Spurned by KNDS, Leonardo teams with Rheinmetall for Italy’s new tanks

ROME — Germany’s Rheinmetall has signed a deal with Italy’s Leonardo to discuss the development and building of hundreds of new tanks and tracked fighting vehicles for Italy, weeks after European giant KNDS walked away from a similar deal with Leonardo.

Rheinmetall and Leonardo signed a Memorandum of Understanding on Wednesday to create a new 50:50 joint venture which will act as design authority and prime contractor for new platforms, the firms said in a statement.

Rheinmetall will offer its prototype Panther KF51 tank as the baseline for a replacement for Italy’s aging Ariete tanks, and its Lynx tracked fighting vehicle as a baseline for a replacement for Italy’s Dardo vehicles.

On both the tank and tracked fighting vehicle programs, “mission systems, electronics suites and weapons integration will be developed and produced by Leonardo according to the requirements of the Italian client,” the statement said.

“Final assembly lines, homologation testing, delivering activities and the logistic support will be done in Italy with an Italian workshare of 60 percent,” it added.

The team-up will also be used as a springboard to bring Italy into 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 deal follows the scrapping last month of a deal between KNDS and Leonardo for Italy to acquire 270 Leopard tanks and to discuss joint work on a new tracked fighting vehicle to meet Italy’s requirement for around 1,000 vehicles.

Italy had forecast the Leopard acquisition programs would be worth €8 billion ($8.6 billion) and the fighting vehicle program worth a total of €15 billion.

Italy’s parliament last year approved the Leopard purchase, which was seen as a fast response to NATO requirements as the Ukraine war puts land warfare back on the map.

KNDS broke off talks after Leonardo sought to add its own systems to the Leopard, with Frank Haun, KNDS CEO, arguing that it would upset the firm’s track record of selling a standardized version of the tank to 18 customers.

KNDS is a consortium of Germany’s Krauss-Maffei Wegmann and France’s Nexter.

The new deal 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 Italian systems into the Panther would however slow final procurement.

“The Italian tank program was meant to give the Italian army a tank quickly as a gap filler before the arrival of the MGCS. But if Italy switches to the Panther it could need ten years to conclude the program, and by that time the MGCS might be arriving,” said the source, who declined to be named because he did not have permission to speak on the record.

A second source however predicted the Panther will be a baseline for the MGCS. “So that gives Italy a headstart on MGCS,” said the source, who also declined to be named because he did not have permission to speak on the record.

The discussions with Rheinmetall on adopting its Lynx as the baseline for Italy’s tracked fighting vehicle program will put an end to ongoing studies by Leonardo and its Italian partner Iveco Defense Vehicles to pick a European partner for the program. KNDS and BAE Systems had been other candidates.

Italy’s aim is to produce 20 prototypes of a new tracked fighting vehicle by 2027 or 2028, with deliveries to follow between 2029 and 2041.

Currently Hungary has signed to buy the Lynx and last year became a development partner with Rheinmetall on the Panther.