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Ford has said its new manufacturing partnership in Spain with China’s Geely will allow the two rivals to compete “at a completely new level of cost” as the US carmaker seeks to revive its struggling European business.
Following months of negotiations, the two carmakers said they would form a manufacturing joint venture at Ford’s Valencia plant in Spain with the US group owning a 66 per cent stake in the business while the rest is held by Geely. The collaboration will also extend to joint development of Ford’s new crossover vehicle to be launched in 2028.
The plant, where Ford’s best-selling Fiesta model was first produced, has been operating well below its potential annual capacity of about 500,000 vehicles, with the utilisation rate at around 30 per cent.
But with Geely planning to produce two electric sport-utility vehicles and Ford building two new models including its latest Bronco SUV in Valencia, their ambition is to use the plant at full capacity.
The two companies did not disclose how much they were investing in the plant or how much support they received from the Spanish government. But they will seek to bring down the cost of building vehicles in Europe and speed up the rollout of new models.
In an interview, Ford’s European boss Jim Baumbick said increased vehicle production and its partnership with Geely would allow the company to be “more than competitive with any other manufacturer in the market”.
Victor Young, executive vice-president at Geely, added: “We want to be quick to bring all of our capabilities into Europe . . . and the first step is to find the right partner to really fulfil our ambition in Europe.”
Ford has turned to several partnerships with rivals to sustain its business in Europe, where it has carried out widescale restructuring to stem losses. In December, it signed a deal with France’s Renault to jointly produce small electric cars and vans in Europe, while it also has a separate van partnership with Germany’s Volkswagen.
Ford’s sales in Europe have been hit by the influx of affordable, technology-focused Chinese vehicles, with its share of the new EU car market declining to 2.2 per cent in June from 2.9 per cent for the same month last year, according to European car industry body Acea. That was below the share held by BYD, Geely and MG owner SAIC.
Legacy carmakers are increasingly turning to collaborations with Chinese rivals to cut costs and safeguard European factories. Stellantis agreed to a manufacturing deal in France with Dongfeng and Nissan is planning to share its Sunderland plant in north-east England with Omoda and Jaecoo owner Chery.
Chinese carmakers in turn want to boost local production of vehicles they sell in Europe as Brussels moves to toughen local content rules and encourage them to share knowhow on batteries and other technologies with their joint venture partners.
Ford’s ties with Geely date back to when the US company sold Volvo Cars to the Chinese group in 2010.
Geely, which also owns Polestar and Zeekr, has raised its export target for this year to 750,000 vehicles from an earlier 640,000 and has ambitions to take 5 per cent of the car market in key regions including Europe.
Li Shufu, the Chinese group’s founder, has said Geely wants to make use of existing Volvo plants instead of building a new facility in Europe. But the group has also been seeking more capacity.
“We want to be a long-term local player,” Young said. “That’s why we need to build up the ecosystem in the long run, not just export cars from China.”
