Ford Motor Co. is nearing an agreement to sell a plant in Germany, with two groups of Chinese carmakers among the three leading bidders at a time when Chinese investments in Europe are under growing scrutiny.

One of the bids comes from BYD Co., the largest domestic automaker in China, while another involves several smaller Chinese car companies, according to people familiar with the situation. The U.S. carmaker and the German state of Saarland, home to the plant, are also in talks with a German solar component maker, said the people, who declined to be named discussing private information.

Ford is seeking to reach a preliminary agreement on a sale during June 2023, the people said. That would be about a year after the manufacturer said it’ll cease making cars at the site in Saarlouis in 2025. The factory, which assembles Ford Focus compact cars, employs some 4,600 people.

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There are additional interested parties and there’s no guarantee a deal will be finalized by the June 2023 deadline, the people said. Talks may also fail, they said. Ford said it’s committed to transforming its Saarlouis plant and creating future employment opportunities while declining to comment further. Spokespeople for BYD and Saarland’s economy ministry, which is also part of negotiations, declined to comment. 

Any deal involving a Chinese entity may attract the scrutiny of Berlin, even as thousands of jobs are on the line in a region highly dependent on making combustion-engine components and vehicles. Germany over the past years has tightened rules for non-European investors buying firms in high-tech sectors such as robotics and artificial intelligence, widely seen as targeting Chinese state-backed investors.

Previously, only investments in critical infrastructure, such as energy, water, telecommunications and defense could be screened. 

Smaller Footprint

Ford is shrinking its extensive footprint in Europe with thousands of job cuts while also investing billions to retool for the electric age. The company’s lineup of mass-market passenger cars, going electric-only by the end of the decade, has for years suffered from low returns, in contrast to its thriving commercial vans unit.

During the week of June 13, Chancellor Olaf Scholz is due to attend the opening of Ford’s EV factory in Cologne following a $2 billion overhaul to start making electric cars in 2023. The 90-year-old industrial complex is one of the largest in Europe.

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For Chinese carmakers, purchasing a major carmaking plant will help boost plans to gain a foothold in Europe’s competitive market as demand for EVs surges. BYD, which has switched to only making electric cars, was China’s biggest automaker during the first quarter of 2023, overtaking Volkswagen AG.

BYD is also looking at alternative sites for a factory in France and Spain, according to three people familiar with the matter. While taking over Saarlouis offers close proximity to an established automotive supply chain, BYD also sees advantages of establishing a new facility outside Germany, one of the people said.