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Rheinmetall charts a course to become the world’s second-largest defense company

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The German arms conglomerate Rheinmetall is systematically expanding into numerous new areas of the defense industry and plans to become one of the top three defense companies in the world.

The company, which traditionally produces tanks, artillery, and ammunition, is now entering the drone and satellite production markets.

According to an analysis in German Foreign Policy, Rheinmetall is thus transforming into a company that not only produces weapons and ammunition for future battlefields but also manufactures the unmanned aerial vehicles flying above them and the satellites that survey the conflict and its surroundings.

While Rheinmetall’s arms sales were only €3.7 billion in 2020, total sales are expected to reach €50 billion by 2030 following the divestment of its civilian automotive division.

Based on current figures, this would place the company second among global defense corporations, behind the US giant Lockheed Martin, which recorded defense sales of €55.5 billion in 2024. In Europe, Rheinmetall will be the largest ammunition manufacturer.

Europe’s largest ammunition manufacturer

Rheinmetall expects ammunition production to constitute the largest share of its sales, reaching €14 to €16 billion by 2030.

The Düsseldorf-based arms manufacturer is already Europe’s largest ammunition producer, thanks in part to the acquisition of its Spanish competitor Expal, which was completed in the summer of 2023.

While Rheinmetall produced approximately 60,000 units of 120mm tank ammunition in 2022, it plans to produce 240,000 units by 2027. For 155mm caliber artillery ammunition, the group aims to increase production from 70,000 rounds in 2022 to 1.1 million rounds in 2027, and 1.5 million rounds by 2030.

The production of medium-caliber ammunition for air defense will be quadrupled by 2030 compared to 2022, reaching 4 million rounds. To achieve this, Rheinmetall is expanding its plant in Unterlüß to become the largest ammunition factory in Europe, and possibly the world, according to a statement by CEO Armin Papperger at the new factory’s opening in late August.

A key customer for the company is the German Armed Forces, which increased its framework agreement for the supply of tank ammunition alone to approximately €4 billion in 2023. Rheinmetall is also building a series of new ammunition and gunpowder factories in countries such as Lithuania, Latvia, Bulgaria, and Romania.

Diversification in tank production

Rheinmetall aims to achieve its second-highest partial sales figure in the combat vehicle business, with a target of €13 to €15 billion in 2030.

The group is involved in the construction of numerous long-standing tanks, including the Leopard main battle tank, for which Rheinmetall primarily produces the smoothbore cannon, and the GTK Boxer wheeled armored vehicle.

In the future, Rheinmetall is focusing particularly on the Lynx infantry fighting vehicle and the Panther main battle tank. The KF41 Lynx was introduced in 2018; Hungary and Italy have placed firm orders for the vehicle so far. CEO Papperger hopes to sell more than 6,000 Lynx infantry fighting vehicles, at least if it emerges victorious in the ongoing selection process by the US armed forces.

Rheinmetall is also focusing on the KF51 Panther main battle tank, which is being touted as a potential successor to the Leopard. This tank is a competitor to the German-French MGCS (Main Ground Combat System) battle tank project, which has made no progress.

Rheinmetall has already received firm purchase commitments for the KF51 Panther: one from Hungary and another from Italy. Here, Rheinmetall is partnering with Leonardo.

In Italy, Rheinmetall operates as a supplier in a joint venture with the Italian defense group Leonardo.

SPOCK satellites: The digitalization offensive

Rheinmetall expects additional sales of €8 to €10 billion in its digitalization business segment, which includes the satellite business. The Düsseldorf-based tank manufacturer is entering this market from scratch.

The background for this is the digital networking of weapon systems traditionally produced by Rheinmetall on the battlefield. This includes network connectivity with reconnaissance satellites.

To produce these, Rheinmetall has established a joint venture with the Finnish startup Iceye, which is considered an international leader in the production of satellites with SAR (Synthetic Aperture Radar) technology.

When using SAR satellites, microwaves are emitted, and their echoes are measured to create high-resolution images of events on the ground, even at night or in poor weather conditions.

Rheinmetall holds a 60% stake in the joint venture, which will operate its production at the Neuss facility, while Iceye holds a 40% stake. The initial plan is to produce satellites for the German Armed Forces’ “Panzer Brigade 45” unit in Lithuania for approximately €1.76 billion.

The reconnaissance system will be named SPOCK (Space-based System for Persistent Operational C2 and Kill-chain). Competing firms were displeased that the contract was awarded without a tender process, which was a clear advantage for Rheinmetall.

Kamikaze drones

Rheinmetall aims for additional sales of €3 to €4 billion in the air defense segment by 2030. This is also a relatively new area for the company.

