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Lead: As competition for new energy vehicles extends from product competition to supply chain and manufacturing system competition, building factories overseas has become an important choice for Chinese automakers to break through trade barriers and get closer to consumers. However, unlike new factories that relied on heavy asset investment in the past, more and more automakers are beginning to explore achieving rapid localization through equity cooperation, strategic alliances, and capacity sharing. Geely's investment in Ford's Valencia plant in Spain is a microcosm of Chinese automakers' global manufacturing model transformation.
Author: Zhang Dachuan
Recently, Geely Auto announced it has formally signed an agreement with Ford Motor. Both parties will establish a joint venture company at Ford's Valencia plant in Spain to promote local production layout in Europe. Geely SPV, a wholly-owned subsidiary of Geely Auto, will acquire 34% equity of Ford's target company in Spain for €221 million (approximately CNY 1.765 billion), while Ford will hold the remaining 66% equity.
According to the plan, after obtaining relevant regulatory approval, the joint venture company will officially begin operations in the first half of 2027, and the first all-new model is expected to roll off the line in 2028.
△ Geely Announces Investment in Ford Valencia Plant
It is worth noting that after the establishment of the joint venture company, the Valencia plant will be positioned as a shared manufacturing platform for both parties, responsible for the production and manufacturing of Geely and Ford brand models, but will not undertake sales, R&D, or brand operation functions. This means that both sides will achieve capacity sharing and resource coordination in the manufacturing link, while maintaining independence in core businesses such as product definition, technical R&D, brand operation, and sales channels.
Why is Geely willing to spend heavily to "pave the way" in Spain?
Against the background of intensifying competition in the domestic automotive market and a decline in market scale of about 20%, accelerating overseas layout has become an important strategic direction for top automakers like Geely. In the first half of 2026, Geely Auto's overseas sales reached 474,000 units, a year-on-year increase of 158%, making it one of the Chinese automakers with the fastest growth in the overseas market.
Europe is the second-largest new energy vehicle market in the world. In 2025, passenger vehicle sales in Europe were approximately 12.9 million units, of which new energy vehicle (pure electric and plug-in hybrid) sales exceeded 3 million units, accounting for about one-quarter of new car sales. For Geely, to continuously expand overseas business, establishing local production capacity in Europe has become a critical step.
△ The European automotive market is very attractive to Chinese automakers
At the same time, facing tariff barriers and local manufacturing requirements, building factories in Europe has become an inevitable choice for Chinese automakers going global. Local production not only helps reduce tariff risks but also shortens delivery cycles and improves customer response speed. In recent years, BYD announced investments of about $1 billion each in Hungary and Turkey to build complete vehicle factories; Chery cooperated with Spanish EV Motors to use the former Nissan plant in Barcelona for car production; SAIC Motor is also studying ways to expand local manufacturing capabilities in Europe.
△ BYD has also invested in a factory in Hungary to radiate the entire European market
Among many European countries, Spain possesses significant advantages. As the second-largest automotive production country in Europe, its annual car production has long been maintained between 2.2 million and 2.5 million units, possessing a complete parts supply chain and a mature automotive industry cluster. It aggregates complete vehicle enterprises such as Ford, Stellantis, Renault, Mercedes-Benz, and Volkswagen, as well as international parts suppliers such as Gestamp, Antolin, Lear, and Bosch. Layout in Spain means Geely can not only obtain local manufacturing capacity in Europe but also quickly integrate into the mature supply chain system, improve logistics efficiency and market response speed. Compared to building a new complete vehicle factory which usually requires an investment of about $1 billion to $2 billion, a construction cycle of 3 to 5 years, and rebuilding the supply chain and employee system, utilizing Ford's existing Valencia plant can significantly reduce capital investment, shorten the product introduction cycle, and fully utilize existing production capacity, technical teams, and supply chain resources. For Geely, which is currently accelerating the expansion of the European market, the greatest value of this investment does not lie in obtaining 34% equity, but in obtaining a mature European local production line at the fastest speed and seizing the development opportunities of the European new energy vehicle market.
A "win-win" investment with Ford
Geely's investment in the Spain Valencia plant this time is one of Ford's most important manufacturing bases in Europe. The plant was originally built in 1976, with a designed annual capacity of about 500,000 units, making it one of the largest and most technologically advanced automotive manufacturing bases in Europe. So, does Ford introducing Geely investment mean "inviting a wolf into the house" or "nurturing a tiger for harm"? The answer is no.
