Ford Motor and Geely Automobile Holdings announced on Thursday a joint venture that will transform the underused Valencia assembly plant into a multi-brand production hub for the European market. Ford will hold a 66 percent stake and Geely 34 percent in the new entity, which is scheduled to begin operations in the first half of 2027. The immediate effect is to lock in the long-term viability of a facility that operated at roughly one-quarter of its 500,000-unit annual capacity last year, while giving the Chinese manufacturer a direct manufacturing footprint inside the European Union’s tariff wall.

The venture will assemble three Ford-badged multi-energy vehicles—the current Kuga, the Bronco, and a jointly developed crossover—alongside two Geely electric SUVs, the first of which will be the EX5 already sold in Europe. By pooling volumes, the partners aim to drive the plant toward its maximum output and reduce per-unit costs. Ford’s European president, Jim Baumbick, described the arrangement as a way to “leverage it for scale to compete at the right level of cost in Europe.” The existing workforce of roughly 4,200 will transfer to the joint venture, and executives said no Chinese labour would be brought in, addressing a key union concern.

Viewed from Detroit, the deal is a pragmatic response to a European restructuring that has seen Ford’s regional sales fall from over one million units a decade ago to 426,000 last year. It monetises excess capacity while retaining control of the plant. For Geely, the calculus is shaped by Brussels: upcoming EU legislation will mandate minimum local content in electric vehicles, and producing in Spain—Europe’s second-largest car-making country, with lower energy and labour costs—allows the company to sidestep both tariffs and future penalties. The tie-up extends a relationship that began when Geely bought Volvo Cars from Ford in 2010, a history that both sides said facilitated the negotiations.

Spanish Prime Minister Pedro Sánchez attended the announcement at the plant, underscoring Madrid’s strategy of courting Chinese automotive investment to safeguard manufacturing jobs and accelerate the electric transition. Unions offered cautious support, insisting that the project must anchor a local supply chain rather than become a mere assembly operation. The joint venture remains subject to regulatory approvals. The first new vehicles are expected to roll off the line in 2028, a milestone that will test whether the partnership can restore the Valencia plant to the output levels it last achieved nearly a decade ago.