Italy and Germany forge new alliance for advanced combat vehicles

The Italian army currently possesses 200 C1 Ariete tanks and an equal number of VCC-80 Dardo infantry fighting vehicles. These relatively young vehicles have been in service for less than 30 years, but from the beginning, they were considered somewhat unsuccessful. Ariete inherited many flaws from the older, Italian-licensed Leopard 1 and, despite modernization, remains poorly armoured. Dardo, on the other hand, was designed with little room for modernization, and both vehicles are relatively few, making them uneconomical to operate.

The Italian army had already decided to implement changes in their equipment some time ago. While the Ariete tanks are set to be modernized, Dardo will be replaced with a new vehicle. The program to replace the Dardo (and partly outdated American M113 and related cars) was called Nuovo Veicolo Corazzato da Combattimento (NVCC, pol. new armoured combat vehicle) and aimed to acquire 679 new cars, including 350 infantry fighting vehicles.

Eventually, the program was reduced to 570 vehicles, acquired in two phases, valued at 9.3 billion CAD. Meanwhile, the plan was to keep 125 Ariete tanks (potentially 138 in the future), to be replaced by a completely new tank by 2030. Initially, the Italians intended to join the German-French MGCS program, but, being excluded, they unsuccessfully tried to negotiate with Spain and Poland for a new tank project. Following the outbreak of the war in Ukraine, they resumed talks with Germany, choosing the French-German joint venture KNDS (founded by KMW and Nexter) as a partner.

Negotiations between KNDS and the Italian corporation Leonardo began in December 2022 with ambitious plans. Rome intended to purchase 132 Leopard 2A8IT main battle tanks (more than Germany had ordered then!) and 140 support vehicles (maintenance, engineering vehicles, assault bridges).

Negotiations fell apart by mid-June. Unofficially, it is said that KNDS did not meet the Italian side's high expectations regarding the involvement of the Italian defence industry in joint projects.

Perhaps Leonardo foresaw the fruitlessness of the negotiations, as during the Eurosatory exhibition in Paris, Rheinmetall presented a medium tank consisting of the Rheinmetall KF41 Lynx infantry fighting vehicle chassis and the lightweight Leonardo HITFACT Mk II tank turret (as used on Centauro II tank destroyers). Even if the demonstrator was assembled hastily, the work must have started before the KNDS talks were terminated.

The official formation of the Leonardo-Rheinmetall partnership was announced on July 3, when the presidents and CEOs of both companies signed an agreement to establish a joint venture for developing and producing new combat vehicles. As the Lead Systems Integrator, the new entity will see both sides contribute equally, with approximately 60% of the work being performed in Italy.

The new Italy-based entity will primarily focus on two programs: developing and selling the Italian army a new main battle tank and a new infantry fighting vehicle. The tank program will start with the KF51 Panther, while the second program (currently named Army Armoured Combat System or A2CS) will begin with the KF41 Lynx.

Both vehicles will undergo significant "Italianization," potentially making them unrecognizable compared to their original versions. This includes task systems, electronic equipment, and weapon integration supplied by Leonardo according to client requirements. Rheinmetall also has three subsidiaries in Italy that will employ about 1,400 employees involved in armoured projects.

It's unknown how many vehicles Italy will purchase. According to online reports from the German newspaper "Handelsblatt," Rome plans to buy over 200 main battle tanks and at least 350 infantry fighting vehicles over the next 15 years, with a total value of up to 27.8 billion CAD. However, these details seem incomplete. Suppose the tank is a more advanced product than the standard Leopard 2 (including options for a giant calibre gun and loitering ammunition, an optional crew member controlling unmanned vehicles). In that case, it may eventually replace the Ariete.

This number likely doesn't include support vehicles (possibly around 140). As for the infantry fighting vehicles, under the A2CS program, around 1,000 vehicles worth around 27.8 billion CAD were to be acquired. Thus, 350 vehicles may signify the first phase of purchases. Therefore, Rheinmetall and Leonardo might expect orders for 1,500 vehicles of all types and versions. Will Rome approach the program ambitiously, and will it have the means to do so? Time will tell, especially since Hungary is involved in the Panther's development.

It's worth noting that Rheinmetall offered Poland a similar collaboration model about a decade ago. The future tank named Atlas was to closely resemble the KF-51-U, a more advanced version of the Panther with an unmanned turret. This would have been somewhat the realization of the new Wilk main battle tank program announced in 2016.

The Polish side showed interest in the project even after the 2015 elections, which is no surprise since Rheinmetall was chosen as the strategic partner for the Leopard 2PL program. However, political shifts and the Polish defence industry's mixed experiences with the German giant led to the program being abandoned in favour of purchasing more conservative but rapidly available Abrams and K2 tanks. The latter's manufacturer, Hyundai Rotem Company, also offers Poland participation in the next-generation tank program.

Returning to Italy, KNDS CEO Frank Haun commented on the suspended negotiations, emphasizing that the company continues to support the Italian Army, suggesting that KNDS will try to find another way to sell Leopard 2A8 tanks to Italy.

I remember that the Leopard 2A8IT program was supposed to serve as Italy's gateway to the European Main Ground Combat System (MGCS) new-generation combat systems program. Meanwhile, according to a press release from Leonardo, Rheinmetall and Leonardo plan to participate in the European land combat system program, MGCS, where Rheinmetall is already collaborating with KNDS.

It's important to remember that the corporations collaborate while competing with the German-French consortium. It's possible that together with Leonardo, they will eventually take fully competitive positions, aiming to oust their government-supported yet less wealthy rivals. It's not impossible that the Atlas project was an early attempt to create a competitive solution. If the German-Italian negotiations succeed this time, the consolidation of the European defence industry could take entirely unexpected directions.