Leonardo and KNDS pull plug on main battle tank and IFV cooperation

BELFAST — Italy’s Leonardo and the Franco-German KNDS walked away from negotiations today to close on a partnership based around joint development and production of the Leopard 2A8 main battle tank (MBT) after failing to agree on a configuration.

In a surprise announcement, KNDS said the company “is no longer in talks with Leonardo S.p.A. regarding a potential partnership,” relating to the latest version of the platform and an Italian requirement for new Infantry Fighting Vehicles (IFV).

“The parties did not manage to agree on [Leopard] configuration and consequently, talks about Leonardo’s strategic participation in KNDS have also fallen short,” Frank Haun, CEO of KNDS NV, said in a company statement.

KNDS is a joint venture between Krauss-Maffei Wegmann and Nexter. Talks between the company and Leonardo had originally opened in December 2023 after the European manufacturers signed an agreement to develop  “more intensive cooperation” converging around the stated aim of establishing “a truly European Defense Group.”

At the time, the commitment by the two parties also covered cooperation on the future Franco-German Main Ground Combat System (MGCS), suggesting the addition of Italy was on the way. It remains unclear if the decision to end cooperation with KNDS will prevent Leonardo from becoming an industrial partner in the multinational effort.

In April, KNDS Deutschland, KNDS France, Rheinmetall Landsysteme and Thales announced plans to develop a four-party MGCS joint venture days after French and German officials signed the “phase 1a” agreement, kickstarting development of the next generation tank.

Italy plans on acquiring 132 Leopard 2A8IT combat capable tanks and up to an additional 140 support vehicles as part of a two phase program, valued at an estimated cost of €8.2 billion ($8.8 billion) and set to run until 2037, according to translated Italian parliamentary documents. Rome has committed to a first phase between 2024 and 2026, covering development and pre-series production of the new vehicles, with the second phase, out to 2037, covering acquisition of production standard platforms.

The decision to invest in the new vehicles and gradually phase out C1 Ariete tanks, demonstrated Italy’s resolve to modernize its land forces amid Russia’s war in Ukraine, while appearing to turn the tide on years of financial uncertainty.

“Although the [Leopard 2A8] program concerns the acquisition of existing and identified means of German production, the board notes that its implementation would have a positive impact on Italian SMEs, creating … growth of technology and know-how and the achievement of greater competitiveness,” state the parliamentary documents.

Various reports previously indicated that Leonardo’s La Spezia facility would produce the Leopard tanks, but that appears to be in doubt, without a firm partnership with KNDS.

“With reference to the press release issued on 13 December 2023, Leonardo announces, despite the efforts undertaken, the interruption of the negotiations with KNDS to define a common configuration for the Main Battle Tank program of the Italian Army and to develop a broader cooperation,” said a Leonardo spokesperson.

“Leonardo confirms its commitment to provide the Italian Army with a performant, interoperable and up to date solution, satisfying the present requirements and remaining well positioned for future developments toward Main Ground Combat System, also through cooperation with other qualified international Partners.”

KNDS and Leonardo are also partners on a development program centered around delivery of a new gun pod for the M-346 Fighter Attack (FA) aircraft, first announced in June 2023.

KNDS said in April that the “main drivers” supporting an order intake for the 2023 financial year of €7.8 billion ($8.3 billion) were the “Leopard 2A8 programs, additional orders for infantry fighting vehicles, orders for artillery systems CAESAR and a growing need for ammunition of all calibers.”

The Leopard 2A8 includes integration of Rheinmetall’s 120 mm/L55 smoothbore gun, capable of firing several munitions, including sub-calibre armor piercing kinetic energy projectiles and programmable High Explosive projectiles.

The ammunition allows the tank to fight at longer range than older Leopard 2 platforms and enables strikes of IFV and second generation MBTs at up to 3,000 meters and third generation MBTs up to 2,000 meters, according to KNDS company literature [PDF].

The 2A8 also carries a 7.62 mm coaxial machine gun and its turret can be fitted with a remote control weapons system. KNDS also notes that the day and night capabilities linked to the remote control station act as an additional “observation option” for increased situational awareness. Defensive capabilities are underpinned by integration of the Trophy Active Protection System.

Separately, Norway announced today that KNDS Deutschland and local supplier RITEK have signed an agreement for 37 of 54 Leopard 2A8 tanks on order to be manufactured at RITEK’s Levanger production site.

Besides the Oslo order, Germany has committed to acquire up to 123 of the new tanks based on a framework agreement between KNDS and Federal Acquisition Office of the German Armed Forces (BAAINBw) signed in May 2023.