Mercedes-Benz teams up with German startup for anti-drone vehicle production

Mercedes-Benz has announced a partnership with German startup Tytan Technologies to manufacture vehicles for anti-drone systems, marking the latest move by a European automaker into the defence sector.

The German carmaker signed a memorandum of understanding with Tytan Technologies at ILA 2026, the International Aerospace Exhibition, on Wednesday.

Under the agreement, Mercedes-Benz will produce vehicles for a mobile air-defence system designed to target small drones.

Focus on vehicle-based drone defence

According to a company statement, Mercedes-Benz will focus on “vehicle-based drone defense and mission platforms for the protection of people and critical infrastructure.”

The systems will be based on the company's G-Class and Sprinter vehicle platforms.

The collaboration represents a strategic expansion into defence-related manufacturing at a time when traditional automotive markets are facing increasing challenges.

The Stuttgart-based automaker has become the latest European vehicle manufacturer to explore opportunities in the growing defence industry.

European automakers diversify into defence

Mercedes-Benz is not alone in seeking defence-related partnerships.

In March, Renault announced that it was developing a ground-based drone for both military and civilian applications.

Earlier, in January, the French automaker also announced a partnership with defence group Turgis Gaillard to manufacture aerial drones in France.

Meanwhile, Volkswagen has signed a letter of intent with Israeli defence company Rafael to produce components for missile defence systems.

The recent developments highlight a broader trend among European automakers as they look for new business opportunities beyond traditional vehicle manufacturing.

The automotive industry faces structural challenges

The shift comes as the European automotive industry continues to face significant headwinds.

The sector has been grappling with slowing demand for electric vehicles, increasing competition from Chinese manufacturers, and higher borrowing costs.

These challenges have placed pressure on automakers across the region, prompting many companies to seek alternative growth areas.

At the same time, the defence sector has experienced strong growth following Russia's full-scale invasion of Ukraine in 2022.

The changing security environment has increased the focus on strengthening Europe's defence production capabilities and reducing dependence on external suppliers.

Industry observers have noted that the transition from automotive manufacturing to defence-related production is achievable because many of the technical skills used in both industries are transferable.

Government encouraging civilian-defence collaboration

Germany's Ministry of Defence is also supporting greater collaboration between defence companies and civilian businesses.

A spokesperson for the ministry told CNBC on Wednesday that it has launched a matchmaking platform that is “bringing established defense companies together with start-ups and companies from the civilian sector.”

The partnership model reflects a growing effort to connect industrial expertise from civilian sectors with defence manufacturing requirements.

Historical parallel

The involvement of automakers in defence production is not unprecedented.

During World War II, automotive manufacturers across the world suspended civilian vehicle production and redirected their operations toward military efforts.

Companies produced military vehicles, aircraft engines, firearms, and ammunition to support wartime requirements.

Share performance

Mercedes-Benz Group AG shares were trading at approximately €47.11 on the Frankfurt Stock Exchange (XETR).

The stock has declined around 22.4% year-to-date and is approximately 9.6% lower compared with its level over the past 12 months.