Factory Economics Are Shifting
Geely has reportedly reached an agreement to take over part of a Ford Motor plant in Spain, according to Bloomberg, which cited people familiar with the matter. Under the arrangement, Geely will use a currently unused assembly line at the site to build its own vehicles, while Ford continues producing its Kuga crossover at the same facility. The deal highlights how idle capacity at legacy automakers is increasingly being viewed as a strategic opening rather than a sunk cost, especially as Chinese EV makers look for faster ways to establish a footprint inside Europe.
Valencia Gets New Role
The Almussafes facility, once Ford's largest plant outside the United States, has reportedly been operating at under a quarter of its annual capacity of 450,000 vehicles. Talks between Ford and Geely on this arrangement have been going on since the start of the year. The tie-up also aligns with Spanish Prime Minister Pedro Sánchez's broader push to position Spain more prominently within Europe's automotive landscape as the industry restructures. Spain has reportedly been courting Chinese manufacturers by offering a domestic production base that helps them avoid EU tariffs, along with an established supplier network, a trained workforce and relatively low energy costs. Unlike Germany, France or Italy, Spain does not have a major homegrown car manufacturing group of its own, aside from the Volkswagen-owned SEAT and Cupra brands. Officials have said these Chinese-backed projects should create thousands of jobs, while acknowledging that some ventures will initially depend on Chinese staff and technology.
Localization Rewrites EV Competition
Spain is reportedly seeing a wave of similar projects take shape. Chery Automobile, working with Spanish brand Ebro, has restarted a former Nissan plant in Barcelona that now employs more than 1,500 people. BAIC Motor has begun building off-road vehicles under the revived Santana name in Andalusia. Separately, Stellantis and CATL are building a battery plant worth about 4.1 billion euros in Zaragoza, expected to start operations in 2028, following an investment agreement the two companies first struck in 2024 to produce lithium iron phosphate batteries. Elsewhere, SEAT and Cupra recently began producing the Cupra Raval and Volkswagen ID. Polo at their Martorell site, part of Volkswagen's Electric Urban Car Family push, while Škoda started series production of its electric Epiq model in Pamplona, its first vehicle ever built in Spain. SAIC Motor has also announced plans for its first EU production site, located in Galicia, backed by an initial investment of roughly 200 million euros.
Auto Alliances Enter Reset
Taken together, these moves suggest Spain is emerging as a preferred entry point for Chinese automakers looking to build inside the EU while sidestepping tariff exposure. For Ford, leasing out unused capacity at Almussafes offers a way to offset weak volumes without shutting the plant down. For Geely and its peers, partnering with an established Western manufacturer shortens the path to European market access considerably. As more of these arrangements surface across the country, Spain's role in Europe's EV supply chain looks set to expand well beyond its traditional position in the industry. As EV competition moves from exports to local production, the next advantage may belong to automakers that build the right alliances before they build more factories.