Adds Ford statement in paragraph 10

By Nick Carey

LONDON, July 23 (Reuters) - Geely Auto 0175.HK will build two electric SUVs at Ford's F.N factory in Spain and the two firms will jointly develop a new model, they said on Thursday, as Chinese automakers race to use traditional carmakers' underutilized factories ahead of European local-content rules.

Under a joint venture that will be 66% owned by Ford and 34% by the Chinese firm, the first Geely brand electric SUVs will roll off the Valencia plant's production line in 2028.

Ford's workforce will become employees of the new joint venture and the plant will likely require more employees as production ramps up, Ford's European head said in a briefing.

Geely does not plan on bringing any workers from China, its Senior Vice President Victor Yang added.

"We have the ability to really load up the facility," Ford's European head Jim Baumbick told Reuters. "That's the goal."

The two automakers had been in talks on a partnership for months, which Reuters reported in February. Executives said a long relationship dating back to Geely's purchase of Volvo Cars VOLCARb.ST from Ford in 2010 helped those talks.

Such cooperation with an automaker like Geely would likely be impossible in Ford's home market, where a U.S. Senate committee on Wednesday approved legislation to toughen a ban on Chinese automakers entering the U.S.

U.S. Representative John Moolenaar, a Michigan Republican and the chair of the U.S. House of Representatives' bipartisan select committee focused on China, issued a statement in response to the news on Thursday.

"This partnership with Geely will further enable China’s decimation of auto markets in Europe as Chinese automakers set their sights on North America," Moolenaar said, adding that Ford's decision to engage in the partnership while seeking protections against Chinese automakers in the U.S. was "incomprehensible."

Ford responded to the criticism, saying: "In Europe, the landscape is changing fast and we are competing head-on with the Chinese and every other major global automaker. This new reality is forcing every car company to get radically leaner and smarter, which is exactly what we’re doing with our plant in Valencia, Spain."

Ford shares dipped 2%.

'MADE IN EUROPE'

Yang told Reuters the first electric SUV to be made in Valencia is the EX5, which is already sold in Europe, and the other vehicle the Chinese automaker will make at the plant is still in development.

"We need to rely on strong partners with the right know-how and expertise to support our localization efforts," Yang said.

This will be Geely Auto's first production facility in Europe.

The deal helps both companies overcome formidable challenges.

Chinese automakers are racing to find space in factories on the continent to make their vehicles ahead of upcoming European Union legislation that will have a "Made in Europe" clause, mandating minimum local content in electric vehicles.

Spain is a popular choice among Chinese automakers because it is Europe's second-largest car-manufacturing country after Germany and has lower labour and energy costs. BYD 002594.SZ, the world's largest EV maker, has said the country is on its shortlist. China's Leapmotor 9863.HK will make an electric SUV at joint-venture partner Stellantis' STLAM.MI factory in Zaragoza and premium brand Hongqi has been talking to Stellantis about building cars in one of its Spanish plants.

Unions were cautiously optimistic about the deal, as long as promises of creating jobs and engaging with local suppliers were fulfilled, said Juan Jose Picazo, secretary-general of the CCOO industrial union.
"We can't be just an assembly plant," Picazo said. "We need the technology to stay here. It's fundamental that the supply chain is grounded here and that this generates jobs."

The Chinese need for production lines in a hurry is a boon for traditional automakers like Ford with plenty of unused factory space.

Just a decade ago, Ford was Europe's No. 4 automaker with sales of more than 1 million cars, according to industry data. Last year, the company sold just over 426,000 cars and had fallen to eighth place.

The company has been through several restructurings in Europe and currently only makes its Kuga SUV in Valencia, which has annual production capacity of around 500,000 vehicles. According to data from GlobalData, the factory was operating at just 26% capacity in 2025.

The No. 2 U.S. automaker will start producing its Bronco SUV in Valencia in 2028, Ford's Baumbick said.

He added that there were no "hard constraints" on how much of the factory's capacity Geely can use.

Ford and Geely will jointly develop a crossover SUV that will come with different powertrains — fully electric, plug-in hybrid and an extended-range EV — and start production in 2028.