Automakers partnering with defense industry

What happened: Automakers are increasingly partnering with defense companies. In April, General Motors (GM) reportedly held talks with Lockheed Martin to supply weapons components. Renault and Thales announced a partnership to develop a military vehicle in May, while Mercedes-Benz partnered with Tytan Technologies to produce anti-drone vehicles in June.

Market impact: These collaborations indicate a shift in automakers' focus towards the defense industry, driven by increased European defense spending due to geopolitical tensions. This narrative affects the automotive and defense sectors, with companies like GM, Renault, and Mercedes-Benz potentially benefiting from new revenue streams. It also signals a diversification of defense supply chains.

What to watch next: Renault and Thales' military vehicle prototype showcase in late 2023; GM's potential announcement on its defense partnership progress; European defense spending figures, expected to rise, which could further drive automakers' involvement in the defense industry.