Rheinmetall's Unmanned Pivot Collides With a Raw-Materials Reality Check

Rheinmetall's unmanned vehicle push boosts battery demand, with graphite as key bottleneck. Record €80.5B backlog and new contracts signal growth.

The defence giant's push into robotic warfare is quietly reshaping its supply-chain priorities. Rheinmetall has taken a 51 percent controlling stake in DOK-ING, a move that formally took effect in July when the business was rebranded as Rheinmetall Unmanned Vehicles. At the heart of the new unit sits the Komodo platform, an unmanned vehicle capable of hauling payloads exceeding 8.5 tonnes, earmarked for autonomous convoy operations under the Bundeswehr's InterRoC VII programme.

That strategic shift carries a less visible consequence: a growing appetite for battery chemistry rather than just steel and explosives. Defence-related battery demand reached 4.34 gigawatt-hours in 2025, with roughly 40 percent of that volume consumed by drones. Graphite has emerged as the critical bottleneck, and early evidence of the scramble is showing up in Quebec, where Focus Graphite kicked off a pilot programme at Lac Knife in late July. Eight tonnes of ore with an 18.9 percent carbon content yielded 850 kilograms of concentrate at 95 to 98.7 percent purity.

The timing is no accident. A US presidential directive issued at the end of July now requires supply chains to run through America or allied nations, adding regulatory weight to what was already becoming a commercial imperative. Analyst Maximilian Berger has described raw materials as the "overlooked lever" in the robotics-driven rearmament cycle, a point that will resonate more loudly once Komodo and comparable systems move into serial production.

Meanwhile, the order book continues to swell through more conventional channels. Rheinmetall has secured a contract from the Danish armed forces for its MASS ship-protection system, covering Absalon- and Iver Huitfeldt-class frigates plus the Royal Danish Navy's weapons school. Deliveries are scheduled to begin in the fourth quarter of 2027, with the order booked in Q2 2026. The soft-kill decoy launcher has clearly outgrown its niche status: more than 400 units are deployed worldwide, shielding vessels across 18 navies.

The Danish deal follows hot on the heels of a Bundeswehr supplementary order for mobile field hospitals worth over EUR 500 million gross, expanding an earlier purchase by 149 units to 165 systems in total. That brings the cumulative value of these medical facilities past EUR 600 million gross, with production slated to start in Q1 2027. Individually, such contracts may look modest against the group's mega-programmes, but collectively they have propelled the backlog to a record EUR 80.5 billion at the end of Q2. Management is targeting EUR 100 to 120 billion by year-end 2026, a goal that looks increasingly credible given the current order velocity.

The real test arrives this winter. The Bundestag is scheduled to debate the Arminius Boxer mega-order on 9 December, a fixed-order volume of roughly EUR 25 billion, of which Rheinmetall's share would be approximately EUR 12.4 billion. Contract signing is expected days later, with final negotiations set for the second week of September. A potential service agreement for Boxer fleet maintenance, worth around EUR 2 billion to Rheinmetall, could follow in January 2027.

Across the Atlantic, a memorandum of understanding with Lockheed Martin signed in July paves the way for joint ATACMS production at Unterluess. Production ramp-up is planned for 2027, though first revenues are not expected until 2028. CEO Armin Papperger has moved to temper expectations, noting that replenishing US stockpiles cannot be accomplished within two years.

The share price tells a story of recovery rather than celebration. The stock traded at EUR 1,211.80 on Tuesday, roughly 10 percent above its 50-day moving average, with a 3.1 percent weekly gain and a 23 percent monthly advance. That marks a rebound from the sharp sell-off triggered by August's guidance cut following the cancellation of the F126 frigate programme. Yet the equity still sits about 40 percent below its 52-week high of EUR 2,007, and year-to-date losses stand at 22 percent. Wednesday's session saw the shares ease to EUR 1,206.80.

The Danish and Bundeswehr contracts will do little to move that overall picture, but they send a useful signal: operational new business keeps flowing despite setbacks on flagship programmes, underpinning the backlog just as investors turn their attention to the billion-euro decisions looming in December.