C1 Ariete Replacement [Italy]
Last reviewed: 16th October 2024
Snapshot
Following nearly 20 years of service within the Italian Army, the C1 Ariete MBT is due for an upgrade or replacement. Suffering from poor serviceability due to a lack of spare parts and breakdowns, the Italian Army began an almost $1 billion upgrade programme for 125 of its C1 Ariete inventory in Summer 2022.
In its 2019 annual report, the Italian Army stated that it would seek to develop a replacement platform through international cooperation. This could be achieved by joining the Franco-German Main Ground Combat System (MGCS) programme or forming alternative partnerships with other countries.
However, reports emerged in March 2023 that Italy is now considering the purchase of up to 250 Leopard 2A8 vehicles for an estimated €8 billion ($8.6 billion). Prompted by the 2022 Russian invasion of Ukraine, the Italian Government confirmed it was finalising a $4.48 billion deal for 125 Leopard 2A8s in June 2023. Requiring approval from the Italian parliament, final confirmation is expected in the upcoming multi-annual defence programming document before a production contract is signed in early 2024.
On 11 June 2024, KNDS and Leonardo announced in separate press releases that they had ended negotiations on forming a partnership for the Italian procurement and domestic production of the Leopard 2A8 main battle tank (MBT) and a new infantry fighting vehicle (IFV).
According to an MoU announced between the German Rheinmetall and Italian Leonardo on 3 July 2024, the Lynx KF51 is the expected platform for the C1 Ariete replacement programme as part of a "double ticket" order with the KF41 Panther chosen for Italy's AISC IFV programme. Whilst not a contract award, the MoU marks a significant step in the programme's future.
Leonardo and Rheinmetall announced a Joint Venture in October 2024, confirming plans for 132 KF51 Panther-derived MBTs for the Italian Army at a cost of $8.7 billion between 2026 and 2035.
Formally known as Ariete C1 MBT Replacement (Italy), this programme had been renamed Leopard 2A8IT (Italy) and subsequently, in light of the KNDS negotiations breakdown, C1 Ariete Replacement [Italy] for brevity.
Summary
- Programme value:
- $8.7 billion (Actual)
- Units required:
- 132 (Actual)
- Award year:
- 2025
- Status:
- Selected
- Type:
- Procurement - new
- Systems:
-
KF51 Panther - Successful
Leopard 2A7/A8 - Unsuccessful
Panther EVO - Unsuccessful
- Unit cost:
- $12.0 million (Modelled)
- PGO:
- 95% ?
Summary
- Programme value:
- $8.7 billion (Actual)
- Units required:
- 132 (Actual)
- Award year:
- 2025
- Status:
- Selected
- Type:
- Procurement - new
- Systems:
-
KF51 Panther - Successful
Leopard 2A7/A8 - Unsuccessful
Panther EVO - Unsuccessful
- Unit cost:
- $12.0 million (Modelled)
- PGO:
- 95% ?
Bids and suppliers
KNDS - Leopard 2A7/A8 - NETHERLANDS
Unsuccessful
Rheinmetall - KF51 Panther - GERMANY
Successful
Rheinmetall - Panther EVO - GERMANY
Unsuccessful
Additional Information
Programme Background
Requirement
To bridge the gap between the retirement of the Ariete and the introduction of a new MBT, the Italian Army has contracted the CIO consortium to develop a mid-life upgrade for part of the Ariete fleet, which originally numbered 200 MBTs. Three prototypes are to be delivered by 2022, followed by an additional 125 examples by 2027 if tests are successful.
Following the completion of these tests, a €980 million upgrade programme for 125 of its C1 Ariete inventory was launched in Summer 2022 by the Italian Army.
Once this upgrade programme is nearing completion, the Italian Army is expected to commence work on developing a next-generation MBT to eventually replace the Ariete. It is unclear precisely when this programme will be started, but the Italian Army's 2017 annual report suggested a programme start date of 2031, while the 2018 edition of the report suggested that the platform will enter service in 2035.
Since the programme has yet to get off the ground, the technical requirements for the platform have yet to be outlined.
However, it is known that the Italian Army will seek to partner with other militaries to develop the platform through an international programme. Currently, the only European programme to develop a new MBT that has been announced is the Franco-German MGCS programme which aims to introduce a new MBT into service by 2035.
In June 2020, the Italian Undersecretary for Defence confirmed that Italy had entered into talks to potentially join the MGCS programme. However, the Undersecretary also stated that in case negotiations to join this programme fail, Italy will consider alternative partners. This could include other European countries seeking a new MBT or partners outside of Europe. Israel could be considered for the latter option, as the Italian Army has published a document calling for greater cooperation between the two countries in the development of armoured vehicles, particularly MBTs.
Whether Italy opts to join the MGCS programme is likely to depend on the degree of local industrial participation that will be offered to the Italian industry.
In addition to how the Italian Army intends to procure its new MBT, it is also unclear how many new MBTs it will require and how much funding it will allocate to the programme.
