Canada Narrowed Down to Two Suppliers in Submarine Procurement Race

Canada’s effort to replace its aging fleet of submarines is progressing, with the government announcing that it has narrowed the competition to two suppliers: a South Korean firm and a German manufacturer. This significant procurement project is aimed at addressing the deteriorating condition of the country’s Victoria-class submarines, which were purchased as second-hand vessels from the United Kingdom in 1998.

Prime Minister Mark Carney has emphasized the urgency of the situation, noting that Canada currently has only one operational submarine. The Victoria-class fleet is expected to be retired by the mid-2030s, with plans for Canada to acquire its first new submarine by 2035. As other countries may also seek to purchase submarines, delays could push Canada further down the line for delivery.

Why New Submarines Are Essential

The need for new submarines stems from the aging condition of the current fleet, which requires costly repairs and part replacements. At the NATO summit held in Washington in 2024, former Prime Minister Justin Trudeau announced the ambitious submarine procurement project amid mounting pressure from allies to increase Canada’s defense spending.

The procurement is projected to significantly enhance Canada’s defense capabilities and help meet NATO commitments, particularly the target of spending more than 2 percent of GDP annually on defense. While officials have indicated a desire for “up to” 12 submarines, recent discussions suggest a shift away from this qualifier.

Finalists in the Competition

As of August 25, 2025, the two companies vying for the contract are Hanwha Oceans and ThyssenKrupp Marine Systems (TKMS). Hanwha, based in South Korea, manufactures the KSS-III submarine, which operates on lithium-ion batteries and is currently in service with the Republic of Korea Navy. The company asserts that it can deliver its first submarine to Canada by 2032 and aims to provide four submarines by 2035, with additional units following annually.

On the other hand, TKMS, a well-established submarine manufacturer, proposes the new 212CD model, which is intended for the German and Norwegian navies. This submarine operates on hydrogen fuel cells and diesel engines. TKMS emphasizes that Canada’s participation would ensure better delivery timelines, citing that they can meet Canada’s 2035 deadline, with the first delivery scheduled for 2034.

Requirements and Funding Considerations

The project, officially dubbed the “Canadian Patrol Submarine Project,” places a premium on stealth and lethality, aligning with Canada’s defense policy, “Our North, Strong and Free.” The Royal Canadian Navy specifically seeks submarines capable of operating under ice, which is crucial for maintaining a presence in the Arctic as geopolitical tensions rise.

Vice-Admiral Angus Topshee, head of the Royal Canadian Navy, has indicated the possibility of making a decision on the supplier by the end of the year, depending on the pace of negotiations. Both companies have proposed establishing maintenance facilities in Canada, with Hanwha offering to set up operations on both coasts and TKMS seeking to engage all three major Canadian shipyards.

The total cost of this procurement remains uncertain, with estimates potentially reaching into the tens of billions of dollars, contingent on the number of submarines purchased. Previous experiences, such as the procurement of F-35 stealth jets, which ultimately cost $27.7 billion—significantly higher than initial estimates—underscore the importance of careful negotiations.

As Ottawa prepares for intense discussions with the finalists, the future of Canada’s submarine fleet hangs in the balance, with implications for national security and defense commitments on the global stage.