I want to start this newsletter in a way I’ve never done before—with a section on Ukraine’s domestic defense production. Many still assume that Ukraine primarily produces drones, but this is not entirely true. The country also manufactures artillery systems, armored vehicles, ammunition, missiles, and other equipment. Diversifying domestic military production is crucial, especially given the uncertainty surrounding military aid from allies. According to President Zelensky, 30% of all weaponry used on the battlefield is produced domestically.
In the following sections, we will also examine how Europe is trying to compensate for a potential halt in U.S. military aid to Ukraine, as well as the latest developments on the battlefield and in U.S.-Ukraine negotiations.
Military Production and Internal Affairs of Ukraine
Ukrainian Armor is a leading manufacturer of armored vehicles and weaponry in Ukraine. During the full-scale invasion, Ukrainian Armor's revenue grew 470 times, from 103 million UAH in 2021 to 48 billion UAH in 2024. Here are the key points from the interview with the CEO of Ukrainian Armor featured in Forbes Ukraine.
Ukrainian Armor manufactures armored vehicles such as the "Varta" and "Novator," mortars, and supplies chassis for the "Bogdana" self-propelled artillery system. The company also serves as a contractor for KB "Luch" in the production of vehicles and equipment for the "Neptune" complex and the "Vil'kha" MLRS. During the ongoing war, the company expanded into artillery ammunition production, and since the end of last year, has been testing its capabilities in the new niche of drones.
Over the last year, the company significantly expanded its production sites: the production of armored vehicles saw a 3.5-fold increase, and ammunition production grew tenfold. By the end of 2025, there are plans to launch serial production of the Varta-2 armored vehicle with a 30mm combat module. The company is also expanding artillery ammunition production and implementing a large-scale project for the manufacture of 155mm shells in partnership with Czechoslovak Group. In 2025, Ukrainian Armor plans to produce and deliver 100,000 ammunition units, and in the following year, 300,000 units.
According to the CEO of the company, Vladyslav Belbas, the armored vehicles contain imported components – Ukrainian Armor purchases the armor steel and chassis abroad, but everything else is produced in Ukraine.
A significant portion of armored vehicles is still being imported by Ukraine at a cost one-third higher than domestic production.
Although Ukrainian manufacturers are capable of fully meeting the needs of the Armed Forces of Ukraine in armored vehicles, they would require appropriate state orders and funding.
Additional developments:
Ukrainian developers from Pars presented a Trembita cruise missile with a range of up to 150 kilometers at the defense exhibition. Currently, Trembita is in the final stages of testing.
DeViRo presented the Bulava unmanned reconnaissance and strike system at the Defense Tech Innovations Forum 2025. The system includes: kamikaze drones, a ground control station, repeaters and reconnaissance equipment that allow them to perform combat missions autonomously.
Ukraine is developing defense system against naval drones. The defense system may be multi-component, with specialized surface drones as one of the elements, which will patrol, search and destroy threats using machine guns integrated on board.
Ukrainian Prime Minister Shmyhal announced that Ukrainian forces have tripled domestic artillery production, increased armored personnel carrier production fivefold, and doubled the output of anti-tank weapons. Shmyhal noted that Ukraine's ammunition production has grown 2.5 times and drone manufacturing has surged tenfold between January 2024 and January 2025. Ukraine currently produces about one-third of its weapons domestically.
Ukraine’s Cabinet of Ministers allocated an additional 7.9 billion hryvnias ($200 million) for drone procurement. Prime Minister emphasized that the government is prioritizing domestic weapons production, noting that nearly 100% of Ukraine’s drone segment now consists of locally made products.
Ukraine will create "drone swarms" and launch explosives production by the end of 2025 - the Digital Transformation Minister said. According to him, Ukraine has opened the market and allowed the private sector to produce gunpowder and ammunition.
In 2025, Ukraine’s Defense Tech plans to attract $100 million in investments to develop innovations in the defense sector.
The Ukrainian defense industry produced 154 units of artillery systems in 2024 - Zelensky. The President did not specify which systems he was talking about, but it is likely to be 155-mm 2S22 Bohdana self-propelled howitzers.
Military Transfers and Cooperation Between Ukraine and Its Partners
Serious debates are underway regarding the future of allied military support to Ukraine. U.S. aid remains uncertain. According to sources, the rare minerals deal discussed between Ukrainian and U.S. delegations is directly tied to the continuation of American military assistance.