BofA Securities has released a research report stating that Geely Auto (00175) plans to spend EUR 221 million to acquire a 34% stake in Ford's Spanish plant, and establish a joint venture with Ford for contract manufacturing of passenger cars at the Ford plant in Valencia, Spain. After the transaction is completed, the investment will be accounted for as an associate rather than being consolidated into Geely's financial statements.

The firm reiterated its "Buy" rating on Geely Auto, primarily based on strong export growth and higher earnings growth, supporting robust revenue growth and active operating expense reductions, with a target price of HK$29.30.

As of December 31, 2025, the net asset value of the Ford Spain plant was EUR 1.85 billion. Geely's acquisition price is equivalent to 0.35 times Ford Spain's 2025 price-to-book ratio. Geely Auto expects the plant to begin producing Geely vehicles in 2028, as time is needed to install new equipment for electric vehicle production.

Key strategic considerations

The bank believes this potential acquisition is an important step in Geely Auto's European localization strategy. The plant can provide Geely with a ready-made production platform to support the future production of Geely models in Europe, including mature production facilities, labor resources, and supply chain networks, while significantly reducing upfront capital investment compared to building a new plant from scratch. Although the transaction will have a limited impact on earnings in the short term, in the long run it will strengthen Geely Auto's global manufacturing footprint and enhance its competitiveness in overseas markets.