Finland’s Valmet Automotive, a Finnish car manufacturer, is making a foray into the defense manufacturing sector with the Finnish government and local capital taking over shares previously held by Chinese battery maker CATL.
On Monday (September 1), the Finnish government announced that it, together with local investor Pontos Group, has acquired the 20.6% stake held by CATL. Following the completion of the transaction, the Finnish state’s ownership will increase to 79%, with Pontos holding the remaining portion. Finnish Minister of Economic Affairs, Sakari Puisto, emphasized that Valmet is a “company of national strategic significance” and stated that its expertise will be utilized in the defense industry.
“The government also sees the opportunity to utilize Valmet Automotive’s expertise to meet the growing demands of the defense industry,” Puisto said.
Headquartered in Uusikaupunki, Finland, Valmet Automotive has primarily been involved in contract manufacturing of cars and electric vehicle components, but in recent years has been undergoing a transition to enter the military and defense manufacturing sector. Analysts point out that against the background of the Russia-Ukraine conflict, Finland places great importance on defense autonomy, and this move to reclaim control has clear strategic considerations.
According to reports from Bloomberg and Reuters, the transaction involves an injection of approximately 120 million euros (about 141 million dollars), with the Finnish government directly investing 35 million euros. Simultaneously, the Finnish government will be divesting Valmet’s battery module business, with the state-owned Finnish Minerals Group holding a 70% stake, while pension fund Varma and Pontos hold 16% and 14%, respectively.
Valmet gained recognition in its earlier years for contract manufacturing for Mercedes-Benz and Porsche, and in recent years has ventured into new energy vehicle components. However, its revenue has been under pressure due to the slowdown in demand for electric vehicles in Europe. Industry insiders believe that Chinese enterprises in the European automotive supply chain are facing increasing challenges, and CATL’s withdrawal reflects its strategic contraction in Europe.
From the Finnish perspective, state investment not only ensures employment and industry chain security but also provides support for the defense industry’s transition. Europe is increasing its defense investments to address the threat from Russia and is seeking to reduce reliance on China in areas such as defense and critical minerals. Valmet’s transition to defense manufacturing is seen as a epitome of the convergence of European industrial strategy and security strategy.