Key Points:
- Geely agreed to buy the Body 3 vehicle assembly facility at Ford’s Valencia plant.
- The Chinese company plans to produce its own models and might build vehicles for Ford.
- Automakers from China are shifting production to Europe to avoid heavy import tariffs.
- SAIC Motor is also looking for a factory site in the Spanish port town of Ferrol.
Chinese car manufacturer Geely just bought a section of a Ford factory in Spain. The company plans to manufacture at least one of its vehicle models at the location. This move represents a huge step for Chinese car companies as they aggressively push into the European market. By setting up shop directly on European soil, Geely gains a massive advantage over competitors who still ship their cars across the ocean.
Local Spanish trade publication La Tribuna de Automocion broke the news on Tuesday. According to unnamed industry sources, Geely agreed to purchase the Body 3 vehicle assembly facilities at the Almussafes plant in Valencia. The report noted that the two giant automakers are also discussing a secondary deal. Under that potential agreement, Geely would manufacture a brand-new vehicle model specifically for Ford at the shared Spanish facility.
Neither company wanted to discuss the exact details of the transaction. Geely did not respond to multiple requests for comment on Tuesday morning. Meanwhile, a representative for Ford actively declined to comment on the situation and dismissed the local news reports as mere market speculation. However, Reuters business journalists already revealed in February that Ford and Geely had begun in-depth negotiations over shared vehicle technologies and manufacturing facilities.
Ford currently operates the massive Almussafes plant but has scaled back operations over the last 2 years. The American automaker recently cut thousands of jobs at the Valencia site as it shifts focus toward a new generation of electric vehicles. Ford executives needed a solution for the empty factory space, making a partial sale to a cash-rich Chinese competitor a logical business decision. Spain already ranks as the 2nd largest car-producing nation in Europe, giving Geely access to an experienced local workforce and established supply chains.
Geely currently ranks as the 2nd-largest automaker in China, just behind industry leader BYD. The company already holds a massive footprint in Europe because it owns popular Swedish brands Volvo and Polestar. By securing its own manufacturing hub in Spain, Geely can accelerate its European production schedule and bring new models to market much faster.
This factory purchase highlights a major shift in how Chinese automakers approach international sales. Companies like Geely want to build cars in Europe to avoid new, expensive taxes. The European Union recently announced plans to impose additional import tariffs on Chinese electric vehicles ranging from 17.4% to 38.1%. European officials claim that the Chinese government heavily subsidizes its car companies, hurting local European manufacturers. When Geely builds cars in Spain, the company easily bypasses these strict border taxes.
Geely is not the only Chinese automotive giant targeting Spain for expansion. On Wednesday, the same Spanish trade publication reported that SAIC Motor is seriously considering building a factory in northwestern Galicia. SAIC executives are currently evaluating a potential production site in the coastal port town of Ferrol. The company wants a reliable European base to produce its popular MG brand vehicles for local buyers.
The Galician regional government clearly wants the business. Back in April, Galician Premier Alfonso Rueda traveled directly to China. He visited the SAIC Motor headquarters in Zhengzhou specifically to pitch his region to the corporate executives. Rueda hopes to attract millions of dollars in foreign investment to boost the local economy and create steady manufacturing jobs for his citizens.
Like Ford and Geely, government officials in Galicia refused to confirm the ongoing factory negotiations officially. Rueda’s office did not answer media requests for comment on Wednesday. However, industry experts expect SAIC to make a final decision regarding its European manufacturing plans before the end of the year.
Spain has quickly transformed into the top destination for Chinese car companies looking to enter the European Union. Earlier this year, Chinese automaker Chery signed a joint venture deal to build cars at an old Nissan plant in Barcelona. By offering empty factories and skilled auto workers, Spain provides a perfect landing spot for expanding Asian brands.
Legacy automakers now face a tough choice. They must decide whether to fight the incoming wave of affordable Chinese cars or partner with them to share the financial load. Ford clearly chose the partnership route. By splitting the costs of the Valencia plant, Ford keeps its facility running while Geely gains a critical foothold in the European automotive market.
