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Germany’s largest defence company Rheinmetall has signed a €1.9bn deal to supply up to 3,058 assault vehicles to Germany and the Netherlands, the latest significant order designed to boost European military capabilities following Russia’s invasion of Ukraine.
The Düsseldorf-based contractor said on Monday that the first test models of the Caracal — a vehicle that is light enough to be airlifted and uses the chassis of a Mercedes-Benz G-class four-wheel drive — were planned for early 2024.
Rheinmetall first unveiled the vehicle last year, calling it its “answer to the upcoming requirements for airborne vehicles in Germany and various armies worldwide”.
The money from the German side comes from the country’s €100bn special military fund set up by German chancellor Olaf Scholz last year, shortly after Vladimir Putin launched his army against Kyiv.
Rheinmetall has been one of the main beneficiaries of what Scholz has called “Zeitenwende” — or turning point — on which Europe’s largest economy has embarked since the war in Ukraine. Berlin is to use the €100bn fund to revamp the Bundeswehr, after decades of pacifist policies and intentional military under-investment in the wake of the country’s role in the second world war.
Two weeks ago, the company announced an order of 367 military trucks from the Bundeswehr worth €285mn and in May it received “a low double-digit million euro” figure from the German government to supply Ukraine with an additional 20 Marder infantry fighting vehicles.
The company’s share price, which was up more than 2 per cent on Monday, has jumped by nearly a third in the past year.
In a sign of greater military collaboration between Nato allies, the company announced last week it would build a new plant in Germany to start making parts of the main body of Lockheed Martin’s F-35A Lightning II fighter jet. Rheinmetall called it a “lighthouse project in German-American armaments co-operation”.
Several of Europe’s largest defence contractors, including Rheinmetall, have been calling for more collaboration within the industry as well as on the procurement side to better supply Ukraine and avert production bottlenecks.
Rheinmetall said on Monday the Caracal order took place against a backdrop of a “tense security situation [with] urgently needed capacities” for Germany and its allies. It intended to sell the Caracal to “numerous international users in the future”.
The company added that “due to the close military co-operation between the German and Dutch armed forces and a comparable situation in both countries” the project had been a bilateral procurement process from the start.