Rheinmetall Secures €8.2bn Italian Tank Deal and Eyes Japan Production as Stock Struggles to Recover

Rheinmetall's €8.2bn Italian tank deal, Japan expansion, and AI ethics push fail to lift stock, still 40% below record high.

Rheinmetall is pursuing a bold expansion strategy on two continents while simultaneously trying to burnish its ethical credentials in artificial intelligence — yet none of that has been enough to lift its shares from a prolonged slump. The defence group used the Eurosatory exhibition in Paris this week to announce a new battle tank for Italy through its joint venture with Leonardo, and separately revealed plans to open production facilities in Japan. But with the stock still trading nearly 40% below its record high, investors are demanding more than just ambition.

The most concrete move came from the LRMV joint venture, equally owned by Rheinmetall and Italy’s Leonardo. The partnership unveiled the NMBT, a main battle tank customised for the Italian army and based on Rheinmetall’s KF51 Panther design. The programme covers roughly 132 tanks plus support vehicles, with a total contract value of around €8.2bn stretching to 2038. The NMBT is armed with a 120mm cannon — with an optional 130mm upgrade — and features an active protection system along with an integrated drone operator station. It can reach 70 km/h and has a range of 450 kilometres.

The Italian deal takes on added significance because the Franco-German MGCS tank project remains stalled over a dispute between Paris and Berlin on main gun calibre — France wants 140mm, Germany prefers 130mm. That deadlock opens the door for countries such as Italy or Hungary to opt for the KF51 Panther as a ready-made alternative, giving Rheinmetall a potential competitive edge in the European market.

On the other side of the world, Rheinmetall is pushing into Asia. According to Japan’s Nikkei newspaper, CEO Armin Papperger plans to set up defence production in Japan through a joint venture with a local partner. The move would transform the group’s profile in the country from a supplier of automotive components into a full-fledged defence player. The entire region is ramping up military spending due to geopolitical tensions, and Rheinmetall hopes the Japanese base will also open export opportunities in the wider Asia-Pacific market.

Papperger has also been using the Eurosatory stage to advocate for global rules on autonomous weapons. He called for a UN resolution or an ethics council — what he termed a “human-in-the-loop” principle — arguing that humans must retain the final decision on lethal force. He compared the urgency of AI regulation to international nuclear weapons treaties. While Rheinmetall itself develops autonomous systems, the company insists all its own designs adhere to that principle. The ethical positioning is not just philosophical: sustainability criteria are increasingly important for institutional investors in the defence sector, and an early adoption of standards could secure long-term access to capital.

Yet for all the strategic headlines, the share price tells a more sobering story. Rheinmetall’s stock closed on Friday at €1,200.20, up 2.16% for the session but still down roughly 40% from the all-time high of €1,995.00 set in September 2025. The year-to-date decline stands at 25%. The relative strength index sits at 46.8, indicating neutral territory with no clear buying pressure. Technically, the 52-week low of €1,099.80 offers the nearest support level, while the 50-day moving average is about 6% above the current price. The critical long-term trendline at €1,584.94 remains a distant target. Analysts at Berenberg remain optimistic, however, maintaining a price target of €1,750.

For now, the market is waiting on concrete deliverables. With the second-quarter earnings report due in the summer, Rheinmetall will need to convert its Italian tank order into firm contracts, provide details on its Japanese venture, and continue to land new business from the Ukraine-related demand. Only hard, signed agreements can arrest the downward trend that has dogged the stock for the past twelve months.