Ford Motor Company and China’s Geely Automobile Holdings have agreed to create a manufacturing joint venture in Valencia, Spain, that will produce low- and zero-emission vehicles designed primarily for European customers. The transaction brings together Ford’s established industrial footprint and regional brand recognition with Geely’s expanding electric-vehicle portfolio, technology base and cost-focused product-development capabilities.

The proposed company will be 66% owned by Ford and 34% owned by Geely Auto. Its formation remains subject to regulatory approvals, with formal operations expected to begin during the first half of 2027. The first newly assigned vehicles are scheduled to enter production in 2028, while Ford will continue assembling the Kuga at Valencia without interruption during the transition.

The companies are positioning the venture as a response to several pressures confronting the European automotive market: elevated manufacturing expenses, increasingly demanding emissions requirements, rapid growth in vehicle software and electronics costs, and competition from Chinese manufacturers offering highly equipped electric and hybrid models at aggressive prices. By sharing capacity and development work, Ford and Geely intend to bring more vehicles to market while spreading fixed expenses across higher production volumes.

The Valencia facility, located in Almussafes, has potential annual capacity of approximately 500,000 vehicles. The plant opened in 1976 and initially produced the Ford Fiesta, becoming one of the most important foreign-owned industrial operations in Spain. Its workload has declined substantially in recent years as Ford discontinued several European passenger models and concentrated remaining Valencia production around the Kuga.

Local reporting indicates that the plant currently produces fewer than 90,000 vehicles annually, leaving much of its installed capacity unused. The factory employs approximately 4,200 workers, down sharply from earlier levels. Ford and Geely have not provided a production target for the venture or quantified the number of additional employees that could eventually be required, but executives said higher output could support future high-technology manufacturing jobs.

The initial production program covers five vehicles across the two brands. Ford will continue manufacturing the Kuga, including its plug-in-hybrid version. The plant will also produce a new compact member of the Bronco family beginning in 2028. Ford described the model as a rugged, adventure-oriented sport utility vehicle developed for European roads rather than a direct replication of the larger Bronco models sold in North America.

A third Ford vehicle will be an all-new family crossover designed by Ford and jointly developed with Geely. The companies describe it as a multi-energy model, a term commonly used to indicate that a vehicle program can accommodate more than one propulsion configuration. Ford has not disclosed the crossover’s name, pricing, battery specifications, powertrain mix or expected annual volume. It is also scheduled to arrive in 2028.

Geely plans to manufacture two battery-electric SUVs at Valencia under its own brand. The companies have not officially identified the models, leaving open whether the vehicles will be based on existing Geely products, modified versions of current platforms or new models developed specifically for Europe. Their local assembly will establish a significant production foothold for the Geely brand within the European Union.

Although the companies will share a plant and certain development capabilities, each vehicle will retain its own branding. Ford said its products would preserve characteristic driving dynamics, off-road capability and design identity. Geely, meanwhile, will use the arrangement to deepen its direct relationship with European customers rather than operate solely as a technology supplier or contract manufacturer.

The structure gives Ford operational control while allowing Geely to participate in the economics of the plant and its future production programs. Financial terms, investment commitments and the allocation of spending for tooling, plant modernization and model development were not disclosed. The parties also did not specify how intellectual property, procurement responsibilities or platform ownership will be divided.

For Ford, the venture provides a path to reduce the financial burden associated with maintaining a large European factory at low utilization. Automotive plants require significant fixed spending regardless of output, including maintenance, energy, tooling, logistics, quality systems and workforce costs. Increasing volume across two brands can lower the average production cost per vehicle and improve the economics of future investment.

The agreement is also central to Ford’s effort to rebuild its European passenger-vehicle business. The company has reduced its traditional car lineup in the region and shifted resources toward commercial vehicles, selected SUVs and electrified models. Ford said the jointly developed crossover forms part of a broader product offensive intended to bring five new multi-energy passenger vehicles to European showrooms by 2029.

Ford has increasingly relied on alliances to accelerate European product programs and avoid duplicating investment across every vehicle architecture. The Geely transaction extends that approach into shared manufacturing and product development at a Ford-controlled factory. It also gives the company access to expertise from a Chinese automotive group that has expanded rapidly in batteries, electric platforms, connected systems and hybrid technologies.

