Ford Motor Company (NYSE:F) saw its shares gain 1.6% to $14.37 in early Friday trading after announcing a strategic partnership with Geely Automobile Holdings Ltd. (HKG:0175) to address a significant capacity gap at its Valencia, Spain facility. The deal, valued at €221 million, will see Geely acquire a 34% stake in the venture, while Ford retains a 66% ownership share.
The Valencia plant, capable of producing approximately 500,000 vehicles annually, operated at just 26% of its capacity in 2025, translating to roughly 130,000 units. This idle capacity represented about 87% of Ford's projected European car sales for 2025, underscoring the urgency of the agreement. The partnership aims to fill a gap of 370,000 vehicles per year, a volume nearly equivalent to Ford's total European passenger car sales last year.
Under the terms of the deal, the venture will function primarily as a contract manufacturer, with each shareholder retaining control over product design, research, branding, and distribution. The enterprise is valued at €650 million, based on the transaction price. Production is expected to commence in 2028, with a lineup of five models: Ford's Kuga, a Bronco, a jointly designed crossover, and two electric SUVs from Geely.
“We have the ability to really load up the facility. That’s the goal,” Ford Europe President Jim Baumbick said in an interview with Reuters. The partnership is seen as a critical step to boost utilization rates at the high-cost European plant, which has struggled with undercapacity amid declining sales. Ford's European deliveries fell to just over 426,000 vehicles in 2025, down from over one million a decade ago, ranking the company eighth in the region.
Investor focus remains on factory loading rather than the €221 million cash payment, as the deal is expected to generate most of its financial benefits starting in 2028. However, near-term share price drivers will likely hinge on Ford's upcoming second-quarter earnings report, scheduled for release on Tuesday at 4:05 p.m. EDT, followed by a conference call at 5 p.m. Wall Street analysts project operating profit of roughly $2.1 billion, according to Barron's.
Ford posted adjusted EBIT of $3.5 billion in the first quarter, which included a one-time $1.3 billion tariff gain. The company's full-year adjusted EBIT guidance remains at $8.5 billion to $10.5 billion. In the second quarter, U.S. sales declined 10% to 549,200 vehicles, driven by the discontinuation of certain models and a 69% drop in daily-rental sales. However, sales of the Bronco increased 15.9%, supported by strong demand for higher-margin SUVs.
Risks remain, including the need for regulatory approval and potential pro-rata loans from shareholders. Additionally, Ford recalled 565,691 Bronco vehicles following 15 reported fire cases, though the National Highway Traffic Safety Administration (NHTSA) noted no accidents or injuries tied to these incidents. The stock traded between $14.15 and $14.54 on Friday, with approximately 39 million shares exchanged.