In July, Rheinmetall, in collaboration with the US defense giant Lockheed Martin, opened a factory in Weeze, North Rhine-Westphalia, that produces fuselage parts for the US F-35 fighter jet. This was the first step into the aviation industry.

The group is also working with various external companies to gain expertise in drone production. For example, it collaborates with the Israeli company UVision, founded in 2011 and specializing in drone manufacturing, with which it primarily produces Hero kamikaze drones.

Recently, this joint venture received an order to supply millions of euros worth of Hero drones to a NATO country.

The Düsseldorf-based group signed a collaboration agreement for drone defense with the US startup Anduril in 2024 and expanded it this year to include drone production. Anduril is considered the world’s largest military startup.

Rheinmetall also works with Auterion, a drone specialist founded in Switzerland and now based in the US. According to reports, Rheinmetall is currently planning to build a drone factory in the Baltic states.

New goals in the maritime sector

The new maritime division is also expected to generate a turnover of approximately €5 billion by 2030.

This division will be created through the acquisition of Naval Vessels Lürssen (NVL), the naval division of the Lürssen shipyard in Bremen, with the acquisition expected to be completed by early 2026.

Rheinmetall hopes this will create certain synergies with its tank-building operations but, above all, allow it to enter the extremely costly warship construction market. “In the future, we will be a significant player on land, at sea, in the air, and in space. Rheinmetall is thus transforming into a cross-domain systems house,” said CEO Papperger.

NVL has primarily built corvettes; the company currently owns four shipyards in Hamburg (Blohm + Voss, Norderwerft), Wolgast (Peene-Werft), and Wilhelmshaven (Neue Jadewerft).

According to reports, the corvettes, which will soon be produced by Rheinmetall’s maritime division rather than NVL, could be equipped with new weapons that Rheinmetall is currently developing in collaboration with the US company Lockheed Martin.

“The current conflict situation shows that military application capabilities are becoming increasingly important in the maritime sector as well,” says Rheinmetall.

Transatlantic orientation is critical for Rheinmetall

Rheinmetall is one of the companies in the German defense industry with a clear transatlantic orientation. Its shareholders include well-known financial firms from the US, though none of them approach the 10% ownership threshold.

According to Rheinmetall’s current information, the largest single investor is BlackRock, with a 7.0% stake. It is followed by Bank of America (4.64%), Morgan Stanley (4.37%), Goldman Sachs (4.06%), and the Swiss UBS Group (3.83%).

More importantly, Rheinmetall is actively seeking orders from the US armed forces, the world’s largest arms buyer, and is collaborating very closely with US companies, including Lockheed Martin.

On the other hand, Rheinmetall also produces weapon systems labeled as “ITAR-free.” These are systems manufactured without US components and are therefore not subject to the US International Traffic in Arms Regulations.

The SAR satellites produced by Iceye—and in the future, in collaboration with Rheinmetall—are “ITAR-free” and thus independent of US influence.

Europe

German officials urge fighter jet alliance with Sweden and Spain

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German Defence Ministry officials have advised Berlin to form a new fighter jet partnership with Sweden and Spain rather than join an existing UK-led consortium.

Internal ministry assessment notes obtained by Politico state that a trilateral arrangement among Germany, Sweden, and Spain represents a “more advantageous and promising” approach than joining the Global Combat Air Programme (GCAP) run by the UK, Italy, and Japan.

The proposal outlined in the document does not yet represent a final government decision, nor does it contain any indication that German Defence Minister Boris Pistorius has approved the recommendation.

The advice was drafted after Germany’s flagship project with France to build a next-generation fighter jet collapsed in June following years of industrial infighting.

Initiated in 2017 and later joined by Spain, the Future Combat Air System (FCAS) was conceived as a showcase initiative for European defence cooperation. The partnership aimed to develop an aircraft to replace Germany’s Eurofighter fleet starting in 2040.

However, the initiative foundered on disputes over operational control and workshare between France-based Dassault and Germany-based Airbus Defence and Space. Following unsuccessful rescue attempts at the political level, Berlin withdrew from the joint fighter project this year.

UK Prime Minister Andy Burnham raised the prospect of Germany joining GCAP during an 8 October meeting in Berlin with Friedrich Merz. The two leaders agreed that officials should continue discussions.

For Berlin, the choice carries implications that reach far beyond which model its air force will fly. The decision will determine who controls future military technology, which countries secure production contracts, and whether a new European partnership can avoid the frictions that dismantled FCAS.

Ministry assessment keeps distance from UK-partnered GCAP project

The ministry assessment listed several reservations regarding the GCAP project. The report argued that the existing programme focuses on operations beyond Germany’s capability requirements, whereas Berlin needs an aircraft better suited for missions over continental Europe.

The document also noted that German manufacturers would struggle to secure a significant share of development and production work within an already established partnership.

