Key Takeaways
- Ford Motor Company and Chinese automaker Geely have agreed to sell part of Ford's Almussafes plant for electric vehicle production.
- The deal will allow Geely, owner of Volvo and Polestar, to avoid EU tariffs on imported EVs from China.
- The partnership aims to provide direct access to the European market while cutting fixed costs for Ford.
Ford Motor Company and Chinese automaker Geely have reached a significant agreement that will see part of Ford's Almussafes plant near Valencia, Spain, transformed into an electric vehicle (EV) production facility. According to reports from ABC newspaper, the deal is expected to be announced during a visit by Spanish Prime Minister Pedro Sanchez and Ford Europe President Jim Baumbick on Thursday.
Under the terms of the agreement, Geely will manufacture its EX2 electric vehicle at Almussafes, leveraging the existing infrastructure while avoiding EU tariffs on imported EVs from China. This move underscores the growing pressure on Chinese automakers to expand their operations overseas as competition intensifies in the domestic market.
The partnership is seen as a strategic step for both companies. For Ford, it will help cut fixed costs through shared use of factory infrastructure and safeguard jobs at Almussafes, which has faced challenges due to the phasing out of several models and its dependence on the Kuga model.
Eugene Hsiao, head of China autos research at Macquarie Capital, commented that while tariffs are a key consideration, this deal more reflects the urgency for Chinese automakers to look outside their crowded domestic EV market. 'This agreement is part of a broader trend where foreign automakers are finding ways to monetise underused legacy assets,' Hsiao said.
Geely has already pursued overseas partnerships, including with Renault in South Korea and Brazil, as Chinese automakers seek faster access to foreign markets and stronger profiles with local governments. 'We expect other Chinese OEMs to follow suit to quickly gain access to overseas EV markets while raising their profile with local governments,' Hsiao added.
Shares in Geely Auto, part of the larger Geely Holding Group, saw a modest increase of 0.45% on Thursday, reflecting market confidence in this strategic move. The deal is expected to provide direct access to the European market for Geely while allowing Ford to optimise its assets and maintain production at Almussafes.
The agreement highlights the evolving landscape of the automotive industry as companies seek to navigate complex global trade dynamics and tap into new markets. Both Ford and Geely are positioning themselves to capitalise on these opportunities, with the potential for further partnerships in the future.