Leopard 2A8
In what appears to be a potential policy-making U-turn to the tune of €8 billion, Italy was reported in March 2023 as being poised to buy between 125 and 250 Leopard 2A8 Main Battle Tanks to replace its 200 ageing C1 Arietes.
Acting as a direct response to Russia's invasion of Ukraine in February 2022, Italy's decision would serve as a stopgap between its C1 Ariete fleet and the future MGCS platform.
Announced in December 2023, Italy's Leonardo signed an agreement with German manufacturer KNDS under which Italy will develop and produce a specific version of the Leopard 2A8 tank, marking a significant milestone in the development of the programme and platform.
Initial Outcome
Announced in July 2023, Italy intended to purchase 125 Leopard 2A8 MBTs and upgrade 125 of its existing Ariete C1s for an estimated $4.8 billion - $6.7 billion.
KNDS Negotiations Breakdown
On 11 June 2024, KNDS and Leonardo announced in separate press releases on 11 June that they had ended negotiations on forming a partnership for the Italian procurement and domestic production of the Leopard 2A8 main battle tank (MBT) and a new infantry fighting vehicle (IFV).
Whilst not explicitly expected to be the manufacturer for the A2CS program, reports had suggested Italy was seeking a 'double ticket' with a singular wider European OEM for the two programs to work in conjunction with CIO/Leonardo.
Given the breakdown in negotiations between KNDS and Leonardo regarding the Leopard 2A8, the likely alternative for the Italian MBT programme is the KF51 Panther from Rheinmetall, placing the German company in a good position to offer a Panther/KF41 Lynx IFV 'double ticket'.
Rheinmetall MoU
As predicted by Shephard, Rheinmetall appears to have become the expected manufacturer for both the MBT programme and Italy's AICS IFV programme.
In a 3 July 2024 MoU, Leonardo and Rheinmetall announced that "In particular, the future joint venture - headquartered in Italy - will be the Lead System Integrator, primecontractor and system integrator, in both the Italian programs (MBT and AICS) and will define the roadmap for the participation in the future European Main Ground Combat System (MGCS)."
Whilst not a contract award, the MoU marks a significant step in the programme's future, with the KF51, in some form, as the expected platform.
The largest remaining question is which Panther variant Italy intends to purchase. The Italian government now has the option to choose between the original 130mm KF51, an unmanned turreted version in the KF51U revealed at Erusoatory 2024, or the Hungarian-funded-developing Panther EVO, a lighter, likely cheaper, version featuring a 120mm cannon similar to the Leopard 2A8 considered initially for this programme.
Rheinmetall - Leonardo Joint Venture
In October 2024, Rheinmetall and Leonardo announced their intent to deliver a new infantry fighting vehicle to the Italian army within two years and a new main battle tank within three years. Forming a 50 - 50 Joint Venture known as Leonardo Rheinmetall Military Vehicles (LRMV) headquartered in La Spezia, production is expected to be collocated.
This included the confirmation of a planned 132 KF51 Panther-derived tank in an $8.72 billion programme due to run through 2035. The first delivery is expected within two and a half to three years from October 2024.
Forecast Methodology
The forecast of this programme entry refers to the acquisition of an MBT similar to Leopard 2, not the MGCS.
Units Required
The October 2024 announcement confirmed a total of 132 KF51 Panther tanks. Shephard predicts that 7 of these will be for training, recovery, and testing, leaving the previously expected 125 MBTs.
Unit Cost
Based on figures from the recent Norway and Hungary Leopard 2A8 programmes, the KF51 platform is estimated to have a unit cost of between $10 million - $14 million per vehicle.
Programme Value
The emerging July 2023 reports suggested a total programme value of €4 billion ($4.8 billion).
Even if Italy was to purchase 125 KF51s for the top-end figure of $14 million per platform, this leaves approximately 60% of the programme value as support costs.
The October 2024 Joint Venture announcement significantly increased the programme value, up to $8.7 billion.
PGO
Defence Insight estimates a PGO of 95%, increasing from 60% awarded in light of the stalling in negotiations between KNDS and Leonardo.
Whilst the KF51 Panther from Rheinmetall may appear as an alternative, it is an untested platform that has yet to receive any orders ahead of Eurosatory 2024 and negotiations between Rheinmetall and any Italian manufacturers will likely result in a significant delay to the expected 2024 contract award date.
Due to the October 2024 JV announcement, Shephard, now estimates a PGO of 95%, with the programme now through all rounds of negotiation and political process and just awaiting a final official contract to be signed.
Shephard notes that ahead of the July 2023 announcement, Defence Insight had already forecast that due to the larger political and financial climate, a pared-down programme for 125 Leopard 2A8s was more likely than a complete replacement of the Ariete; instead, suggesting the alternative that appears to be actioned.
Programme Timeline
A production contract could be awarded as soon as Q4 2024 but is expected in early 2025.
Delivery is expected to begin in 2027/2028, with final delivery of the 132 vehicles predicted for 2035.
Programme Years
The programme value has been pro-rated across the projected delivery period in line with the number of MBTs procured each year, beginning in 2027 and finishing in 2035.
Unit delivery has been modelled to increase slowly before reaching full-rate production in 2030.
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