My wife did her mathematics PhD under an analogous structure in Germany where it’s fairly common. She was supervised by a professor at the University of Munich and a lab at Bosch, wrote and defended a thesis as usual. Employed in industry immediately after graduating. A great experience.
During my academic career I worked at a top German research university and advised multiple of these projects. On the surface it’s a good deal for everyone: the professor gets increased publication and graduate counts without having to pay for it, the company gets a top student working on their research problem very cheaply, and the student gets a PhD, an employment contract, and often a visa. The reality was unfortu…
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.