I guess it depends. While doing my PhD at a top German research university, our chair advised multiple of these projects, too (e.g., BMW, Siemens, Audi).

Yes - the downsides you mention are all true. But similar downsides apply to most PhD students working directly at the university - either you have some teaching load and administrative duties, or you work in an externally funded project and have to write project reports and do a lot of non-research stuff, too.

As I mentioned elsewhere in the thread, if you want to have an academic career, doing a PhD in industry is not the best choice. But if you want to work in R&D or as a group leader in industry, these PhD positions might be a good stepping stone.