Invoking past experiences with the Eurofighter programme, which was developed in the 1990s and entered service in the early 2000s, the document took direct aim at British defence contractor BAE Systems.

The German Defence Ministry assessment accused BAE Systems of prioritizing exports over the development interests of Germany and Italy, warning that British dominance would prove incompatible with an equal partnership.

By contrast, the document stated that the military requirements of Germany, Sweden, and Spain align closely and that their starting positions are well balanced.

The assessment proposed an industrial partnership between aerospace giant Airbus and Sweden’s Saab, while recommending that the Saab-manufactured Gripen E fighter jet serve as a technological stepping stone until the new aircraft is developed.

The German Defence Ministry declined to comment on the matter. A separate ministry note, however, recorded British efforts to integrate Germany into GCAP as an observer or participant, asking German officials to examine potential industrial roles and military requirements.

An Airbus spokesperson said the company was “generally open to cooperation”, provided that German and Spanish industry secured a “substantial and equal role” across development, production, and operational phases.

“Purely political decisions without an industrial foundation remain insufficient,” the spokesperson said, urging authorities in Berlin and Madrid to clarify the path forward swiftly.

In an interview published in Handelsblatt on Monday, Airbus defence chief Michael Schollhorn pointed to ties with Saab, noting that the two companies have always worked well together.

A Saab spokesperson also indicated that the company is receptive to broad defence cooperation, including in fighter aircraft.

Emphasizing that large-scale collaborative projects are handled at the political level and that participation decisions rest with the respective governments, the spokesperson said: “All questions regarding potential Swedish participation should be directed to the Swedish government. Saab stands ready, as always, to support Sweden’s future fighter aircraft requirements.”

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EU reopens debate on naming envoy for Ukraine talks with Putin

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The European Union has returned to the idea of appointing an envoy to hold talks on Ukraine with Russian President Vladimir Putin.

According to sources familiar with the matter who spoke to Politico, this search gained fresh momentum following a visit to Russia by Steve Witkoff, the US special envoy.

During his trip, Witkoff proposed to Putin that Russia, the US, and Ukraine hold trilateral talks.

European countries, meanwhile, fear that Washington could accept terms unfavourable to Kyiv in negotiations that exclude them.

Sources speaking to Politico said the names being discussed for the envoy role include European Commission President Ursula von der Leyen, European Council President António Costa, and EU High Representative for Foreign Affairs and Security Policy Kaja Kallas.

Some European diplomats believe Finnish President Alexander Stubb may be the most suitable candidate for the post.

Stubb’s good relations with Trump and Finland’s experience in dealing with Russia are cited among the factors setting him apart.

An unnamed EU diplomat described Stubb as the only European politician so far to have demonstrated senior-level leadership.

Another group of diplomats argues that Costa should lead the talks. European leaders asked Costa during last week’s EU summit in Brussels whether the time had come to speak with Putin.

Politico’s source recounted that exchange: “Costa said no, saying he would not speak to Putin right now. But if we want to play a role in the negotiations, Costa still needs to initiate dialogue with Putin.”

According to an assessment by another source, the European Council president could serve as a more neutral mediator than von der Leyen or Kallas, who are seen as overly focused on supporting Ukraine.

“Three or four people cannot go there with each of us speaking on behalf of the European Union,” one of the sources told the publication. “Ultimately, the choice of who represents the EU must be based on maximum efficiency, not on a personal power struggle or someone’s narcissistic ambitions.”

Politico previously reported in January that the EU was considering appointing a special representative for Ukraine negotiations. At the time, the initiative drew support from several European leaders, including French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni.

Putin said he was ready to negotiate with European countries, but asserted that Europe had “no peace agenda” and stood “on the side of war”.

The Russian leader also named former German chancellor Gerhard Schröder as Moscow’s preferred negotiator from Europe.

Kallas ruled out such an appointment, noting that Schröder was “a lobbyist for Russian state companies” and would sit “on both sides of the negotiating table”.

Stubb details obstacles to talks and Oslo diplomatic drive

Finnish President Alexander Stubb said the principal obstacle to ending the war between Russia and Ukraine was the territorial issue.

Stubb took part in talks in Oslo with US envoy Steve Witkoff, who subsequently travelled to Saint Petersburg to meet Vladimir Putin.

As reported by the newspaper Helsingin Sanomat, Stubb stated that advancing the peace process required either bilateral talks between Russia and Ukraine or trilateral negotiations involving the US.

The Finnish president listed the other major items to be addressed within a settlement as US security guarantees for Ukraine and the construction of a new European security architecture after the war ends.

Without stating it outright, Stubb implied that the core issue within this framework was Ukraine’s NATO membership. The Finnish leader pointed to monitoring the ceasefire, establishing the line of contact, ensuring energy and food security, and exchanging prisoners as practical tasks.

