General Motors is in discussions with Lockheed Martin to manufacture commonly used components that would help the defence contractor bolster munitions output, the Wall Street Journal reported on Monday, citing people familiar with the matter.
Specific parts GM would produce remain under negotiation, and terms are subject to change.
The talks mark a meaningful escalation in the automaker’s existing defence involvement — and another sign that the boundary between civilian and military manufacturing is dissolving across the Western automotive industry.
Shares of the Detroit automaker rose 3.15% to close at $84.07 on Monday following the announcement.
The rally extended into Tuesday’s pre-market trading, with the stock gaining a further 1% to $85.00 as of press time.
According to the WSJ, CEO Mary Barra has held separate discussions with Trump administration officials about expanding GM‘s role in defense.
GM Defense
GM Defense, the subsidiary through which the company conducts military work, has been operating for nearly a decade.
Last week, it was reported that the US Army awarded the unit a $143 million firm-fixed-price contract for infantry squad vehicles (ISV) and winch kits — bringing its cumulative defense contract value to $623.8 million, according to Pentagon contract records.
An earlier $18.8 million contract announced in March covered 121 infantry squad vehicles, anti-lock brake system kits and vehicle storage covers, forming part of a broader programme valued at approximately $458.4 million.
GM Defense’s infantry squad vehicle is derived from the Chevrolet Colorado ZR2 and uses 90% commercial off-the-shelf parts.
As of November 2025, the US Army had 1,105 ISVs in its inventory.
In late March, the Army released a separate Commercial Solutions Opening for a heavier variant, the ISV-Heavy, intended to replace the Humvee and serve as both a troop carrier and a mobile power supply.
GM Defense is expected to bid for that programme.
Beyond the ISV, GM Defense supplies armoured Chevrolet Suburban Shield vehicles to the US Department of State’s Diplomatic Security Service and has secured a contract with the Qatar Armed Forces.
Moving from vehicle platforms into munitions-adjacent components for Lockheed Martin would represent a qualitatively different kind of defense work for GM.
Detroit Automakers
Ford, for its part, is pursuing a parallel track.
Earlier this year, Army Secretary Dan Driscoll has cited both Ford and GM as potential partners the Pentagon is eager to engage, highlighting their manufacturing scale as critical to addressing stockpile depletion accelerated by the war in Iran and ongoing support for Ukraine.
Unlike GM, Ford does not currently hold major military contracts. However, it supplies engines and other components to defence contractors.
The Jim Farley-led company is in active discussions with the US government and several European defense ministries about militarized versions of its F-Series Super Duty trucks.
According to GM Defense President Steve Cain, Ford is focused on selling more pickups using commercial off-the-shelf platforms, while GM Defense positions itself as a broader solutions provider for military leadership.
Speaking with the Detroit Free Press, Ford spokesperson Mike Binhammer said its approach offers governments access to technology at a fraction of the time and cost of bespoke military platforms.
German Automakers
Developments have moved faster in Europe, where automakers face even more acute overcapacity pressures.
Additionally, defense budgets have expanded sharply in response to Russia’s invasion of Ukraine and NATO’s decision to raise its spending target to 5% of GDP by 2035.
In late April, Volkswagen and Israel’s Rafael Advanced Defense Systems signed a letter of intent for the Israeli agent to acquire VW‘s Osnabrück assembly plant in Lower Saxony.
Osnabrück employs approximately 2,300 workers and currently produces the T-Roc Cabriolet, a model slated for discontinuation by mid-2027. VW had flagged the site for closure in its March 2026 capacity review.
VW CEO Oliver Blume confirmed advanced talks with defense companies on the same day’s investor call, without naming Rafael directly.
Volkswagen brand CEO Thomas Schäfer separately confirmed that defense-sector partnerships are among the active solutions VW is pursuing for underutilized German plants, framing the approach as part of a doctrine that treats outright closures as a last resort.
XPeng‘s managing director for northeastern Europe Elvis Cheng confirmed at the Financial Times’ Future of the Car summit in May that the Chinese EV maker is in discussions with Volkswagen about finding a European production location.
VW invested $700 million in XPeng in 2023 and holds a stake of roughly 5% in the Chinese automaker — which currently assembles vehicles at the Magna Steyr plant in Austria.
Volkswagen‘s 2025 profit fell 53.5%, its worst result since the diesel emissions scandal.
Last week, Mercedes-Benz also signed a memorandum of understanding with Munich counter-drone startup Tytan Technologies at ILA 2026 in Berlin.
Under the agreement, Mercedes will supply G-Class SUVs and Sprinter vans as mobile platforms for vehicle-mounted counter-drone systems, while Tytan provides radar, sensors and interceptor launchers.
Germany’s Federal Minister for Economic Affairs Katherina Reiche attended the signing. Mercedes described the defense sector as a strategic growth field.
Legacy Automakers Overcapacity
Two simultaneous crises explain the breadth and speed of the pivot. On the demand side, traditional Western defense players are operating near capacity and cannot surge output to meet the requirements created by ongoing conflicts in Ukraine and Iran, as well as NATO-wide rearmament.
All 32 NATO members met or exceeded the 2% of GDP defence spending target for the first time in 2025, according to data published by NATO earlier this year.
European allies and Canada achieved a 20% year-on-year increase in defense spending.
Germany’s 2026 defense budget reached a record €108 billion, with the Bundestag having approved plans to spend €649 billion on defense over five years through 2029.
On the supply side, automakers have idle factories, trained industrial workforces and supply chains engineered for high-volume production, many of which are being closed or facing layoffs — driven by weakened regional vehicle markets, surging competition from Chinese automakers, and a slower-than-expected EV transition.
