Canada Considers Initial Purchase of Eight German Submarines, With Four More Planned for Later

Canada is considering restructuring its planned submarine procurement from Germany by committing to an initial purchase of eight submarines, with the possibility of acquiring four additional vessels in a later phase, according to sources familiar with the ongoing negotiations.

The proposal comes as the federal government continues discussions with German submarine manufacturer ThyssenKrupp Marine Systems (TKMS) and Norwegian defence company Kongsberg over a major military procurement program intended to replace Canada’s aging Victoria-class submarine fleet.

The proposed two-stage purchasing arrangement was discussed during meetings held in Ottawa last week between Canadian federal officials, representatives of TKMS and Kongsberg. The discussions were led by Canada’s Defence Investment Agency.

Three confidential sources familiar with the negotiations said the Canadian government has been considering dividing the submarine order for several weeks, following discussions with European officials in September.

The potential change could have significant implications for the economic benefits originally promised as part of the German proposal, which included approximately $86 billion in investments across Canada.

German government officials are reportedly examining how a reduced initial order could affect those economic commitments, while TKMS is also consulting with approximately 400 suppliers about the potential consequences of a smaller procurement agreement.

Canada Seeks Flexibility in Major Defence Purchase

Prime Minister Mark Carney announced in July 2026 that Canada had selected Germany’s TKMS proposal over a competing offer from South Korea’s Hanwha Ocean.

At the time, Carney confirmed that Canada intended to acquire up to 12 modern submarines, describing the procurement as the largest in Canadian history.

The proposed purchase is estimated to cost between $20 billion and $24 billion. However, the overall financial commitment is expected to exceed $100 billion over approximately two decades when operational expenses, maintenance and repairs are included.

Sources familiar with the negotiations say Canadian officials want to maintain flexibility for future governments because the submarine delivery schedule will extend over several years.

The first submarines are not expected to arrive until the mid-2030s, with deliveries potentially continuing for more than a decade.

Federal officials are also considering how future developments in military technology, particularly unmanned underwater systems and drone technology, could influence the long-term need for conventional crewed submarines.

An initial commitment to eight submarines would allow Canada to begin replacing its aging fleet while leaving the decision on four additional vessels to future procurement reviews.

One source familiar with the discussions described eight submarines as a substantial initial commitment, emphasizing that the government’s stated intention throughout the process has been to purchase up to 12 vessels.

Government Maintains Commitment to Up to 12 Submarines

The Canadian Navy has identified a requirement for 12 submarines based on the country’s extensive coastline along the Atlantic, Pacific and Arctic oceans, as well as its responsibilities to participate in international military operations.

The vessels are expected to strengthen Canada’s ability to monitor its maritime approaches and contribute to allied missions, particularly in the strategically important Indo-Pacific region.

A spokesperson for Stephen Fuhr, Secretary of State for Defence Procurement, said the federal government’s commitment remains focused on acquiring up to 12 modern submarines to replace the aging Victoria-class fleet.

Sofiya Sapeha said the Defence Investment Agency continues negotiations with the preferred supplier and is working to secure an agreement that delivers the greatest possible economic benefits for Canadians.

However, she declined to discuss the specific details of the negotiations because the procurement process remains active.

Carney has established a target of reaching a final contract agreement by the end of 2027.

TKMS has also confirmed that discussions with the Canadian government are continuing, although the company declined to comment on the proposed purchasing arrangement.

Company spokesperson Andrew Bernardo said TKMS remains committed to working with Canada to finalize an agreement that supports the country’s submarine requirements while creating opportunities for Canadian industries.

He added that negotiations are progressing and that the company remains focused on developing a long-term strategic partnership with Canada.

Germany Wants Full 12-Submarine Agreement

The proposed reduction in the initial order has attracted attention in Germany, where officials are keen to secure the complete 12-submarine agreement.

Thomas Röwekamp, head of the German Parliament’s Defence Committee, visited Ottawa last week and acknowledged that he was aware of the discussions surrounding the proposed purchasing arrangement.

Although he was not directly involved in the negotiations, Röwekamp expressed confidence that Canada, Germany and Norway would resolve outstanding differences.

He emphasized that the agreement represents more than a commercial transaction between a German manufacturer and the Canadian government, describing it as part of a broader strategic partnership with implications for NATO.

Röwekamp said Germany and Norway had already made adjustments to their own production schedules to accommodate Canada’s requirements, including making production capacity available so that Canada could receive four submarines by 2036.

He expressed hope that Canada would ultimately proceed with the full purchase of 12 vessels.

Billions in Economic Benefits Could Be Affected

One of the central issues surrounding the submarine procurement is the economic investment Germany has promised to deliver across Canada.

Because Canadian shipyards currently lack the specialized capacity to manufacture submarines, the federal government asked competing bidders to include substantial economic benefits and industrial partnerships in their proposals.

Germany’s offer included several major projects designed to support Canadian industries and create employment opportunities.

Among the proposed investments was a large-scale carbon capture facility in Alberta using proprietary industrial technology developed by TKMS.

The German proposal also included plans to modernize and expand the Port of Churchill in Manitoba, potentially supporting the export of liquefied natural gas and critical minerals.

Other proposed projects included establishing a Canadian factory to manufacture heavy torpedoes, developing and testing hypersonic missile technology, and expanding cooperation in defence-related research and manufacturing.

The submarine agreement would also require the construction of specialized maintenance facilities on Canada’s east and west coasts to support the future fleet.

However, reducing the initial order could affect the scale of these investments and the willingness of suppliers to participate in long-term industrial partnerships.

Defence Experts Warn of Possible Financial Disadvantages

Defence analyst Dave Perry, president of the Canadian Global Affairs Institute, said dividing the submarine purchase into smaller batches could create disadvantages for Canada.

He warned that reducing the initial commitment could weaken the country’s negotiating position and limit the economic benefits associated with purchasing a larger number of submarines.

According to Perry, manufacturers and suppliers may be less willing to make substantial investments if Canada does not commit to the full procurement from the beginning.

However, he also acknowledged that staged purchasing arrangements are not unusual in major defence projects.

Perry pointed to Canada’s plan to acquire 15 new destroyers as an example of a similar approach. Under that program, the federal government initially committed to purchasing three warships from Halifax-based Irving Shipbuilding.

He explained that dividing procurement into separate phases can help governments manage financial risks by making an initial commitment and reassessing future purchases as circumstances change.

The approach allows governments to limit immediate financial obligations while maintaining the option of expanding a project later.

For Canada, the challenge will be balancing the financial flexibility of a phased submarine purchase against the potential economic advantages and industrial commitments associated with ordering all 12 vessels.

As negotiations continue, the federal government must also consider the country’s long-term naval requirements, the cost of maintaining a modern submarine fleet and the broader economic opportunities connected to the agreement.

With a final contract targeted for the end of 2027, the coming months will be important in determining whether Canada proceeds with an initial order of eight submarines or ultimately commits to purchasing the full fleet of 12 from Germany.

Courtesy: CBC