By Dr. Josef Demergis and Dr Nikolaos Katsiotis
Porsche Automobil Holding SE has announced its intention to invest up to €2 billion in the defence industry. The move has of course ignited widespread debate, bringing renewed attention to Porsche’s historical involvement in arms production and raising ethical concerns over revisiting a controversial chapter from its World War II legacy (Tooze 2006, 412).
In a sense, Porsche’s involvement in the previously dormant European defence industry, is not out of character for any large German manufacturer of industrial goods that wishes to diversify and at the same time take advantage of a huge business opportunity, of the possible re-armament of Europe with European manufactured arms (Alim, 2024).
The “possible” in this case has to do with the evolving geopolitics of sustaining an international political economy that is presently out of step due to US tariffs, the discussions between the EU and the US about them and the possible role of US arms manufacturers in the European re-armament project (Brattberg and Whineray 2023).
With Germany and other NATO members significantly boosting military spending, defence contractors are experiencing record order backlogs. Berlin’s recent approval of a €500 billion public fund for infrastructure and defence, set for early 2025, has driven shares of construction and defence companies sharply higher. For Porsche SE, positioning itself within this surge in defence spending could open up substantial new revenue opportunities.
Nevertheless, the major re-armament push that took place since the start of the Russian-Ukraine war has majorly benefitted US arms companies with EU officials attacking the Biden administration about it, along with similar attacks about the price of US gas supplied to Europe (Moens et al. 2022).
The US has had a very successful supply chain necessary to maintain an arms industry for decades now and building one, almost from scratch to a competitive level is a very tall order for a very politically fragmented European Union (Fiott 2024).
Porsche SE’s move to re-engage with the defence industry aligns with its broader objective of balancing its investment portfolio while capitalising on cross-sector technological innovation (European Commission 2023).
Defence R&D can be applied to the other sectors of industry when appropriate and it is certainly a happenstance when the EU is footing the bill.
Porsche has already delved in military-related activities by acquiring in 2024 a minority stake in Quantum Systems, an autonomous drone startup (Quantum Systems 2024). Quantum System’s drones offer aerial data gathering, surveillance, and reconnaissance, in settings where drones serve dual-use purposes across civilian and defence sectors. The path between civilian innovation, military utility and financial gain is self-evident (Møller 2024).
Nevertheless, Porsche, like many German manufacturers, must contend with the historical burden of its WWII-era industrial role despite brand and company positioning seeking to gain from the flood of EU and German money that is set to re-arm Europe (which is a very tall order indeed).
Its association with Nazi-era armaments complicates contemporary efforts to portray German re-armament as ethically sound and strategically defensive. This history invites warranted skepticism, particularly from critics who rightly condemn both Russian aggression and any selective memory of European culpability.
Looming in the background, though rarely acknowledged in Western discourse, is another geopolitical force: China. Beijing actively seeks to increase its influence over the EU, economically and strategically (Leonard 2022). Porsche’s strategic shifts may be seen not only in terms of profit but as a positioning maneuver within the broader geopolitical chessboard.
References:
Detsch, Jack. “Trump May Blow Up U.S. Defense Sales to Europe.” Foreign Policy, April 10, 2025.
European Commission. “European Defence Fund: €1.2 Billion to Boost EU’s Defence Capabilities.” June 30, 2023.
Arjun Neil Alim and Martin Arnold, “German Businesses Break with Postwar Taboo to Supply Defence Sector,” Financial Times, July 2, 2024.
Fiott, Daniel. “Beyond Strategy? Industrial Strategy and the Future of European Defence.” ARI 57/2024, Elcano Royal Institute, May 9, 2024.
Moens, Barbara, Jakob Hanke Vela, and Jacopo Barigazzi. “Europe Accuses US of Profiting from War.” Politico Europe, November 24, 2022.
Leonard, Mark. 2022. The Age of Unpeace: How Connectivity Causes Conflict. London: Penguin Books.
Møller, Signe B., and Sten Rynning. “Military Drones in Europe: The European Defence Market and the Spread of Military UAV Technology.” Defending Europe: Security, Society, Strategy, Center for War Studies, 2024.
Quantum Systems. “Porsche SE Invests in Dual-Use Drone Startup.” Press Release, March 14, 2024.
Tooze, Adam. The Wages of Destruction: The Making and Breaking of the Nazi Economy. London: Penguin, 2006.
