Did you know? Europe’s automotive and defence industries are increasingly converging

Europe’s industrial landscape is undergoing a significant transformation, driven by geopolitical developments and structural changes in key sectors. One of the most notable trends is the growing convergence between the automotive and defence industries, with increasing collaboration across technologies, supply chains, and manufacturing capacity.

Recent analysis shows that this convergence is no longer theoretical; it is already materialising across Europe’s industrial ecosystem.

A shared industrial and technological base

The automotive and defence sectors rely on many of the same core capabilities, including:

• Vehicle engineering and mobility platforms
• Electronics, sensors, and embedded systems
• Robotics and high-volume manufacturing
• Advanced materials and lightweight structures

This overlap enables the development of dual-use technologies, where innovations can serve both civilian and defence applications. It also creates opportunities to leverage existing industrial capacity more efficiently.

A trend already visible in industry

Several concrete developments illustrate how this convergence is taking shape:

• Industrial partnerships are expanding: German defence company Rheinmetall has strengthened cooperation with Lockheed Martin to establish a European centre of excellence for missile production, combining industrial capabilities across sectors
• Automotive capacity is being repurposed: Discussions are ongoing to convert underutilised automotive plants, such as facilities linked to Volkswagen, for defence production, reflecting the shift in industrial priorities
• Cross-sector consolidation is accelerating: Italian group Leonardo is acquiring the defence division of Iveco Group for €1.7 billion, strengthening integration between commercial vehicle expertise and defence manufacturing
• New joint ventures are emerging: Rheinmetall and Polska Grupa Zbrojeniowa are collaborating to establish a European centre for military support vehicles, reinforcing industrial cooperation across borders

These examples demonstrate that the convergence is already translating into investment decisions, partnerships, and industrial restructuring.

Key figures illustrating the scale

• European defence spending reached approximately €343 billion in 2024, with continued growth expected
• The automotive sector supports around 13.8 million jobs and represents ~7% of EU GDP
• Cross-sector opportunities are estimated at €50–80 billion over the next decade, particularly in vehicles, electronics, and industrial systems

In addition, companies such as Rheinmetall are already repurposing former automotive production capacity to meet rising defence demand, reflecting a structural shift in industrial priorities

Implications for European manufacturing and innovation

This convergence highlights the strategic importance of stronger links between manufacturing, research, and innovation ecosystems in Europe. It also reinforces the role of manufacturing as a key enabler of:

• Industrial resilience and strategic autonomy
• Technology transfer across sectors
• Scaling up production in response to emerging needs

For industry, research organisations, and policymakers, this trend opens new avenues for collaboration and investment, particularly in areas such as mobility, advanced manufacturing, and digital technologies.

To conclude: the convergence of automotive and defence is becoming a defining feature of Europe’s industrial transformation, demonstrating how existing manufacturing strengths can be mobilised to address new strategic challenges.

Picture made with AI