The companies want to deliver a new infantry fighting vehicle to the Italian army within two years and a new main battle tank within three years.

Italy’s Leonardo SpA and Rheinmetall AG of Germany agreed to form a joint venture to build combat tanks in Europe, combining efforts on fighting vehicles as defense spending rises across the region.

German weapons manufacturer Rheinmetall and Italian defence contractor Leonardo are jointly launching a new company to build battle tanks, initially for the Italian military, the firms announced on Tuesday.

Italy's Leonardo and Germany's Rheinmetall have finalised a joint venture for the development and manufacturing of military combat vehicles, in what is seen as the first step in the consolidation of the European sector.

Both companies will be equal shareholders in the new company – named Leonardo Rheinmetall Military Vehicles (LRMV) – with headquarters in Rome and La Spezia. The establishment of the company is expected by the first quarter of 2025, pending regulatory approval, with 60 percent of the work to be carried out in Italy.