△ The Spain Valencia plant Geely invested in is one of Ford's important manufacturing bases in Europe
In recent years, Ford's European business has continued to face pressure, with market share dropping to about 3.3%, and industry ranking falling from second place to twelfth place. As a core production base for Ford in Europe, the Valencia plant currently produces only one model, the Kuga. According to union data, factory output in 2025 was less than 100,000 units, far lower than the 500,000 unit design capacity, with capacity utilization rate only about 20%. Idle capacity problems are very prominent.
△ Ford Valencia currently only relies on the Kuga model to barely hold on
Against this background, introducing Geely can not only improve factory capacity utilization, share fixed costs, and relieve operational pressure, but also buy precious time for Ford's European business transformation. According to the plan, in addition to continuing to produce the Kuga, the Valencia plant also plans to launch an all-new Bronco family compact SUV in 2028 to prepare for future product updates. If not for Geely's investment, the Ford, which values financial data extremely, might have decided to close the Valencia factory in a couple of years.
△ Ford will produce another high-volume new model at Valencia plant starting in 2028 — the Bronco
Looking further ahead, this is also a further deepening of the cooperation relationship between Geely and Ford. After Geely acquired Volvo from Ford in the past, the two parties reached another important cooperation. Today, Geely has grown into a globally leading new energy vehicle enterprise, with obvious advantages in new energy and intelligent connectivity; while Ford still maintains strong profitability in traditional automotive manufacturing, brand influence, and the North American pickup market. Both sides complement each other's advantages. This cooperation not only solves the capacity problem of the Valencia plant but also creates conditions for deeper cooperation in the future in new energy and intelligence fields. It can be called a "win-win" investment that takes into account short-term interests and long-term strategies.
Geely's new approach to "going out"
In recent years, Geely has continued to promote global manufacturing layout. However, unlike some Chinese automakers building new overseas factories on a large scale, Geely's overseas capacity expansion adopts a combination of equity investment, strategic cooperation, and using existing capacity, to achieve local production with lower cost and higher efficiency.
This model was first verified in Malaysia. In 2017, Geely acquired 49.9% equity of the Malaysian state-owned automotive brand Proton and continuously invested funds to upgrade the Tanjung Malim factory. By introducing BMA, CMA and other complete vehicle platforms, as well as R&D, procurement, and supply chain resources, Proton launched new models such as X50 and X70 in succession, with operating conditions significantly improved. Market share increased from about 13% in 2017 to about 19% in recent years, re-stabilizing as the second place in the Malaysian automotive market, becoming one of the successful cases of overseas industry cooperation by Chinese automotive enterprises.
△ Proton brand, with Geely's support, re-stabilized as the second place in the Malaysian automotive market
The South Korean market further reflected Geely's "capital cooperation + technology empowerment" model. In 2022, Geely invested about $200 million to acquire 34.02% equity in Renault Korea and relied on the Busan plant to produce new models developed based on Geely's CMA platform. Relying on Renault Korea's mature manufacturing system, supply chain, and sales network, Geely not only significantly shortened the product introduction cycle but also effectively reduced initial investment costs and operational risks. Subsequently, Geely replicated this model in Brazil, cooperating with Renault to use the plant located in Curitiba for local production, accelerating entry into the South American market.
△ Geely realized the production of relevant models quickly in South Korea and Brazil by investing in local Renault factories
From this investment in Ford's Spain plant, it can be seen that Geely is further replicating and perfecting this model. Compared to spending billions of dollars to build new factories, through equity investment and strategic cooperation, Geely can make full use of local mature manufacturing capabilities, supply chain systems, and talent resources to achieve faster market access, while effectively reducing capital expenditure, shortening the investment return cycle, and reducing operational risks brought by policy changes, trade barriers, and market fluctuations. After years of practice, Geely has gradually formed a global manufacturing layout model centered on "capital cooperation + technology empowerment + local manufacturing". This asset-light, high-collaboration development path not only improves capital efficiency but also enhances the enterprise's flexibility in responding to changes in the global trade environment and regulatory requirements of various countries, providing more sustainable support for its globalization strategy.
Comment
The core value of Geely's investment this time does not lie in obtaining 34% equity in a factory, but in rapidly obtaining mature local manufacturing capabilities in Europe at a lower cost. This is more efficient and has a cost advantage than building a new factory. From Proton to Renault Korea, and then to Ford's Spain plant, Geely is continuously replicating this model and gradually forming a globalization path distinct from traditional heavy-asset factory building. In the future, the focus of Chinese automakers' overseas competition may no longer be who built more factories, but who can integrate global manufacturing resources more efficiently.
(This article is original from "He Yan Reads Cars". No reprinting without authorization.)
