Germany’s TKMS advances $12 billion bid to supply 12 Type 212CD patrol submarines to Canada.

ThyssenKrupp Marine Systems has advanced a bid valued at approximately $12 billion to supply up to 12 Type 212CD patrol submarines to Canada, as part of the Canadian Patrol Submarine Project, for which the final decision is expected in 2026.

As reported by Reuters on January 21, 2026, ThyssenKrupp Marine Systems formally advanced an investment-linked proposal for Canada’s Canadian Patrol Submarine Project. The approach combines submarine procurement with long-term industrial commitments intended to meet Canada’s offset and domestic economic requirements. A final government decision on the program is expected in 2026.
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The German effort is centered on negotiations with industrial partners in Germany and Norway, as the Type 212CD is a joint project between the two countries, to assemble a multi-billion-dollar investment package directly linked to the submarine tender. (Picture source: TKMS)

Germany’s ThyssenKrupp Marine Systems formally advanced a detailed investment-led strategy to secure Canada’s future submarine procurement, a program expected to conclude with a government decision in 2026. The move directly targets the Canadian Patrol Submarine Project, which foresees the acquisition of up to 12 new conventionally powered submarines to replace the Royal Canadian Navy’s Victoria-class fleet during the 2030s. The submarine order alone is assessed at more than €10 billion, or about $12 billion, placing it among the largest defense procurements in Canadian history. TKMS presented its approach as a combined defense and economic proposal, structured to meet Canada’s requirement that major military acquisitions generate long-term domestic industrial benefits. The initiative reflects Ottawa’s stated objective of maximizing Canadian economic return from defense spending rather than focusing solely on equipment delivery. The German bid therefore positions the submarine choice as a multi-decade strategic and industrial decision.

Canada’s acquisition effort is conducted under the Canadian Patrol Submarine Project (CPSP), formally launched in 2021 to replace the Royal Canadian Navy’s four Victoria-class submarines, which are expected to reach the end of their service lives in the mid-to-late 2030s. The program aims to procure up to 12 new conventionally powered submarines capable of sustained operations in the Atlantic, Pacific, and Arctic, reflecting Canada’s three-ocean operational requirement and its need for persistent undersea presence. In August 2025, Canada narrowed the competition to two bidders, Germany’s ThyssenKrupp Marine Systems and South Korea’s Hanwha Ocean, with a final government decision expected in 2026. Ottawa has stated that the first new submarine, along with associated training and maintenance infrastructure, must be delivered by 2035 to avoid a capability gap.

Canada has repeatedly stated that the submarine purchase must deliver clear and measurable economic benefits to Canada. Therefore, industrial requirements include long-term sustainment in Canada, mandatory offset obligations spread over roughly 30 years, and commitments designed to generate measurable domestic economic activity across the life of the fleet. These industrial obligations, treated as core requirements alongside the submarine's performances, expanded to include expectations linked to the automotive sector, turning the bid into a wider industrial negotiation involving car manufacturers. Canada has signaled to both bidding countries that large-scale industrial commitments in the auto industry would be viewed as part of the overall economic value of the submarine offers, in line with its Industrial and Technological Benefits policy. On the German side, this has brought indirect attention to Volkswagen, which already has an established presence in Canada and is building an electric vehicle battery plant in St. Thomas, Ontario, through its PowerCo subsidiary.

The German effort is centered on negotiations with industrial partners in Germany and Norway to assemble a multi-billion-dollar investment package directly linked to the submarine tender. These talks are intended to demonstrate that the bid can deliver sustained economic activity in Canada alongside the naval capability itself. According to TKMS leadership, the investment package is not an ancillary element but an integrated part of the overall proposal submitted to Ottawa. The approach aligns with Canada’s procurement framework, which evaluates industrial participation and domestic value creation as core criteria. By broadening the bid beyond ship construction, TKMS aims to address political, economic, and regional considerations attached to the submarine program. This structure reflects the scale of the acquisition and its expected impact over several decades.

