US' Ford and China's Geely forge Valencia plant alliance

In 2010 Ford sold Volvo Cars to Geely, a transaction that at the time looked like a straightforward retreat from a brand it could no longer justify. Sixteen years on, the two carmakers are walking back toward each other, this time as co-owners of one of Europe's most productive automotive plants.

Today, Ford and Geely have agreed to form a joint venture at Ford's manufacturing hub in Valencia, Spain, with Ford holding 66% of the new entity, and Geely Auto the remaining 34%. Pending regulatory approval, the venture is expected to begin operations in the first half of 2027, with new vehicles reaching the line in 2028.

A response to Europe's cost reckoning

But why collaborate in this manner? The deal is less a gesture of goodwill than an admission of how starkly, and at times relentlessly the European market has shifted. Regulation has certainly tightened, operating costs have clearly climbed, and a new cohort of global competitors - chiefly from China - has reset what counts as an acceptable manufacturing cost base.

For an established plant like Valencia, opened in 1976 - and the first facility a non-Spanish automaker built in the country - standing still as the ground shifts was never going to be an option.

And if the question is one of production challenges, the pooling of production volumes between brands is Ford and Geely's answer. By running Ford and Geely vehicles through the same facility, both OEMs can lift utilisation at a site with a potential annual capacity of around 500,000 vehicles, spreading fixed costs across a larger output and, in theory, bringing per-unit costs down to something closer to the new industry benchmark.

Jim Baumbick, President of Ford of Europe, laid out the automaker’s logic, saying: "That's why we're building a flexible, cost-effective industrial system with a capable partner in Geely Auto. Together we can fully utilise a best-in-class plant with a great workforce and match the industry's new cost benchmark. This is all part of Ford's vision to give European drivers rally-bred handling, true off-road capability and multi-energy technology, with a distinct Blue Oval DNA."

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What each partner brings to the line

The product mix reveals how the two carmakers intend to divide the opportunity rather than compete head-on for the same buyer. Ford's Kuga, one of Europe's better-selling plug-in hybrids, will continue rolling off the Valencia line without interruption, providing a revenue base while the rest of the venture is built out.

Alongside it will arrive a new member of the Bronco family, reimagined as a compact, adventure-oriented SUV for European roads, and an all-new multi-energy crossover jointly developed by Ford and Geely, both due in 2028. Ford has described this as part of a wider offensive that will bring five new passenger vehicles to European showrooms by 2029.

Geely Auto, for its part, will use the same facility to build two electric SUVs under its own badge, the first of which are scheduled to reach the production line in 2028 too.

The arrangement extends a period of overseas momentum for the Chinese group, which reported overseas sales of 474,228 vehicles in the first half of the year.

Alex Nan, Vice President of Geely Auto Group, situated the move within a broader strategic posture rather than a one-off deal. "This JV with Ford in Europe reflects our commitment to open, collaborative product development as part of our growth strategy, deepening our local presence and commitment to customers in Europe.

“We are dedicated to delivering vehicles that European customers will choose on merit: on industry leading features, on high-quality and on actively contributing to Europe's green future. Put simply: we are building cars in Europe, for Europe, alongside a trusted partner."

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Trust built on an earlier transaction

The willingness of two automakers to share a factory floor rests on a relationship that predates this agreement by more than a decade. Ford's decision to sell Volvo Cars to Geely in 2010 could easily have ended in acrimony had the brand faltered under its new owner.

Instead, Geely protected and revitalised it, and that outcome appears to have earned a measure of confidence that now extends to production sharing on Ford's own home turf in Europe. Both OEMs point to shared commitments to quality, cost-efficient sourcing and continuous improvement as the foundation for the new arrangement.

Valencia's next chapter

For Valencia itself, the venture offers something scarcer than fresh product allocations, namely, a measure of long-term certainty. The plant has spent nearly fifty years at the centre of Ford's European operations, having built the original Ford Fiesta, the company's first global front-wheel-drive car and a defining early success. 

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Securing its future now depends on a joint venture structure rather than a single manufacturer's fortunes; a shift that Baumbick suggested has implications beyond this one site. "This partnership,” he said, “shows how automakers are strengthening Europe's industrial base, but we can't do it alone. What we've achieved in Valencia, with the ongoing support of Spain's national and regional governments, is a masterclass in public-private partnership that sets the benchmark for the rest of Europe."

For China, the deal also means circumventing regulatory hurdles put in place to prevent what Europe deemed “unfair competition”, barring China from saturating the European market with Chinese EVs that ‘Western’ OEMs are finding difficult to compete with. For Ford, it means tapping into efficiencies that it is set on clearly benefiting from, and that, as a logical deduction, it lacks in its absence. For Valencia, the answer to an industry resetting its benchmarks has turned out to be an old rival with new capital and a shared production line.