ROME – Germany’s Rheinmetall has signed a contract with Italy’s Leonardo to develop and build hundreds of new tanks and tracked combat vehicles for Italy, weeks after European giant KNDS pulled out of a similar deal with Leonardo.
Rheinmetall and Leonardo signed a memorandum of understanding on Wednesday to create a new 50:50 joint venture that will act as the design authority and lead supplier of the new platforms, the firms said in a statement.
Rheinmetall will offer its Panther KF51 prototype tank as a replacement for the old Italian Ariete tanks and its Lynx tracked combat vehicle as a replacement for the Italian Dardo vehicles.
In the tank and tracked combat vehicle programs, “Leonardo will develop and manufacture mission systems, electronic suites and weapons integration according to the Italian client’s requirements,” the statement said.
“Final assembly lines, homologation tests, deliveries and logistical support will take place in Italy with an Italian share of 60 percent,” he added.
The team will also be used as a springboard for Italy’s involvement in the pan-European Main Ground Combat System (MGCS) tank program.
“The technologies will be the basis for the development of the future European Main Battle Tank (MGCS),” the statement said.
The agreement follows the cancellation of an agreement between KNDS and Leonardo last month for Italy to acquire 270 Leopard tanks and to discuss joint work on a new tracked combat vehicle to meet Italy’s requirement for around 1,000 vehicles.
Italy has forecast the Leopard acquisition programs to be worth 8 billion euros ($8.6 billion) and the combat vehicle program to total 15 billion euros.
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The Italian parliament last year approved the purchase of the Leopard, which was seen as a quick response to NATO demands as the Ukraine war puts ground warfare back on the map.
KNDS broke off negotiations after Leonardo sought to add its own systems to the Leopard, with Frank Haun, KNDS CEO, arguing that this would disrupt the firm’s track record of selling a standardized version of the tank to 18 customers.
KNDS is a consortium of the German Krauss-Maffei Wegmann and the French Nexter.
The new agreement with Rheinmetall will instead see the firm discuss with Leonardo an Italianized version of the Panther KF51, which is at an early stage of development and therefore more open to Italian input.
An industry source told Defense News that the scope for integrating the Italian systems into the Panther would slow down the final procurement, however.
“The Italian tank program was to give the Italian Army a tank quickly as a gap filler before the arrival of the MGCS. But if Italy switches to Panther, it could take ten years to complete the program and by then the MGCS could arrive,” said the source, who declined to be named because he was not authorized to speak on the record.
However, a second source predicted that the Panther would be the baseline for the MGCS. “So it gives Italy a leg up on the MGCS,” said the source, who also declined to be named because he was not authorized to speak on the record.
Discussions with Rheinmetall to adopt its Lynx as the baseline for Italy’s tracked combat vehicle program will end ongoing studies by Leonardo and its Italian partner Iveco Defense Vehicles to select a European partner for the program. KNDS and BAE Systems were other candidates.
Italy aims to produce 20 prototypes of the new tracked combat vehicle by 2027 or 2028, with deliveries to follow between 2029 and 2041.
Currently, Hungary has signed a contract to purchase the Lynx and last year became a development partner with Rheinmetall on the Panther.
Tom Kington is the Italian correspondent for Defense News.