Prime Minister Mark Carney has reportedly selected the winner of the Canadian Patrol Submarine Project (CPSP) deal, with Germany’s TKMS outdoing South Korea’s Hanwha, according to initial reports.
Canada initiated the CPSP procurement in 2021 to replace the Victoria-class submarines, which are at the final leg of their service life. The country has long sought to replace them with 12 cutting-edge diesel-electric submarines with specialized under-ice capabilities.
According to some estimates, the acquisition cost could reach $24-30 billion, while the total cost over three decades, or the next 30 years, including lifetime maintenance and support, could reach $100 billion.
The procurement is intended to bolster maritime sovereignty, particularly in the Arctic, which is becoming increasingly crowded amid sustained climate change, making the region more accessible to adversaries. Therefore, Canada—being an Arctic state with high stakes in the High North—needs submarines capable of conducting extended patrols and surveillance, deterring incursions and protecting resources and crucial shipping routes.
More importantly, though, the submarines will enhance the Royal Canadian Navy’s capability to detect, track, deter, and defeat adversaries simultaneously across three of Canada’s oceans: Pacific, Atlantic, and Arctic, as noted earlier in the defense strategic paper titled “Our North, Strong and Free: a Renewed Vision for Canada’s Defense”, released by the Defense Ministry in 2024.
The acquisition of a new sub would align with NATO obligations and with the US and allies in the Indo-Pacific, while reducing reliance on partners like the US for undersea monitoring amid sustained bilateral tensions. In fact, PM Carney is believed to have chosen the NATO platform for the announcement to signal Canada’s commitment to military modernization and a hike in defense spending, and reaffirm its role within NATO.
Notably, Canada formally launched the Request for Information in September 2024, officially setting the submarine acquisition project into motion. Five industrial designs were subsequently considered: Saab’s oceanic/extended-range A26, Navantia’s S-80 Plus, Naval Group’s Blackfin Barracuda, TKMS’s Type 212CD, and Hanwha’s KSS-III.
In August 2025, Carney announced that the country had down-selected two vendors: Germany’s Thyssenkrupp Marine Systems (TkMS) and South Korea’s Hanwha Ocean Co.
At the time, Carney said that the process helped determine that the two consortia met the exacting standards of the Canadian Navy.
“Because in Canada, submarine means weeks under the sea ice, as well as in the Pacific at the same time. So we need to be able to have year-round fleets on all three coasts under quite demanding conditions. So that’s how the field narrows quite quickly. So it’s a testament to both of these companies, both of these consortia, that they qualify,” he was quoted as saying.
The Fierce Contest Between TkMS & Hanwha
The TKMS offered Canada a joint German-Norwegian bid for the Type 212CD submarine, which is a collaborative “Common Design” program. On its part, Germany launched a targeted campaign to win the contract, as evidenced by direct pitches from TKMS and German leadership.
“Team 212CD brings together Germany, Norway, and Canada in a uniquely integrated submarine partnership — one that is already underway and already producing. At its core stands TKMS, the world’s most experienced builder of conventional submarines, offering Canada a low-risk, NATO-aligned, and economically transformative solution,” states Team 212CD. “This is not a paper concept. This is a proven program, a live production line, and a generational opportunity for Canada’s economy and sovereignty,” it added.
TkMS emphasizes that this Air-Independent Propulsion (AIP) design is already in production and benefits from extensive operational experience in challenging northern waters.
It is noteworthy that TkMS and the German leadership have sought to exploit their status as NATO members to promote their subs to Ottawa. “If we come to that decision of the Canadian government, we will talk about a fleet of up to 24 submarines of the same type,” German Defense Minister Boris Pistorius said in an interview with CBC News. “This is really an advantage, really a benefit, for NATO and for all of the allies to be able to operate with 24 of the same type of submarines.”
Furthermore, he stated that German and Norwegian submarines could be a backup in the Arctic in the event of a crisis.
On the economic front, TKMS had promised immense benefits, including up to 50,000 jobs in the first five years and more than 650,000 job-years over the life of the program. The package includes redevelopment of the Port of Churchill in Manitoba, potential cooperation on a Canadian space launch facility, establishment of a heavy torpedo production plant, and opportunities for hypersonic missile testing.
Not just that, some submarine construction and sustainment work would take place in Canadian shipyards, supporting high-skilled domestic manufacturing.
The Chief Executive of TkMS, Oliver Burkhard, earlier stated that, should its design be chosen, some manufacturing may occur in Canadian facilities. Additionally, the German shipbuilder has now pledged to deliver four Type 212-CD submarines to the Canadian Navy by 2036, directly addressing the urgency of the procurement felt in Canada.
Hanwha Competes
South Korean Hanwha Ocean Co, on the other hand, pitched the KSS-III submarine to the Royal Canadian Navy.
However, the overall offer went beyond just these underwater war machines.
South Korea and its two major defense companies, Hanwha Defense and Hyundai Heavy Industries, have together pitched a “revitalization” of the country’s defense industrial base, offering an ambitious proposal to modernize Canada’s depleting armed forces with submarines, artillery systems, armored vehicles, and training packages.
According to Hanwha, the two sides could also sign an agreement to localize production of military armored vehicles through a joint venture with 51% Canadian ownership. The vehicles to be produced in Canada include: K9 Thunder Self-propelled Howitzer, K10 Ammunition Resupply Vehicle, Redback Infantry Fighting Vehicle, Chunmoo Multiple Launch Rocket System, and Uncrewed Ground Vehicles.
Moreover, it has apparently also offered to co-develop a next-generation battle tank.
Hanwha Group previously signed a memorandum with Canada’s Automotive Parts Manufacturers Association (APMA) and Algoma Steel to use Canadian steel to manufacture armored vehicle parts at Martinrea.
Unsurprisingly, the South Korean bids to Canada are fully supported by the Seoul government, which is eager to expand its defense partnership with Canada.
The South Korean bid calls for the construction of hydrogen refueling networks across Canada, as well as investments in green infrastructure and the production of hydrogen-powered trucks. In addition, it offers increased investment in Canada’s LNG infrastructure and increased procurement of Canadian LNG.
During a visit to Canada, the Presidential Special Envoy and Chief of Staff to the President of South Korea, Kang Hoon-sik, stated that Hanwha will deliver four submarines by 2035 and promised to deliver one submarine each year starting in 2036. He also reiterated the economic benefits of a deal, including the creation of 25,000 jobs annually.
The Canadian Prime Minister had said earlier this year that both submarines satisfy the navy’s standards and that the final decision will depend on the deal’s long-term geostrategic alliances as well as the economic package.
The two contractors earlier competed for India’s Project-75I submarine program, but Hanwha withdrew, and TkMS went on to win the project in collaboration with Mazagon Dock Shipbuilders Limited (MDL) after a fierce contest with Spain’s Navantia.
This is the second win for German TKMS over South Korean Hanwha.
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