Affordable Mass: The Companies Competing to Rebuild Europe’s Missile Arsenal

Europe’s missile debate is moving beyond range and technical sophistication. The new question is whether the continent can manufacture precision-strike weapons in the quantities required for a prolonged conflict.

That shift gained fresh momentum after U.S. defence startup Covenant announced plans to begin producing its Anthem cruise missile in Germany in early 2027. The company intends to establish a production rate of up to 5,000 missiles annually at a facility in Saxony by 2028.

If achieved, that volume would represent a sharp departure from the traditional European model of procuring relatively small numbers of complex and expensive missiles over extended production cycles.

Covenant has already secured an undisclosed European customer and expects its first European deliveries in 2027, co-founder and CEO Michael Kaufman told Reuters. The company says more than 95% of the components used by its German operation will be sourced in Europe, with the longer-term objective of eliminating non-European components entirely.

The announcement places Covenant at the centre of a much broader industrial contest: who will supply Europe with affordable, domestically produced deep-strike weapons at scale?

Europe’s deep-strike gap

European governments have identified long-range precision strike as a critical capability gap since Russia’s full-scale invasion of Ukraine.

Existing European inventories include systems such as the British-French Storm Shadow/SCALP and Germany’s Taurus. However, these weapons were generally designed and procured under a peacetime model based on limited inventories rather than sustained high-volume consumption.

France, Germany and Poland launched the European Long-Range Strike Approach to explore common requirements and procurement of deep-strike systems. Britain and Germany are separately developing a Deep Precision Strike weapon intended to exceed 2,000 kilometres in range.

Germany has also agreed to acquire U.S.-made Tomahawk cruise missiles and ground-based Typhon launchers as a near-term response while European alternatives are developed.

The result is a market spanning several different operational categories: shorter-range ballistic missiles, cruise missiles capable of penetrating contested airspace, lower-cost one-way attack systems and future weapons with ranges beyond 2,000 kilometres.

These systems are not interchangeable. Nevertheless, they are competing for parts of the same rapidly expanding European procurement budget.

Covenant challenges the traditional model

Covenant’s Anthem is being positioned as a long-range, heavy-payload cruise missile designed from the outset for serial production.

The ground-launched weapon carries a payload exceeding 200 kilograms and uses a solid-fuel booster followed by a heavy-fuel cruise engine. Covenant says it has completed more than 200 test flights and is targeting a unit price in the mid-six-figure range once full-rate production is achieved.

The company’s planned German facility is particularly significant. Covenant is not merely offering Europe an imported American weapon but attempting to establish a largely European supply chain and domestic production base.

Its objective of reaching an annual production rate of 5,000 missiles in Saxony by 2028 remains highly ambitious. Reaching that scale would require more than an operational missile design. It would depend on sustained access to engines, guidance systems, seekers, explosives, launchers and qualified industrial suppliers.

It would also require governments to place sufficiently large and predictable orders.

A factory capable of producing thousands of missiles cannot operate efficiently on small annual contracts followed by gaps in procurement. Affordable mass is therefore as much a contracting challenge as a manufacturing one.

Rheinmetall and Destinus enter the race

Covenant is not the only company attempting to reshape the European market.

Rheinmetall and European defence technology company Destinus agreed in April to establish Rheinmetall Destinus Strike Systems. Rheinmetall will hold 51% of the venture and Destinus 49%.

The partnership combines Rheinmetall’s production capacity and experience managing major defence programmes with Destinus’ missile technology and system design. Production is expected to begin in late 2026 or early 2027.

One of the systems associated with the partnership is the Ruta Block 2 cruise missile, which has a claimed range exceeding 700 kilometres. Rheinmetall CEO Armin Papperger has said the company intends to manufacture cruise missiles for deep-strike missions at its Unterlüß site.

Destinus CEO Mikhail Kokorich has described industrial capacity, rather than market demand, as Europe’s principal constraint.

The partnership represents a model increasingly visible across the European defence sector: large established contractors providing production infrastructure, certification experience and access to government customers, while younger companies contribute designs developed through faster and more iterative processes.

Germany emerges as a missile-production hub

Germany is simultaneously pursuing several missile-production pathways.

In addition to the Covenant facility in Saxony and the Rheinmetall-Destinus programme, Rheinmetall and Lockheed Martin signed a memorandum of understanding in July covering the production of ATACMS missiles at Unterlüß.

The proposed facility would become the first ATACMS production site outside the United States and would supply NATO members and other allied countries.

ATACMS is a ballistic missile and belongs to a different operational category from systems such as Anthem or Ruta. Its planned localisation nevertheless demonstrates Germany’s effort to build a broader missile-manufacturing ecosystem rather than relying exclusively on finished imports.

Meanwhile, the British-German Deep Precision Strike programme is intended to deliver a weapon with a range exceeding 2,000 kilometres. It is likely to be more complex, expensive and slower to develop than the lower-cost systems now being proposed by startups.

Europe may ultimately need both models: highly capable weapons for heavily defended strategic targets and larger quantities of less expensive systems for operational depth, infrastructure, logistics nodes and other fixed targets.

Production claims still require proof

Europe’s new missile projects are attracting large investments and ambitious production announcements, but factory targets should not be confused with delivered capability.

Several questions remain unresolved:

• Can the new systems perform reliably in contested environments?
• Can manufacturers secure enough engines, seekers, warheads and electronic components?
• Will governments accept commercially available components in strategically important weapons?
• Can production continue if access to non-European technology is restricted?
• Which launch platforms and targeting networks will be available?
• Will national procurement agencies place multi-year orders large enough to support genuine mass production?

Missile output also cannot be measured only by the number of completed airframes. A deep-strike capability requires intelligence, surveillance, target identification, mission planning, secure communications and battle-damage assessment.

Without that wider architecture, thousands of missiles would not automatically translate into an effective deterrent.

What to watch in Q4

The final quarter of 2026 could reveal whether Europe’s missile expansion is becoming an industrial reality or remains a collection of announcements and memoranda.

The most important developments will be the formal establishment of Rheinmetall Destinus Strike Systems, additional European customers for Covenant, concrete production contracts for ATACMS in Germany and further decisions surrounding the British-German Deep Precision Strike programme.

Another key test will be whether European governments coordinate their requirements or continue funding overlapping national projects in relatively small quantities.

Fragmentation has historically reduced production volumes and increased unit prices across the European defence industry. If governments want affordable mass, they will need common requirements, longer contracts and greater acceptance of cross-border production.

A different measure of missile power

The emerging competition will not be decided solely by which company offers the longest range or the most advanced guidance system.

The decisive advantage may belong to the manufacturer that can combine credible performance, European supply-chain resilience and repeatable production measured in thousands rather than dozens.

Covenant’s entry into Germany raises the pressure on both startups and established manufacturers. Its production targets remain unproven, but the company is asking the question now shaping Europe’s missile market:

Can the continent move from exquisite weapons in limited inventories to an arsenal large enough to deter and sustain a prolonged war?