Germany becomes the world's largest traditional ammunition producer, as artillery shell factories replace car factories.

Germany’s defense giant Rheinmetall CEO Armin Papperger announced that Germany has officially surpassed the United States in traditional ammunition production capacity, with annual shell production skyrocketing from 70k to 1.1 million; he also predicted that the defense industry will replace about one-third of jobs in the German automotive sector.
(Background summary: Morgan Stanley’s pessimistic forecast: the Hormuz Strait cannot be reopened this month, Polymarket’s predicted reopening rate is only 30%)
(Additional background: Barclays warns: history shows that when the Federal Reserve Chair changes, U.S. stocks face an average 16% pullback)

Table of Contents

Toggle

• Shell factories replacing car plants: Germany’s silent industrial transformation
• Europe’s rearmament: national competition under the €80 billion framework
• Geopolitical implications: Europe no longer waiting for the U.S.

Germany, a manufacturing powerhouse once dominated by automobiles and precision machinery, is quietly switching to a new production line — shells.

Rheinmetall CEO Armin Papperger told Süddeutsche Zeitung directly: “Germany now surpasses the U.S. in traditional ammunition production capacity.” Behind this statement is a staggering set of numbers: military truck production has increased from 600 to 4,500 units annually; medium-caliber ammunition from 800k to 4 million rounds; 155mm shells from 70k to 1.1 million.

Shell factories replacing car plants: Germany’s silent industrial transformation

Rheinmetall currently employs 44k workers and plans to expand to 70k by 2030. When including the supply chain, the employment benefits could increase by another 210k.

Papperger emphasized that the company currently collaborates with 11.5k German suppliers, of which 4,500 are also automotive manufacturing supply chain partners. This means that automotive equipment, labor, and technology are quietly being absorbed by the defense industry.

Germany’s automotive industry has been mired in structural crises in recent years, with ongoing layoffs. Papperger predicts that military production will fill one-third of the jobs lost in the automotive sector. This is not just a metaphor but a real industry replacement: in 2025, Rheinmetall alone received 250k job applications in Germany, with a total of 350k applications. The old perception that the defense industry is “unattractive” is now history.

In August 2025, Europe’s largest caliber shell factory officially opened in Unterlüß, Lower Saxony, marking the transition of Germany’s rearmament from policy declaration to actual mass production. The goal is to produce 1.5 million 155mm shells annually by 2027, surpassing the U.S. Department of Defense’s target of 1.2 million per year.

Europe’s rearmament: national competition under the €80 billion framework

Germany’s military industry surge is a microcosm of Europe’s broader rearmament wave. In 2026, Germany’s defense budget will reach €108.2 billion, a significant increase from €86 billion in 2025, accounting for 2.6% of GDP, with plans to borrow an additional €400 billion over the next five years to fund rearmament.

In 2025, Germany’s military expenditure grew by 24% annually, reaching $114 billion, breaking the 2% GDP threshold for the first time since 1990.

The EU’s “Rebuild Europe” plan provides a framework of €800 billion: including €650 billion in fiscal flexibility and €150 billion in joint borrowing (SAFE bonds). NATO also set a record in 2025: all member countries met the 2% GDP defense spending threshold for the first time, with the 2035 target raised to 5% of GDP (including security-related expenditures).

Against this backdrop, Rheinmetall’s performance is booming. In 2026, sales are projected to reach €14.5 billion, a 45% increase year-over-year; order backlog is expected to double to €135 billion; and the stock price has surged over 540% in three years.

Geopolitical implications: Europe no longer waiting for the U.S.

From a broader perspective, Germany surpassing the U.S. in ammunition capacity signifies more than just numbers. It marks Europe’s first serious consideration, 80 years after World War II, of self-defense without U.S. dominance. Germany, the country that signed the surrender treaty and long suppressed its military power after the war, is redefining its role in Europe’s security architecture.

Orders are coming in, production capacity is increasing, talent is flowing in, and supply chains are being reorganized. The battlefield is Ukraine, but the true industrial revolution is quietly unfolding inside German factories.