Stubb also detailed the talks held in Oslo on 20 October, which included Witkoff, Ukrainian President Volodymyr Zelenskyy, and Norwegian Prime Minister Jonas Gahr Støre.

The discussions, which spanned approximately eight hours across various formats, had three objectives: to lower tensions in public discourse, to convey European and Ukrainian proposals to the US envoy before his visit to Russia, and to determine the next steps toward a peaceful settlement. Stubb announced that these goals had been achieved.

Moscow ready to resume trilateral talks in November

Witkoff met Putin in Saint Petersburg on Wednesday.

Following the meeting, Russian presidential aide Yuriy Ushakov announced that Moscow was prepared to resume trilateral negotiations with the US and Ukraine during the first half of November.

Ushakov also said that the EU and NATO had begun to “take a more serious approach” to Kremlin proposals on Ukraine, adding that “matters” were moving toward an end to the conflict.

Witkoff described the meeting as “constructive”.

Sources told Bloomberg in September that Putin continued to insist the Donetsk region must come fully under Russian control, expressing confidence that the territory would be captured within the next six months.

Putin previously set conditions for ending the war, demanding that Ukraine abandon plans to join NATO, maintain a neutral and non-nuclear status, and that anti-Russian sanctions be lifted.

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Trump midterms calculus halts Israeli strike plan against Iran

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A comprehensive military operation planned by the Israeli military for 10 October did not take place because US President Donald Trump chose to avoid a broad conflict before the 3 November congressional midterm elections.

Preparations had been made on the orders of Prime Minister Benjamin Netanyahu for an aerial bombardment meant to last several days, according to a report by the Financial Times citing sources familiar with the matter.

The list of targets included nuclear facilities and locations associated with the Iranian leadership, along with power stations and other civilian infrastructure sites.

The planned strikes were projected to exceed the joint operation launched by the US and Israel in February in terms of intensity.

White House Deputy Press Secretary Anna Kelly told the newspaper: “The United States is not going to strike Iran at any point before the midterms.”

Kelly argued that the administration in Tehran was in distress both economically and militarily, adding that the blockade imposed on Iranian ports and US efforts to secure oil shipments through the Strait of Hormuz were producing results.

Speaking to the newspaper, one source addressed the possibility of strikes resuming in the coming weeks, saying: “There’s either going to be a deal or a strike.”

The same source reported that Washington aims for a comprehensive settlement that resolves the conflict over both the Strait of Hormuz and the nuclear programme, although it remained unclear whether the US would have participated directly in the cancelled operation.

Another source said the preparations for the operation might have served as leverage to pressure Tehran in negotiations, adding that the final decision on any new military step rests with the US president.

Hegseth reviews updated target list in Israel

An Israeli official said US Secretary of War Pete Hegseth visited Israel on 19 October to meet with Netanyahu and senior representatives.

Another source stated that the Israeli side presented an updated target list to its American counterparts, compiled with fresh intelligence and incorporating civilian infrastructure sites that had not been struck earlier this year.

The Pentagon did not respond to questions regarding the meetings, while Netanyahu’s office and the Israeli military declined to comment.

Despite the postponement of the operation, Trump and Netanyahu continued to issue military warnings to Iran in public.

In a video released on 19 October, Netanyahu addressed Trump, saying: “Donald, you said we need to finish this, and we will finish it together.” Speaking on speakerphone, Trump responded: “You’re a great warrior, and we’re going to prove it very soon.”

These engagements between the leaders coincide with critical election cycles in both countries.

Parliamentary elections in Israel are scheduled for 27 October, one week before the vote in the US.

Most public opinion polls in the country show the opposition bloc holding a narrow lead over Netanyahu’s coalition, though neither side commands a clear majority.

Axios, a US-based news outlet, previously reported that the Pentagon instructed military planners to finalize strike plans against Iran, though the directive specified no date and Trump had not reached a final decision.

On 15 October, CNN reported on plans to use the GBU-43/B munition, known as the “mother of all bombs”, against Iranian nuclear facilities, with US officials who spoke to the broadcaster expressing scepticism about the weapon’s ability to destroy deep bunkers.

While Tehran announced that it remains open to a diplomatic solution, it declared that any potential operation would draw a fierce response.

Iranian Foreign Minister Abbas Araghchi stressed that if its adversaries chose military conflict, the response would be “much harsher than before”.

Following the joint operation launched by the US and Israel on 28 February, Iran retaliated by striking targets across the region and restricting maritime passage through the Strait of Hormuz.

Although the parties reached an agreement in June covering a ceasefire and negotiations to lift the blockade in the strait, reciprocal strikes between the US and Iran have not ceased.

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