Ford operates a substantial factory in Valencia, Spain, but it faces challenges due to underutilization and insufficient vehicle production for profitability. To address this, Ford is engaged in advanced discussions with Geely, the prominent Chinese firm that owns Volvo. The two companies aim to forge a deal that will significantly alter operations at the Valencia plant. Reports indicate Geely may acquire a specific section of the factory to manufacture its own electric vehicles.
According to the Spanish news outlet La Tribuna de Automoción, Geely is interested in the "Body 3" assembly lines, which are responsible for assembling the main structure of vehicles. Internally, Geely has dubbed this project "135." While the deal has yet to be finalized, Geely has already initiated discussions with local parts suppliers, signaling its commitment to utilizing the Spanish facility promptly.
The vehicle Geely plans to produce is likely the EX2, a successful small electric hatchback that was the best-selling car in China last year. For the European market, it will likely be rebranded as the E2, designed to offer an affordable option for consumers transitioning to electric vehicles without a significant financial burden.
Geely has developed the E2 on its GEA platform, an abbreviation for Global Intelligent Electric Architecture. This platform allows for the production of various types of vehicles, including conventional hybrids, plug-in hybrids, and fully electric models.
An intriguing aspect of this potential partnership is that Ford might not only lease space to Geely. Sources suggest that Ford could utilize Geely's GEA platform to create a Ford-branded vehicle. Developing a new car platform is typically a costly and time-consuming process; leveraging Geely's technology could enable Ford to launch a new model more swiftly and economically.
This strategy aligns with Ford's broader objectives in Europe. The American car manufacturer is already collaborating with other firms; both the electric Ford Explorer and the new Capri are based on Volkswagen's MEB platform. Additionally, Ford has partnered with Renault to produce two compact electric cars. Ford seems to be embracing the idea that pooling resources with competitors may be more effective than pursuing solitary efforts.
Ford's concerns about the rise of Chinese brands like BYD are well-known. These companies offer high-quality vehicles at significantly lower prices than their Western counterparts. Ford CEO Jim Farley has candidly remarked on the issue, describing the situation as a "fight for its life" and labeling Chinese competition as an "existential threat." Collaborating with Geely might be essential for Ford to maintain its competitiveness in the European marketplace.
Geely also has motivations for establishing a factory in Spain. In 2024, the European Union imposed a substantial tax on vehicles imported from China, with Geely facing an 18.8% tariff on each vehicle shipped from its home country. By manufacturing the E2 in Valencia, Geely can bypass this tax, making the vehicles more affordable for European consumers and facilitating its expansion in the region.
The partnership may extend beyond manufacturing, as Ford and Geely are exploring avenues to share advanced technologies. This includes automated driving systems and cutting-edge safety features, which promote safer driving practices. Collaborating on such technologies can help both parties reduce R&D expenses. While Ford representatives emphasize that negotiations are ongoing, they acknowledge the importance of exploring new opportunities with other firms.
While pursuing partnerships, Ford continues to develop its proprietary projects. The company is working on a new "Universal" platform intended to underpin a lineup of small, affordable electric vehicles. Selling off underutilized sections of the Valencia plant will provide Ford with the necessary funding to advance these initiatives.
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