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Ford and China’s Geely are holding talks about a potential partnership that could cover both manufacturing and vehicle technology, according to multiple people familiar with the discussions.

The most advanced part of the talks centres on allowing Geely to use Ford’s factory space in Europe to produce vehicles for the regional market. The companies have also discussed a framework for sharing certain vehicle technologies, including systems linked to automated driving.

Discussions have been underway for several months. Ford recently sent a delegation to China to step up negotiations, following meetings in Michigan between senior executives from both companies.

Neither side has confirmed details. Geely declined to comment, while Ford said it regularly holds discussions with other companies and that not all talks lead to formal agreements.

Automakers worldwide are increasingly turning to partnerships as development and manufacturing costs continue to rise, particularly in electric vehicles, software and advanced driver assistance systems.

A tie up could help Ford narrow what its leadership has described as a significant technology gap with Chinese manufacturers, especially in connected vehicle systems and electrification. Ford chief executive Jim Farley has previously described China’s lead in electric and connected vehicle technology as deeply humbling.

Any collaboration involving Chinese technology would face close political scrutiny in the United States. Chinese automakers remain effectively shut out of the US market due to tariffs and restrictions imposed on national security grounds related to data and vehicle software.

However, manufacturing vehicles in Europe using Ford facilities could help Geely avoid European Union tariffs of up to thirty seven point six percent on Chinese made electric vehicles introduced in 2024. One plant mentioned in connection with the talks is Ford’s factory in Valencia, Spain.

Several Chinese carmakers are already moving production to Europe through partnerships. Leapmotor vehicles are set to be built at a Stellantis plant in Spain, while other manufacturers have agreements with Magna facilities in Austria.

Geely has used a similar strategy with Renault in South Korea and Brazil, producing cars based on Geely technology through Renault’s factories and sales network. Renault branded sales outside Europe rose sharply last year following the partnership.

Ford has also been vocal about the need to collaborate with rivals and recently agreed an electric vehicle production deal with Renault in Europe.

A broader commercial arrangement between Ford and Geely involving the US market would almost certainly attract opposition from lawmakers, particularly given past criticism of Ford’s decision to license battery technology from China’s CATL for a plant in Michigan.

Current US rules continue to ban certain Chinese communication technologies in connected vehicles, and there has been no indication that these restrictions will be eased.

Geely Auto, which includes the Zeekr and Lynk and Co brands, reported a strong rise in sales last year to just over three million vehicles. Including affiliated brands such as Volvo Cars and Lotus, Geely is China’s second largest automaker behind BYD.

Geely has a long history of overseas deal making. In 2010, it acquired Volvo Cars from Ford for one point eight billion dollars.