Investing over 1.7 billion yuan in a Spanish factory, from acquiring Volvo to sharing production capacity, why has Geely Auto chosen Ford again 16 years later?

Geely has once again joined forces with Ford, acquiring a 34% stake in Ford's Valencia plant in Spain for 221 million euros.

On July 23, Geely Auto (00175.HK) announced in a regulatory filing that its wholly-owned subsidiary Geely SPV has signed an agreement with Ford NL (a wholly-owned subsidiary of Ford Motor Company) to acquire a 34% stake in Ford's Valencia plant in Spain for 221 million euros (approximately 1.765 billion yuan), and the two parties will establish a joint venture at the plant.

First built in 1976, the plant has a designed annual production capacity of 400,000 to 500,000 vehicles, making it one of Europe's largest and most technologically advanced complete vehicle manufacturing bases.

After the joint venture is established, the Valencia plant will become an advanced manufacturing center shared by both parties, where Geely and Ford will each produce new energy vehicles under their respective brands.

Geely Auto stated that through capacity sharing, it will develop new energy vehicle products for the European market under both the Geely and Ford brands, accelerating the implementation of Geely's localisation strategy in Europe.

Ford Motor, on the other hand, emphasised that after the joint venture is established, the Valencia plant will become a shared advanced manufacturing center for both parties, significantly improving capacity utilisation and product development efficiency while reducing development costs.

Pending regulatory approvals, the joint venture will officially begin operations in the first half of 2027, with the first all-new model rolling off the production line in 2028.

"Asset-light" Global Expansion: The Dawn of a Capacity-Sharing Model

For this collaboration, Geely Auto is acquiring a 34% stake in Ford España, S.L. (hereinafter referred to as the "Target Company") through its wholly-owned subsidiary Centurion Industries Limited (Geely SPV), and will establish a joint venture with the Ford Group to share the production capacity of the Valencia plant in Spain.

Geely SPV is a wholly-owned subsidiary of Geely Auto, primarily engaged in investment business. Ford NL is a wholly-owned subsidiary of the Ford Group, whose main businesses include wholesale and retail distribution of automobiles, sale of auto parts, and automobile leasing.

Prior to the completion of the acquisition, the Target Company is wholly-owned by the Ford Group, and Ford NL, as a member of the Ford Group, directly holds and controls the Target Company. The Target Company's plant located in Valencia, Spain, is engaged in automobile manufacturing and assembly operations.

It should be noted that the shareholding structure is 66% for Ford and 34% for Geely. The Target Company will become an associate company of Geely, accounted for using the equity method, and will not be included in the consolidated statements. The Target Company will operate primarily as a contract manufacturer, with no independent sales function, and will not engage in product design, R&D, branding, or downstream sales activities.

In simple terms, the plant is only responsible for vehicle manufacturing, with Geely and Ford each selling their own vehicles and managing their own branding. Geely essentially secures a portion of the mature plant's production capacity, locking in a local European manufacturing base through a joint venture structure.

As early as February this year, relevant reports pointed out that Geely was planning to use Ford's factories in Europe for localised production, shifting manufacturing to Europe to avoid tariff pressures.

In April this year, Geely Holding Group explicitly outlined a new overseas expansion strategy: the group will no longer build new production plants, and will instead advance its business layout through cooperation, integration, and revitalisation of existing production capacities. Geely founder Li Shufu noted that the global automotive industry is currently facing severe overcapacity, and against the backdrop of geopolitical tensions and a shifting globalisation landscape, the group will prioritise using Volvo Cars' existing factories in Europe for vehicle production.

The partnership between Geely Auto and Ford Motor dates back many years. In 2010, Geely acquired Volvo as a whole from Ford for $1.8 billion, setting a precedent for Chinese automakers to acquire premium automotive brands.

From the perspective of industry insiders, this "asset-light" model of Geely Auto — which avoids building new plants and instead leverages existing production capacity — may become a new approach for Chinese automakers expanding overseas.

Overseas Sales Surge 158% Year-over-Year in the First Half

Geely Auto's cumulative sales volume in the first half of the year reached 1.423 million units, achieving positive growth against the market trend. Among this figure, monthly overseas sales in June exceeded 100,000 units for the first time, and total exports in the first half of the year hit 474,000 units, a substantial 158% year-over-year increase, with the volume already surpassing the full-year 2025 export total.

At the same time, the overseas business has officially become one of the three major growth pillars, standing alongside the domestic market and the new energy business.

Specifically, the 474,000-unit export volume accounts for 33.3% of the total first-half sales, meaning that for every three vehicles Geely sells, one is exported to overseas markets.

Riding on this momentum, Geely has raised its full-year export target from 640,000 units to 900,000 units. This marks the company's second upward revision to its full-year export sales guidance this year, following a prior increase from 640,000 units to 750,000 units.

Unlike most Chinese automakers that pursue the "build factories on their own" path when expanding overseas, Geely follows an "asset-light" global expansion route by leveraging existing resources from its partners. For example, Volvo's European factories, Proton's Southeast Asian network, and Renault's Latin American channels — Geely gains direct access to these ready-made resources through equity partnerships and technology output. As of the end of the first half of the year, Geely has deployed more than 1,900 sales and service outlets across over 100 countries worldwide.

Regarding the models to be produced at the Valencia plant, according to the plan, the joint venture will continue to manufacture the Ford Kuga in the future, and is scheduled to launch an all-new SUV from the Ford Bronco family in 2028. Geely Auto will produce two new energy vehicle models, with the first one rolling off the production line in 2028.

In addition, according to Ford Motor, the joint venture will also launch an all-new Ford-brand Crossover model, which will be led by Ford in design and co-developed with Geely, also scheduled for production in 2028.

This article is from the WeChat Official Account "Time Weekly" (ID: timeweekly), written by Liu Xue, and published with authorization from 36Kr.