Rheinmetall is considering converting Volkswagen's factory for military production.

On Wednesday, Rheinmetall shares surged following the company's earnings report and comments from CEO Armin Papperger regarding the potential conversion of Volkswagen's Osnabrueck plant to military production. As Volkswagen evaluates options for the future of the facility, Rheinmetall's interest in restructuring or acquiring automotive plants under suitable conditions has come to light.

Papperger noted that tank factories require specialized infrastructure, such as heavy cranes and load-bearing capacity, when assessing the suitability of the Osnabruck facility for military production. He emphasized that significant orders, like the Lynx infantry fighting vehicle, would be prerequisites for investments in new locations. Despite Rheinmetall's order backlog of €55 billion and new orders valued at €27 billion falling short of previous forecasts, investor sentiment remained positive, contributing to a nearly 10% rise in shares during the day. This increase is part of an impressive 88% rise since the beginning of the year, highlighting the company's strong position in the defense sector and the market's response to potential expansion opportunities.