China Is Buying Into Spain's Auto Industry — One Factory at a Time

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Geely Moves Into Ford's Valencia Plant

China's Geely Automobile has reached an agreement to purchase the Body 3 vehicle assembly hall at Ford's Almussafes plant near Valencia, Spain, according to Spanish automotive trade publication La Tribuna de Automoción, citing industry sources. The deal would give Geely its first owned manufacturing footprint in Western Europe.

The facility in question — Ford's most modern assembly hall at the site — has been sitting idle. Ford currently only produces the Kuga SUV at Almussafes, using a different production line. Geely would be able to operate the acquired section independently, without sharing supply chains with Ford.

According to reports in both Autocar and Carscoops, Geely is considering producing a compact crossover at the Valencia plant — internally coded "135" and based on its GEA (Global Intelligent Electric Architecture) platform. This vehicle would come in hybrid, plug-in hybrid, and fully electric versions. In Europe, it could be marketed as the EX2 or E2.

A Deal That Benefits Both Sides — For Now

The arrangement as reported is not one-sided. Discussions also include the possibility of Geely manufacturing a model specifically for Ford using the same platform — potentially giving Ford's struggling European division a much-needed production partnership and cash injection at a time when its sales have declined sharply.

Ford's representative declined to comment on the report, calling it speculation. Geely did not respond to a request for comment. But local suppliers in the Valencia region have reportedly already been contacted by Geely — a detail that suggests the deal is more advanced than either company is publicly acknowledging.

Geely is China's second-largest automaker after BYD, and its portfolio includes Volvo, Lotus, and the Lynk & Co brand. The broader technology and manufacturing partnership between Geely and Ford was first reported by Reuters in February 2026.

Why Spain? The Tariff Calculation

The strategic logic is clear. The European Union imposed tariffs on Chinese-made electric vehicles beginning in late 2024, with Geely specifically facing a rate of 18.8 percent on imports from China. For a company selling cars at competitive price points, that margin is too large to absorb or pass on to customers.

Manufacturing inside the EU eliminates the tariff entirely. A vehicle assembled in Spain qualifies as a European product. It may also qualify for local and EU-level green vehicle incentives, depending on the powertrain. And unlike building a new greenfield factory from scratch, acquiring an existing idle facility is faster, cheaper, and far less politically visible.

Spain has been among the more accommodating EU member states toward Chinese industrial investment — a point that has not been lost on Beijing.

SAIC Eyes Ferrol: Another Chinese Giant Targets Spain

The Geely-Ford story is not happening in isolation. On the same day the Valencia acquisition was reported, La Tribuna de Automoción also reported that SAIC Motor — owner of the MG brand, the best-selling Chinese car brand in Europe — is in advanced talks to establish a production facility at the port of Ferrol, in the northwestern Spanish region of Galicia.

According to sources cited in Spanish media, the planned plant would have an initial annual capacity of around 120,000 vehicles, with components shipped in from China and assembled locally. The port access in Ferrol is a key factor, particularly given MG's strong sales presence in the United Kingdom.

Galician Premier Alfonso Rueda traveled to SAIC's headquarters in Zhengzhou, China in late April — a trip explicitly aimed at attracting Chinese automotive investment to the region. Bloomberg reported separately in late April that SAIC had settled on Spain over Hungary for its European production plans, though key details remain under negotiation.

A Pattern Taking Shape Across Spain

Taken together, these developments represent something larger than individual business deals. Spain is becoming the preferred staging ground for Chinese automakers seeking European manufacturing capacity.

Geely is targeting Valencia. SAIC is eyeing Ferrol. And as we reported in our earlier analysis, FAW's Hongqi brand — the vehicle manufacturer historically reserved for China's Communist Party leadership — is in talks to use Stellantis's factory in Zaragoza for European production. You can read that piece here: Mao's Car Brand Is Coming to Europe — Through the Back Door.

Three separate Chinese automakers. Three different Spanish locations. All using the same fundamental playbook: partner with, acquire, or lease existing European production capacity to manufacture inside the EU and circumvent the trade defenses the bloc put in place to protect its own industry.

The EU tariffs were designed to slow the flood of Chinese EVs into Europe. What they may have done instead is accelerate China's decision to simply build inside Europe's borders.

What Europe Stands to Lose

The strategic risks are considerable, even if the individual transactions appear commercially reasonable. European car manufacturers — already under severe pressure from the shift to electric vehicles — now face competition not just from Chinese imports, but from Chinese-branded cars built in European facilities, by European workers, and sold under European consumer protection rules.

The use of European factories also gives Chinese brands political cover that pure importers do not have. A plant that employs local workers and pays local taxes is far harder for politicians to oppose than a container ship full of finished vehicles from Shanghai.

Brussels has begun debating not just import tariffs, but investment screening rules — what Chinese automakers must agree to in order to manufacture in Europe, including technology transfer restrictions, local content requirements, and data sovereignty provisions. Those policy discussions are still ongoing. The factories, meanwhile, appear to be moving forward.

Outlook

Spain is not alone in this dynamic, but it is currently the most active battleground. With Geely in Valencia, SAIC approaching Ferrol, and Hongqi circling Zaragoza, the question is no longer whether Chinese automakers will manufacture in Spain — it is how many, how fast, and on what terms.

European policymakers have a narrowing window to answer that question before the production lines start running.

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Sources:

1. Reuters — Chinese carmaker Geely buys Ford assembly facilities in Spain, local media reports (May 6, 2026): https://www.reuters.com/business/autos-transportation/chinese-carmaker-geely-buys-ford-assembly-facilities-spain-local-media-reports-2026-05-06/
2. Reuters — Ford, Geely in talks for manufacturing, technology partnership (February 2026): https://www.reuters.com/business/autos-transportation/ford-geely-talks-manufacturing-technology-partnership-sources-say-2026-02-04/
3. Autocar — Ford to sell part of Valencia plant to Geely so it can build new crossover for Europe (May 6, 2026): https://www.autocar.co.uk/car-news/new-cars/ford-sell-part-valencia-plant-geely-build-new-crossover-report
4. Bloomberg — China's SAIC to Pick Spain Over Hungary for Electric Car Plant (April 24, 2026): https://www.bloomberg.com/news/articles/2026-04-24/china-s-saic-to-pick-spain-over-hungary-for-electric-car-plant
5. La Tribuna de Automoción — Ferrol, principal candidata de SAIC Motor para fabricar 120.000 MG al año (May 6, 2026): https://www.latribunadeautomocion.es/2026/05/ferrol-principal-candidata-de-saic-motor-para-fabricar-120-000-mg-al-ano/

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