds Volkswagen’s Amarok pickup alongside the Ranger in South Africa and its Transit Custom alongside the VW Transporter in Turkey.

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—With assistance from Keith Naughton.

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