These decisions have raised concerns among some analysts and new market entrants.
After many years of failing to meet NATO spending targets, Berlin has allocated hundreds of billions of euros for rearmament following Russia's full-scale invasion of Ukraine in 2022.
However, much of the funding has been spent on expensive items, including 35 American F-35 fighter jets, Eurofighter Typhoon jets, Chinook helicopters, as well as new military ships and submarines. Orders for thousands of tanks and armored vehicles are also being prepared.
These decisions have raised concerns among some analysts and new market entrants that Germany is investing too much in conventional weapons, such as tanks—primarily in the interests of established arms manufacturers—rather than in artificial intelligence-driven drones. This was reported by the Financial Times.
Acknowledging the ongoing debate, Defense Minister Boris Pistorius stated that the largest EU country will "invest more and more in innovation, more investment in new technologies, more cooperation with startups, and more collaboration between startups and the Bundeswehr."
He said, "If anyone had told us five years ago that drones would play such an important and decisive role, no one would have believed it or could have imagined it."
What Experts Are Saying
The head of the German army, Christian Freuding, stated that soldiers still need "traditional systems, such as battle tanks and howitzers." But he added that the military must also "support our innovative spirit" and think outside the box.
Florian Seibel, co-founder of the German drone manufacturer for surveillance, Quantum Systems, highlighted the company Rheinmetall, warning that Berlin is not allocating enough funds for autonomous systems and artificial intelligence.
"Spending 500 billion euros just from Germany, of which 495 billion euros will go to Rheinmetall and similar companies, is not what we need... There is enough money, but we are not spending it wisely. We are going to spend hundreds of billions on equipment that will gather dust in junkyards. And my children and grandchildren will still have to work to pay off debts to the banks," he said.
Although Quantum is one of several startups that have received contracts to supply drones to the Bundeswehr in recent months, these amounts represent only a small fraction of the country's total spending, whose overall defense budget this year is 118 billion euros.
Moritz Schularick, head of the Kiel Institute for the World Economy, estimates that "95 or 98 percent" of German defense spending since 2022 has been directed towards "traditional procurement of outdated systems."
He warned that the current approach does not prepare Europe to confront Russian aggression and also misses out on broader economic benefits from supporting flexible and innovative young companies.
"We need to reserve a much larger share for the procurement of innovations, understanding that some of these projects will not work. You identify the problem and allow the private sector to find a way to solve it, instead of dragging out bureaucratic processes that impose a top-down solution and dictate how it should be solved," Schularick added.
