Why Europe is suddenly betting big on drones
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Europe has spent years rebuilding its military in response to Russia’s invasion of Ukraine. Investments are now increasingly coalescing around a technology seen as central to the continent’s future security: drones.
The flurry of announcements over the past two weeks shows how quickly this change is accelerating. NATO announced a new drone initiative, the UK allocated billions of pounds for drones and counter-drone systems, Germany moved to buy 50,000 drones for Ukraine, and defense technology startup Helsing achieved an $18 billion valuation.
The developments reflect a broader shift in military planning, with unmanned aerial vehicles and autonomous systems moving from niche battlefield tools to a fundamental part of modern warfare. The trend creates opportunities not only for drone manufacturers but also for companies developing artificial intelligence, software, electronic warfare and secure communications.
“Future defense is moving towards a layered battlefield; for example, a tank will not only fire projectiles, but also launch drones, receive live targeting data from satellites and [unmanned aerial vehicles]Morningstar analyst Loredana Muharremi told CNBC:
Iran’s use of low-cost Shahed drones in the Middle East, as well as battlefield lessons from Ukraine, have demonstrated the importance of relatively inexpensive, AI-enabled drones that can gather intelligence, extend the reach of conventional weapons, and operate increasingly autonomously.
How are drones used in modern warfare?
These lessons on the battlefield are now reshaping purchasing decisions across Europe.
Last week, NATO Secretary General Mark Rutte said the military alliance would become “drone ready” by announcing a drone initiative that will see allies invest more than $40 billion in counter-drone capabilities over the next five years.
Citing the Russia-Ukraine war as an example, Rutte said drones had “fundamentally changed” the character of modern warfare and become a “decisive factor” on the battlefield.
The UK is also investing heavily in autonomous systems. Under the Defense Investment Plan published in late June, the government has committed £5 billion ($6.7 billion) to a “UK drone transformation” program aimed at strengthening the country’s armed forces.
Meanwhile, Germany is increasing its support for Ukraine. On Monday, defense software company Auterion and Ukrainian drone manufacturer Skyfall announced a 90 million euro order from a European NATO member for 50,000 drones equipped with Auterion’s operating system. A source familiar with the matter confirmed to CNBC that the country is Germany.
“This is the first war to occur at a time when drones are ubiquitous enough to start playing a role,” Auterion CEO Lorenz Meier told CNBC.
According to Meier, software is increasingly defining the battlefield.
Auterion’s operating system allows drones to continue hitting targets despite electronic interference, making them more effective in contested environments. “This allows them to dive into the target, even if there are jammers on the target where they would previously lose the video signal and miss it,” Meier said.
It also allows them to hit a target below the radio horizon, for example when a drone lands in the valley. The company plans to offer software that allows operators to control coordinated swarms of drones, rather than piloting each drone individually.
In this photo from a social media video, a fire at the Omsk oil refinery in Omsk, Russia, on July 6, 2026, where the regional governor said the province came under attack from Ukrainian drones.
Reuters
Although the latest order is for Ukraine, Meier said the technology has already attracted the interest of armed forces including Germany, Norway, Britain and France.
Low-cost drones are also becoming more common They are paired with high-end weapons to increase their effectiveness by distracting or overwhelming enemy air defenses.
Beyond drone manufacturers
According to Muharremi, the increasing use of drones and other autonomous systems is also increasing the demand for the technology needed to coordinate drones in real time. This includes secure communications, battle management software, artificial intelligence and satellite-based intelligence, sensors and electronic warfare systems.
“As a result, companies with physical platform scale and exposure to autonomy, air defense, sensors, electronic warfare, software and space are likely to capture a share of future defense spending,” he said.
According to McKinsey, Europe’s core defense spending has doubled since 2019 and could reach nearly 800 billion euros by 2030, or roughly 2.9% of GDP, under NATO’s 3.5% target for 2035.
Among the biggest beneficiaries of this project is Munich-based Helsing. On Monday, the company announced a funding round valuing it at $18 billion, cementing its position as one of Europe’s best-funded defense tech startups.
Helsing produces drones and underwater surveillance weapons and develops artificial intelligence and autonomous software to power these military applications; This underscores that Europe’s defense industry is increasingly betting that the future of warfare will depend as much on software and autonomy as on traditional military hardware.