Ford and Geely have an established corporate relationship dating to 2010, when Ford sold Volvo Cars to Zhejiang Geely Holding Group. Volvo subsequently expanded its global manufacturing network, refreshed its product portfolio and increased its emphasis on electrification. Ford cited Geely’s stewardship of Volvo as part of the foundation of trust supporting the new Valencia agreement.

For Geely, the venture provides local scale at a time when Chinese automakers are accelerating their expansion outside their home market. Geely Auto reported overseas sales of 474,228 vehicles during the first half of 2026, an increase of 158% from the same period a year earlier. International new-energy-vehicle sales reached 277,189 units and represented 59% of the company’s overseas volume.

The group has expanded its presence across European markets including Spain, Germany, France, the Netherlands and Belgium. Its regional strategy has involved new dealership partnerships, the introduction of battery-electric and plug-in-hybrid models, and investments in localized sales and service operations. Manufacturing in Spain would add an industrial component to that distribution-led expansion.

European production may also reduce Geely’s exposure to trade measures applied to finished battery-electric vehicles imported from China. The European Union imposed a five-year countervailing duty of 18.8% on qualifying Geely Group electric vehicles originating in China, in addition to the EU’s standard vehicle import tariff. Vehicles manufactured in Spain would not be treated as Chinese-origin finished-car imports, although individual components would remain subject to relevant customs, origin and regulatory requirements.

Localization offers additional commercial advantages beyond tariffs. Building vehicles near their target customers can shorten delivery times, reduce shipping costs, simplify inventory management and allow product specifications to be adjusted more quickly for regional demand. It can also improve eligibility for government procurement, consumer incentives or industrial-support programs that include European production or content conditions.

The timing of the agreement coincides with a strengthening European market for electrified vehicles. According to the European Automobile Manufacturers’ Association, new EU passenger-car registrations increased 5.7% during the first half of 2026. Battery-electric models accounted for 20.7% of registrations, up from 15.6% a year earlier, while conventional hybrid vehicles led the market with a 37.3% share.

Plug-in hybrids captured another 9.8% of EU registrations during the period. Combined, those figures show why Ford and Geely are retaining a multi-energy approach rather than betting the Valencia plant exclusively on one propulsion system. Battery-electric demand is expanding, but hybrids and plug-in hybrids continue to represent a substantial portion of European purchases as charging infrastructure, incentives and consumer preferences vary by country.

The planned lineup reflects that diversity. Geely’s two SUVs will be fully electric, while the Kuga already offers plug-in-hybrid technology. Ford has not specified every propulsion option for the Bronco and crossover, but its use of flexible multi-energy programs suggests the company wants the ability to respond to different regulatory and demand conditions over the life of the vehicles.

The venture has received support from Spain’s national government and the regional government of Valencia. Ford said public-private cooperation had played an important role in maintaining the plant and preparing it for future production. Spanish officials have sought to attract investment across vehicle assembly, batteries and components as the country works to preserve its position as one of Europe’s largest automotive manufacturing centers.

The Valencia workforce is expected to transfer into the new entity while retaining existing employment conditions, according to statements reported following the announcement. That commitment will be closely watched by unions because the plant has experienced repeated production reductions and temporary employment measures as output declined. Negotiations over workforce requirements and future labor agreements are likely to continue before the venture becomes operational.

Execution will depend on several unresolved issues. Regulators must approve the ownership structure, the companies must complete detailed operating agreements, and the factory will require new tooling and production preparation before 2028. Ford and Geely must also determine how to coordinate supplier networks, software systems, quality controls and component sourcing while keeping the identities of their respective brands distinct.

Demand is another variable. European electric-vehicle registrations are rising, but competition is intensifying as established manufacturers expand their battery-powered portfolios and Chinese groups introduce additional models. Pricing pressure could limit margins even if Valencia achieves higher output. The partners will therefore need to deliver competitive vehicles without allowing shared engineering or production complexity to erase the expected cost benefits.

The arrangement may become a reference point for other global automotive partnerships. European manufacturers have valuable factories, engineering talent and distribution systems, while Chinese groups often bring newer electric architectures, fast development cycles and competitive supply chains. Combining those assets can preserve European production, but it also raises policy questions about technology dependence, state support and the long-term division of value between Western and Chinese companies.

For Ford and Geely, the immediate objective is more practical: fill an underused Spanish factory, share the cost of new products and compete more effectively in a market where scale and speed have become increasingly important. If the venture secures approval and launches on schedule, Valencia will move from producing one principal Ford model to supporting a five-vehicle, two-brand manufacturing program from 2028.