Germany’s struggling automotive industry is increasingly drawing attention from the country’s fast-growing defence sector, as manufacturers and defence firms explore new partnerships, factory conversions and recruitment opportunities amid economic pressures facing Europe’s carmakers.

The latest indication came from Mercedes-Benz Chief Executive Ola Källenius, who said the luxury automaker would be open to supporting Europe’s expanding defence efforts if needed.

Speaking in an interview with The Wall Street Journal, Källenius said Europe’s changing security environment was forcing companies to rethink their role in industrial production.

“The world has become more unpredictable, and I think it is quite clear that Europe needs to strengthen its defence capabilities,” he said, adding that Mercedes-Benz would be prepared to contribute if it could play a positive role.

Källenius stressed, however, that any future defence-related activities would remain limited compared with the company’s main automotive business. He did not outline any specific projects or investment plans.

Mercedes-Benz is not alone in examining possible links to the defence industry. Volkswagen is also studying whether military transport vehicles could eventually be produced at its plant in Osnabrück, according to Chief Executive Oliver Blume.

Blume said the company would make a decision later this year but emphasized that Volkswagen had no plans to manufacture weapons or tanks.

At the same time, Germany’s major defence companies are increasingly targeting the country’s automotive sector as a source of industrial capacity and skilled labour.

Rheinmetall said it is assessing whether some automotive supplier facilities in Berlin and Neuss could be converted into defence production sites. The company is also reportedly examining the possibility of taking over entire factories from car manufacturers facing financial pressure, including Volkswagen’s Osnabrück plant.

Rheinmetall Chief Executive Armin Papperger has cautioned that adapting car factories for defence manufacturing would be costly and technically challenging, though he said such options should still be considered before building new facilities from scratch.

Other defence firms are already benefiting from the downturn in the automotive industry. Hensoldt has stepped up recruitment efforts aimed at workers from automotive suppliers including Continental AG and Bosch.

Germany’s auto sector has faced mounting difficulties in recent years due to high production costs, weak European demand, growing competition from Chinese manufacturers and continuing trade tensions with the United States.

Mercedes-Benz reported that profits fell about 49 percent in 2025, dropping from €10.4 billion to €5.3 billion, while revenue declined roughly nine percent.

Most major German carmakers, with the exception of BMW, have announced domestic job cuts in recent months.

Meanwhile, the defence sector continues to expand rapidly. According to the Stockholm International Peace Research Institute, the world’s 100 largest arms manufacturers recorded record revenues in 2024.

Despite the growth, analysts note that Germany’s defence industry remains far smaller than its automotive sector. Germany’s car industry generated more than €540 billion in revenue in 2024, compared with less than €30 billion combined revenue for the country’s five largest defence companies in 2023.

A fire broke out near the UAE’s Barakah Nuclear Power Plant on Sunday after what officials described as a drone strike, adding fresh strain to rising regional tensions linked to the fragile Iran ceasefire situation.

Authorities said the incident occurred on the perimeter of the nuclear facility, located in Abu Dhabi’s Al Dhafra region. According to the Abu Dhabi Media Office, an electrical generator outside the main operational area caught fire following the strike.

Officials confirmed there were no injuries and no radiation leak. The statement added that the nuclear plant continued operating normally despite the incident.

The International Atomic Energy Agency also confirmed that the fire affected an electrical generator connected to the facility. The agency said one of the plant’s reactors temporarily relied on emergency diesel generators before normal systems were restored.

The Barakah facility is the Arab world’s first commercial nuclear power plant and plays a major role in the UAE’s long-term energy strategy. The site has been viewed as a critical piece of infrastructure for the country’s efforts to diversify energy supplies and reduce dependence on hydrocarbons.

No organization immediately claimed responsibility for the strike, and UAE authorities did not publicly identify any party behind the attack. The incident, however, comes amid heightened tensions across the Gulf following weeks of regional instability tied to the conflict involving Iran and ongoing ceasefire negotiations with the United States.

Diplomatic efforts aimed at stabilizing the situation have shown little progress in recent days, raising concerns among regional governments and energy markets that hostilities could intensify again.

Security analysts say attacks targeting strategic infrastructure have become an increasing concern across the Gulf as regional conflicts spill beyond traditional battle zones. Energy facilities, shipping routes and critical utilities have all faced elevated security threats during recent months.

The incident near Barakah also triggered renewed debate over the vulnerability of nuclear and energy infrastructure to drone warfare, which has become a defining feature of modern regional conflicts.

Meanwhile, Iranian state media continued broadcasting wartime-themed programming on Sunday, including footage showing television presenters undergoing firearms training and appearing armed during broadcasts. The images circulated widely online and added to the tense atmosphere surrounding the stalled ceasefire efforts.

The UAE has repeatedly called for regional stability and diplomatic solutions to ongoing conflicts while strengthening security coordination with international partners.

Barakah’s operators have not announced any disruption to electricity production, and authorities stressed that safety systems at the facility functioned as designed during the incident.

The nuclear plant supplies a significant share of the UAE’s electricity needs and is considered one of the country’s most strategically important infrastructure projects.

Nvidia has reached a market capitalisation of $5.7 trillion, overtaking the projected size of Germany’s economy and underlining the growing dominance of major US technology firms in global financial markets.

The California-based chipmaker, whose processors power artificial intelligence systems, gaming technology and data centres, became the world’s most valuable company after its valuation climbed sharply in recent months. According to market data from CompaniesMarketCap, Nvidia’s value reached $5.7 trillion in mid-May, exceeding Germany’s projected 2026 gross domestic product of $5.45 trillion estimated by the International Monetary Fund.

Germany remains Europe’s largest economy and the world’s third largest overall, behind the United States and China. Nvidia’s valuation now places it ahead of every European economy, including the United Kingdom, France, Italy and Spain.

The rapid rise of Nvidia has been driven largely by surging global demand for artificial intelligence technology. The company’s advanced chips are widely used in AI systems, cloud computing infrastructure and machine learning platforms, placing it at the centre of the ongoing AI investment boom.

Jensen Huang recently said growing demand for artificial intelligence could push Nvidia’s annual sales toward $1 trillion within the next two years. Huang joined US President Donald Trump during a high-profile visit to China earlier this week as Washington and Beijing continue discussions over technology and trade relations.

The broader gap between American corporate power and European economies is also widening. The combined market value of the five largest US companies — Nvidia, Alphabet, Apple, Microsoft and Amazon — now stands at more than $20.8 trillion.

That figure exceeds the combined GDP of Europe’s five largest economies: Germany, the United Kingdom, France, Italy and Spain, whose total output amounts to roughly $18.1 trillion.

Europe currently has no company approaching the scale of the leading American technology firms. Dutch semiconductor equipment maker ASML is Europe’s most valuable listed company with a market capitalisation of about $610 billion, far below Nvidia’s valuation.

Swiss pharmaceutical company Roche and British drugmaker AstraZeneca are also among Europe’s largest firms, though their market values remain significantly smaller than those of US technology giants.

Economists note that market capitalisation and GDP measure different aspects of economic activity. GDP reflects the total annual production of goods and services in an economy, while market value represents investor expectations about a company’s future growth and profitability.

Still, the comparison highlights the extraordinary scale reached by a small group of US technology companies during the global AI expansion.