Geely to Take Over Ford’s Spanish Factory with Official Agreement to Be Announced on July 24
Chinese automaker Geely Automobile Holdings and U.S.-based Ford Motor Company have reached an agreement for Geely to acquire part of Ford’s factory in Almussafes, Valencia, Spain. The facility has a peak annual production capacity of 450,000 vehicles but is currently operating at less than a quarter of that capacity, with over 70% of its production lines idle. Spanish Prime Minister Pedro Sanchez is scheduled to formally announce the agreement on July 24, highlighting its potential to reactivate underutilized capacity, create jobs, and revitalize the local automotive supply chain.
Ford will retain some production lines to continue manufacturing the Kuga model, while Geely plans to convert the acquired lines to produce the EX5 pure electric SUV and other electric vehicles. This move will provide Geely with a production base in Europe, helping to reduce shipping costs and avoid potential EU tariffs. The Spanish government views the agreement as a critical opportunity for the automotive industry’s transformation, aiming to attract foreign investment and accelerate the electrification of the domestic supply chain.
Spain Seeks to Compete with Germany in the Electric Vehicle Market
The Spanish government has been actively promoting the development of the electric vehicle industry in recent years, hoping to offset the decline in orders for fuel vehicles through partnerships with Chinese automakers. Spain offers skilled labor and relatively low energy costs, and the government aims to leverage these advantages to attract Chinese electric vehicle manufacturing technology and compete with traditional European automotive powerhouses like Germany. The Sanchez administration believes this collaboration will help Spain secure a position in the European electric vehicle market.
Geely is not the first Chinese automaker to expand into Spain. In 2024, Chery Automobile signed an agreement with Spain’s Ebro to repurpose Nissan’s former factory in Barcelona, with plans to begin large-scale production in 2029. Beijing Automotive Group (BAIC) has also partnered with Santana Motor to produce off-road vehicles in Andalusia. Additionally, battery manufacturer CATL and Stellantis are constructing a new battery factory in Zaragoza, expected to begin operations in 2028. These collaborations demonstrate how Chinese automakers are deepening their industrial presence in Spain through diverse models.
Key Details of the Agreement Remain Unclear, with Uncertain Benefits
While the Spanish government has high hopes for the agreement, many details remain to be clarified. It is still unclear how Geely will allocate the proportion of locally sourced versus imported components or whether it will prioritize hiring local Spanish workers. In past collaborations between Spain and China, local supply chain participation has been limited, with some projects dominated by Chinese partners, resulting in fewer-than-expected benefits for Spain. Analysts suggest Geely may favor using imported Chinese components or semi-knocked-down (SKD) kits to reduce costs, which could limit the positive impact on local Spanish suppliers.
Furthermore, it remains to be seen whether Geely’s localized production in Spain will effectively reduce cognitive barriers among European consumers toward Chinese brands. While “Made in Spain” may enhance brand perception, Geely’s long-term competitiveness in the European market will still depend on product quality and pricing advantages. For Spain, this agreement symbolizes its ambition in the electric vehicle sector, but whether it will achieve industrial upgrading and job growth requires further observation. For Geely, this marks a critical step toward localized production in Europe, and its ability to leverage Spain’s strategic location to expand in the European market will be a key indicator of whether Chinese automakers can establish a firm foothold in the region.
