Systemic and Industrial Deficiencies in the European Armoured Vehicle Sector
Executive Summary
This analysis examines the structural deficiencies undermining Europe's ability to scale and modernise its armoured vehicle sector, at a time when geopolitical pressures and battlefield lessons from Ukraine demand urgent rearmament. Despite the growing demand for tanks and armoured fighting vehicles (AFVs), Europe faces significant barriers: a fragmented industrial landscape with redundant platforms and non-standardised systems; critical dependence on non-EU suppliers for engines, sensors, and protection systems; and limited surge manufacturing capacity due to underinvestment and regulatory constraints. The current EU funding mechanisms (EDF, EDIRPA, ASAP) remain insufficiently coordinated and too slow to deliver the necessary industrial transformation.
For investors and defence-focused funds, this scenario presents both a challenge and a structural opportunity. As member states shift from legacy procurement models to joint European platforms, and as Brussels streamlines regulatory frameworks, there is growing space for capital to support consolidation, dual-use innovation, and next-generation supply chains. Firms positioned in propulsion systems, AI-enabled mission electronics, active protection technologies, and modular vehicle architectures are likely to capture increasing investment flows. Europe’s rearmament is not just a policy imperative but a long-term industrial realignment with strategic value creation potential.