KNDS Moves From Order Intake to Execution Race With Auto Plant Tie-Ups and Joint Venture Blitz

The defence contractor KNDS is betting that old car factories can solve its biggest bottleneck. With a record €33.1 billion order book and a dual listing in Frankfurt and Paris pencilled in for June or July 2026, the company is racing to scale up production capacity far beyond its existing footprint.

Car Plants Become Tank Factories

Chief executive Jean-Paul Alary confirmed on 26 May 2026 that KNDS is in talks with Volkswagen and Mercedes-Benz to take over plants in Osnabrück and Ludwigsfelde. The plan for the Mercedes site near Berlin is to initially share the hall — Sprinter vans continue on one line while Boxer infantry fighting vehicles roll off the other. Eventually, the entire facility would go to KNDS, with around 2,000 workers potentially switching employers.

The Volkswagen plant in Osnabrück is more complicated. Israel's Rafael Advanced Defense Systems has already signed a letter of intent, setting the stage for a bidding contest. KNDS is ploughing roughly €1 billion into new manufacturing capacity overall.

Joint Ventures Deepen Integration

Alongside the auto-plant gambit, KNDS is strengthening its role as a systems integrator. EuroTrophy, the joint venture with Rafael and General Dynamics European Land Systems, is now equipping some 200 vehicles — primarily Leopard 2A8 main battle tanks for Germany and Norway — with the Trophy active protection system, which intercepts incoming anti-tank missiles and rocket-propelled grenades. The system is expected to expand to the Boxer and CV90 armoured vehicles, giving KNDS a broader foothold in electronic protection.

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Meanwhile, the EuroPuls joint venture with Elbit Systems reached a new operational readiness level on 1 June 2026, focusing on rocket artillery production for European forces. The Israeli partners bring battle-proven effector and sensor technology, while KNDS contributes European vehicle platforms and industrial scale. These tie-ups fit the company's “One KNDS” strategy of bundling platforms, munitions, sensors and protection into larger contract packages.

Record Order Book Pressures Output

The urgency is clear from the numbers. KNDS reported revenue of €4.4 billion for 2025, up nearly 16 percent. Operating profit reached €661 million, lifting the margin from 13.2 to 15 percent. New orders worth €13.5 billion were added, including more than 300 Leopard 2 A8 tanks for the Czech Republic, the Netherlands and Croatia, plus Caesar howitzers.

The order backlog hit €33.1 billion, compared with €23.5 billion at the end of 2024. To help close the gap, KNDS opened a production facility in Levanger, Norway in May, capable of turning out up to 36 Leopard 2A8NO tanks per year from the third quarter of 2026. In Belgium, a new 155-millimetre ammunition line is up and running. In Görlitz, a cooperation with Alstom secured the factory.

Government Stake Confirmed, IPO Pricing Shifts

Political backing for the listing is taking shape. Berlin confirmed at the end of May its intention to initially take 40 percent of KNDS, matching France's stake. After two to three years, the German share could fall back to 30 percent. The dual listing is expected in June or July 2026.

But the IPO faces two hurdles. Auditor PwC has refused to sign off on the 2025 annual accounts pending a final report from law firm Freshfields, which is investigating a €1.89 billion tank deal with Qatar from 2013. So far no evidence of misconduct has been found, but without a clean audit opinion, no prospectus can be approved.

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Valuation expectations have also moderated. Advisers now talk of €18 billion to €20 billion, down from earlier estimates of up to €25 billion. On 19 May, KNDS placed 5.8 million shares of transmission specialist Renk, raising around €262 million to strengthen its balance sheet ahead of the debut.

Closing Thoughts

For KNDS, the question has shifted from how many orders can be won to how fast they can be delivered. The car-plant strategy and joint ventures are designed to push through factory, supply-chain and certification bottlenecks. Neither the political jostling over the state's stake nor the audit delay appear to have derailed the timetable, but they keep the spotlight on execution risk rather than order flow. The coming months will tell whether the company can scale fast enough to match the ambition of Europe's defence build-up.

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