The proposed investment package extends into sectors identified by Canada as strategically significant, including rare earths, mining, artificial intelligence, and battery production for the automotive sector. These areas are linked to supply chain security, industrial resilience, and advanced manufacturing capacity within Canada. TKMS chief executive Oliver Burkhard confirmed that the company is in discussion with Isar Aerospace as part of this initiative, while other potential partners were not publicly named. The total value of the broader package could exceed the submarine contract itself, depending on the scale of commitments made by participating companies. This structure is intended to differentiate the German bid in a competition where industrial benefits carry significant weight. The investment elements are designed to run in parallel with the naval program rather than being limited to initial construction phases.

To convert these discussions into binding commitments, TKMS has been engaging potential partners on foreseeable investment decisions in Canada that could be incorporated into offset obligations. These offset obligations are mandatory financial commitments typically structured over a 30-year period, ensuring long-term domestic economic impact. The framework allows investments to be phased across decades, supporting sustained activity rather than short-term industrial work. Burkhard stated that between 30 and 40 TKMS staff are currently dedicated to developing and coordinating the offset and investment package. This allocation highlights the scale of internal resources assigned specifically to the Canadian competition. The offset structure is designed to include defense-related activity while extending into civilian and dual-use sectors.

For the naval component of its offer, TKMS is proposing the Type 212CD, a conventionally powered attack submarine jointly developed by Germany and Norway. The Type 212CD was formally contracted on July 8, 2021, with a total value of about €5.5 billion for development and procurement for both navies, and construction of the first boats began in September 2023 at TKMS facilities in Kiel and Wismar. The Type 212CD has a surfaced displacement of 2,500 tonnes and a submerged displacement of 2,800 tonnes, with a length of 73 meters and a beam of 10 meters. It uses diesel engines combined with lithium-ion batteries and a new-generation air-independent propulsion (AIP) system based on PEM fuel cells, allowing extended submerged endurance of up to 41 days. The design incorporates a low-observable hull shape optimized for reduced acoustic and sensor signatures, as well as a combat system developed by the kta naval systems consortium involving TKMS, Atlas Elektronik, and Kongsberg. Armament is based on six 533 mm torpedo tubes with capacity for heavyweight torpedoes, missiles, and unmanned underwater vehicles, depending on customer configuration.

Competing with the German-Norwegian proposal is South Korea’s Hanwha Ocean, which was shortlisted alongside TKMS in August 2025. Hanwha Ocean has structured its KSS-III submarine bid around an extensive industrial engagement and localized execution in Canada, establishing a Canadian subsidiary, Hanwha Defence Canada, in Ottawa to support its campaign for the up-to-12 submarine program valued at roughly $43 billion. On January 21, 2026, Hanwha Ocean appointed Glenn Copeland, a former Royal Canadian Navy officer who served 22 years and later worked on the Halifax-class frigate modernization program, as managing director and chief executive officer of its Canadian unit to intensify engagement with Ottawa and provincial partners.

Hanwha Ocean has also teamed with UK's Babcock to propose a trilateral cooperation model linking Korean shipbuilding with British sustainment expertise and Canadian industrial participation, with Babcock Canada expected to lead localization, workforce development, in-service support, and supply-chain integration across maintenance, repair, overhaul, and weapons handling systems. In addition to industrial cooperation, Canada has raised expectations related to Hyundai Motor Group, which does not currently operate an auto manufacturing plant in Canada but exports vehicles to the Canadian market from South Korea and Mexico.

Written by Jérôme Brahy

Jérôme Brahy is a defense analyst and documentalist at Army Recognition. He specializes in naval modernization, aviation, drones, armored vehicles, and artillery, with a focus on strategic developments in the United States, China, Ukraine, Russia, Türkiye, and Belgium. His analyses go beyond the facts, providing context, identifying key actors, and explaining why defense news matters on a global scale.