Belgium is offering Volvo up to $136.4 million to support its Ghent plant, a move that could help Chinese brands avoid hefty EU tariffs.
The funds will go toward “industrial, innovation and ecological initiatives,” according to a government announcement.
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Volvo hinted the facility could add contract manufacturing for other brands, potentially including those under its parent company Geely.
European automakers currently face excess capacity, prompting several to explore partnerships with Chinese firms.
Stellantis and Dongfeng started the trend, while Nissan and Chery are discussing contract manufacturing in the UK.
Volvo signed a Memorandum of Understanding with the Belgian federal government and the regional government of Flanders.
The deal calls for up to €119 million ($136.4 million) for industrial, innovation, and ecological initiatives, as well as financing programs.
Volvo said the money will “help secure the future utilization of the plant and support continued manufacturing activity.”
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Beyond continued Volvo production, the automaker hinted the plant could be used for “contract assembly of cars of other brands.”
Volvo pitched this as a win-win, increasing plant utilization and contributing to regional industrial activity.
The company did not specify which other vehicles could be built there, but Geely owns Polestar, Zeekr, and Lynk & Co.
For these Chinese brands, production in Ghent would be appealing as it would enable them to avoid hefty EU tariffs.
The Ghent plant currently builds the EX30, XC40, EX40, EC40, and V60.
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It opened in 1965 and employs around 6,300 people.
