Geely Automobile Holdings Limited（吉利汽车控股有限公司）has conditionally agreed to pay €221 million for a 34% interest in a Spanish manufacturing company that will operate Ford’s Valencia plant as a joint venture between the two automakers.
Ford will retain the remaining 66%. Announced on July 23, the transaction values the manufacturing business that will remain after a planned corporate reorganization at €650 million. Completion is subject to regulatory approvals and other conditions, with the joint venture expected to begin operating in the first half of 2027.
Before the transaction closes, Ford will remove operations unrelated to the plant’s core manufacturing activities, including certain subsidiaries, sales and customer-service divisions and associated support functions. The resulting company will operate primarily as a contract manufacturer for Ford and Geely and will not independently conduct vehicle design, research and development, branding, sales or distribution.
The Valencia facility, located in Almussafes, has potential annual capacity of approximately 500,000 vehicles. It is not idle: it continues to produce the Ford Kuga. However, output fell below 100,000 vehicles in 2025, leaving much of the plant’s capacity unused.
The companies plan to manufacture five vehicle programs at the site. Production of the Kuga will continue, while Ford plans to add a new compact SUV from the Bronco family and a new crossover designed by Ford and co-developed with Geely. Both are scheduled to enter production in 2028. Geely Auto separately plans to manufacture two electric models at the plant, with the first also expected to roll off the production line in 2028.
The venture gives Geely immediate access to an established European manufacturing platform, including its workforce, equipment and supply-chain network. In its regulatory filing, Geely said the structure would reduce the capital requirements and execution risks associated with developing an independent factory while allowing both companies to share investment and production costs.
The transaction should be distinguished from the wider holdings of Zhejiang Geely Holding Group（浙江吉利控股集团）. The listed Geely Automobile Holdings, acting through a wholly owned investment vehicle, is the party acquiring the Spanish stake. Volvo Cars, Polestar, Lotus and smart are among the brands managed or partly owned by the wider Geely Holding group, rather than direct subsidiaries of the Valencia joint venture.
Producing vehicles in Spain also reduces Geely’s exposure to the European Union’s additional duties on battery-electric vehicles originating in China. The EU currently applies an 18.8% countervailing duty to China-made vehicles from the Geely group, in addition to the standard import tariff. Neither Ford nor Geely, however, identified tariff avoidance as the sole or formal purpose of the transaction.
For Ford, the partnership provides additional production volume and spreads the cost of keeping a large but underused factory competitive. For Geely, it creates a manufacturing presence inside the European market without the cost and delay of constructing a greenfield plant.
The deal illustrates how trade measures can redirect Chinese automotive investment rather than simply restrict it. Instead of relying exclusively on exports from China, Geely is acquiring a minority position in an existing European industrial operation. Its success will depend on regulatory approval, execution of the planned corporate separation and whether the five-model program can restore the Valencia plant to a sustainable level of utilization.