Ukraine holds off on new Helsing drone orders after setbacks

Helsing also pivoted to build AI-native hardware. Funds including General Catalyst, Lightspeed Ventures and Accel participated in a June round that valued Helsing at €12 billion ($14 billion)

Ukraine is holding off on additional orders for strike drones from Helsing, Europe’s most valuable defense tech startup, after the company’s weapon systems faced problems in front line tests in battle, according to a German military presentation and people familiar with the matter.

The German company’s flagship strike drone, the HX-2, had trouble taking off in tests by Ukraine’s 14th Regiment, an unmanned aerial systems unit, according to the Nov. 20 internal presentation that was prepared by a group within the German Defense Ministry. The model, which was supposed to include artificial intelligence components designed to help it steer without a pilot, lacked some of those tools, the presentation said.

The presentation seen by Bloomberg News was compiled by a unit reporting to General Gunter Schneider, who was appointed as head of the Armed Forces Division at the German Defense Ministry in October. Schneider’s name was on its cover page.

Bloomberg’s reporting is based on the presentation and conversations with five people in Germany and Ukraine who are familiar with Helsing drones’ performance in the war. They asked not to be identified because the information is classified. A spokeswoman for the German Defense Ministry said its management hadn’t reviewed or approved the report, and the ministry declined to make Schneider available for an interview.

Helsing’s drones were affected by jamming near the front that severed connections with its human operators, three of the people said. The setbacks have undermined demand for the drones, which are paid for by the German military, according to the presentation and two of the people. Germany doesn’t plan a follow-up order until there’s an expression of interest from Ukraine, they said.

Helsing said in a statement that the company is not aware of the presentation and rejected many of the findings that Bloomberg presented it with, including that HX-2 drones had a high failure rate when taking off. Several groups in the Ukrainian military have expressed interest in the drone, the company said.

“The hit rate of the first flights, which was officially documented, is encouraging," Helsing said, adding that it's too early to draw conclusions from the drone's performance on the frontlines in Ukraine. "We are confident that HX-2's test performance will translate well into high hit rates on the battlefield, too, including under electronic warfare conditions.”

The Ukrainian Defense Ministry said it doesn’t comment on classified information.

Russia’s full-scale invasion of Ukraine has been a boon to defense companies worldwide, with many weapon manufacturers seeking to highlight that their products are battle-tested in the conflict. Drones have become the most essential weapon used by Ukraine during the war and are in high demand, with European powers seeking to expand their arsenals.

Helsing has been a major beneficiary. When the company was formed in 2021 to integrate AI into Europe’s military systems that lag far behind cutting-edge developments in the US and China, most European venture capital wouldn’t invest in the defense industry. It was initially backed by Spotify Technology SA founder Daniel Ek’s fund Prima Materia.

The war in Ukraine changed investor attitudes as the continent moved to spend record sums to rearm and develop new military technology. Helsing also pivoted to build AI-native hardware. Funds including General Catalyst, Lightspeed Ventures and Accel participated in a June round that valued Helsing at €12 billion ($14 billion).

“In the next few years, Europe is going to lead even over the US in terms of the deployment of real AI-enabled autonomous systems,” Torsten Reil, co-chief executive officer of Helsing, said at the Bloomberg Tech Summit in London in October.

The HX-2 is the first in-house designed hardware that Helsing has delivered to a war zone and its success is a key bellwether as the company devotes more resources to building air and underwater devices. The competition for government orders of unmanned systems is intense, with startups like Helsing and Germany’s Stark Defence facing off against primes like Rheinmetall AG.

“There won’t be that many programs of record for large drone purchases,” Reil said at the October event. “There will be a lot of drone startups, and in fact defense startups, that will disappear over time.”

Helsing announced the HX-2, a so-called X-wing drone that combines fixed wings with a quadrocopter’s propellers, in December 2024. It is a maneuverable missile capable of striking targets as far as 100 kilometers (62 miles) away. The system has been combat tested by Ukraine’s Unmanned Systems Forces units and it was cleared for deployment on the front, according to the company.

“At least six groups in the Ukrainian army have submitted inquiries about the HX-2 to Helsing,” it said in the statement. “We have already expanded our production capacity significantly in response, but must first fulfill our existing contract.”

Helsing signed a deal in 2024 to provide 4,000 strike drones produced together with a Ukrainian company. It had delivered about half of those models, known as the HF-1, and some 40% of the shipments remained in Ukraine’s inventory, according to the November presentation. The parties were converting the contract to supply the HX-2 in lieu of the other model, the presentation said.

The HF-1, which is made out of plywood, had faced criticism in Ukraine for being too expensive and not effective, Bloomberg reported previously. Last February, Helsing announced it planned to ship an additional 6,000 HX-2 drones to Ukraine. The German Defense Ministry said at the time it hasn’t committed to such an order, and Helsing did not specify who placed it.

Drones are constantly evolving in Russia’s war in Ukraine to contend with electronic warfare and new tactics. The innovation cycle, in which new ideas are developed, tested and implemented, often only takes weeks as weapon systems constantly iterate to remain a step ahead of enemy measures.

“Experimental and test series are designed to allow companies to test their systems under various conditions,” a spokeswoman for the German Defense Ministry said, adding that “there are regular developments in this area” due to the short innovation cycle in the industry.

Both Helsing models intended for Ukraine were supposed to include three AI components: terminal guidance, midcourse guidance and visual target acquisition, but they didn’t have all of the AI components installed, according to the presentation and one of the people. The presentation said that just 25% of Helsing’s HX-2 were able to launch in front line tests conducted by the 14th Regiment. Three of the people said launches were affected by mechanical problems of the catapult.

Helsing denied that only a quarter of the HX-2s successfully launched in tests. A company spokesman said the supply contract from the beginning set out that Helsing would initially provide HF-1s and then switch to the more advanced HX-2. He added that less than 40% of the HF-1 drones remain in Ukrainian stockpiles and said the drones are used regularly.

Failure during tests is not unusual. In trials conducted in October with the German and British militaries, Helsing HX-2 drones hit their targets and outperformed those of its competitor Stark Defence. In those tests, Helsing hit close to 100% of its targets, the spokesman said. By contrast, Stark’s model missed targets, in part due to a bug in its software, according to two people familiar with the matter who asked not to be identified because the information was not public. The Financial Times previously reported on those tests.

Stark said at the time that crashes were a normal part of developing drone technology. The same model has subsequently been successfully tested by the German military, according to a video posted on one of the army’s Instagram channels in December.

“Following the most recent series of tests we are more confident than ever in the strike precision and warhead penetration of our system,” a Stark spokesperson said in a statement to Bloomberg.

Other foreign drone makers’ products in Ukraine have also faced criticism over their performance. Anduril’s Altius and Ghost drones struggled early in the war at a time when most drones had an effective hit rate of as low as 10%, the company said in November in response to reporting by Reuters and the Wall Street Journal about its setbacks.

Both models have been effective despite the early challenges, with the Ghost drone undergoing a substantial redesign to make it more resilient, the company said.