Geely Auto rises 3.4% as CLSA says Spain plant deal boosts tariff resilience

Geely Auto (00175.HK) rose 3.4% to HKD 19.15 after CLSA said its EUR 221 million acquisition of a 34% stake in Ford's Spain plant strengthens the automaker's ability to withstand European tariff impacts.

"The joint venture will provide Geely Auto with a solid European production base, thereby strengthening its ability to withstand tariff impacts," CLSA said in a report.

The Chinese automaker plans to spend EUR 221 million to acquire the stake in Ford's Valencia, Spain facility, which has an annual production capacity of about 500,000 vehicles. CLSA reiterated its "High Conviction Outperform" rating and maintained its HKD 30 price target, implying roughly 57% upside from the current price. Turnover reached approximately HKD 395 million, with short selling accounting for 26.9% of volume.

The deal aligns with the EU's proposed Industrial Acceleration Act and is expected to qualify for tariff exemptions, CLSA said. Production is slated to begin in 2028 with an EV-focused lineup that could significantly enhance Geely's per-vehicle profit contribution in Europe.

Ford will hold 66% of the joint venture and Geely 34%, with operations starting in the first half of 2027. The first vehicles — including a new Ford crossover, a Bronco variant designed for European roads, and two electric Geely SUVs — are expected to roll off the assembly line in 2028. Ford's Kuga production will continue uninterrupted through the transition.

The partnership deepens ties between the two automakers after they began talks in April. A broader U.S. component involving Ford licensing Geely's technology has stalled as tariffs and connected-vehicle software restrictions limit Chinese automakers' access to the American market. The Senate Commerce Committee this week advanced the Connected Vehicle Security Act of 2026, which would permanently restrict Chinese-linked connected vehicles and software in the U.S.

The CLSA reiteration reflects confidence in Geely's European expansion strategy as trade barriers rise. Investors will watch for regulatory approval of the joint venture and further details on the EV product lineup ahead of the 2028 production start.

This article is for informational purposes only and does not constitute investment advice.