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Two start-ups backed by tech billionaires Daniel Ek and Peter Thiel have won contracts worth as much as €4.3bn in total to supply kamikaze drones to Germany’s military, in its first major foray into unmanned weapons.
Munich-based Helsing was selected to supply drones to the Bundeswehr, the German armed forces, in an initial deal worth an initial €269mn, according to procurement documents submitted to Germany’s budget committee and seen by the FT.
The contract contains the option of buying more HX-2 drones from the company, which is backed by Spotify’s Swedish founder Ek, with a total contract value of up to €1.46bn in the future.
For Berlin-based Stark, backed by US entrepreneur Thiel, the deal is worth €269mn initially and potentially rising to €2.86bn. It was not clear why the Stark contract, for its Virtus drone, had a larger potential value.
The number of drones to be delivered by each company is redacted from the files. News of the contracts was first reported by Der Spiegel.
The award comes despite glitches for Stark, which failed to hit a single target during two separate tests with the UK and German armies — a setback that the company insisted was an integral part of trialling and developing new technology.
Helsing has also faced criticism of the performance of its drones in Ukraine, with Politico reporting last month that the company hit its target just five times out of 14 in field deployments in the Donbas region, citing an internal German defence ministry report.
Helsing said it was proud of its performance in real combat conditions, hitting a Russian tank, logistics truck and two howitzers, despite electronic warfare aimed at disrupting Ukrainian forces. It said the HX-2 had been approved for frontline use by the Ukrainian army.
The head of the German armed forces, Carsten Breuer, said during a visit to trials in December that he was satisfied with the performance of the drones.
Berlin has pushed ahead with a rapid procurement as it races to equip its flagship new brigade in Lithuania with the latest military technology in a bid to deter Russia.
Both of the two kamikaze drone contracts contain an “innovation clause” that requires the companies to offer the latest technology to the Bundeswehr.
That reflects desire among procurement officials to keep up with rapid changes in the development of drone technology, as illustrated by the pace of innovation seen on the battlefield in Ukraine.
The deals strike a blow to the German arms giant Rheinmetall, which had been in the running for a contract and expected to secure a €300mn deal.
But the Düsseldorf-based tank and artillery maker was left out of the procurement after delays to the development of its in-house armed drone, the FV-014, also known as Raider, according to two people familiar with the matter.
It was still possible that Rheinmetall would be awarded its own contract later this year as long as the performance of its armed drones proved satisfactory in tests, the people said.
The company was expected to demonstrate its technology to the Bundeswehr in the coming weeks, one of the people added.
The Stark and Helsing contracts must still be signed off by members of the Bundestag, who have the power to approve or block all significant government spending on weapons, and are due to make a decision in coming weeks.
The German defence procurement agency and defence ministry did not immediately respond to requests for comment.
