The United States has spent billions of dollars for developing small drones which the Pentagon plans to utilise in future conflicts. However, these drones have not yet excelled on the battlefield. The problem? Not only are they expensive but also glitchy.
With the American drone technology turning out to be a disappointment, defense startups have now joined forces with Ukraine to build battle-ready aircraft. But why Ukraine? Ukrainian drone makers have mastered the art of producing drones despite limited resources. And, the nation which has been embroiled in a war with Russia is looking for new customers as well as capital.
Apart from the efficiency, Ukraine-made drones sell for as low as 1/10th the price of American options. The US-made drones are often fragile and vulnerable to electronic warfare. That is a major factor why the US has shown immense interest in Ukrainian drone makers.
This unlikely collaboration, especially amid the deliberations over Russia-Ukraine war, is attracting attention from the Defense Department.
"No US company is keeping up with Ukraine ... You know their stuff works. They've got the ultimate high-stakes laboratory meant to battle-proof all this stuff," Wall Street Journal quoted Southern California startup CX2 co-founder Nathan Mintz as saying.
Last year, CX2 struck a deal to put its software and sensors on Ukrainian drones, a matchup that has received approval from a branch of the US military and might soon arm American forces.
As per Defence Department estimate, the United States is capable of building up to 1,00,000 drones a year. On the other hand, Ukraine produced over 2 million drones last year.
Some of the Ukraine-built drones that the Defense Department wants can fly several hundred miles with explosives and have also been used in attacks inside Russia.
'Drone capital after war ends'
Ukraine has already proved it dominance in drone production. But the government cannot afford to purchase all home-made drone. For Ukrainian startups, growth depends on expanding outside their country, where there are caps on how much profit they can make on sales.
These startups want American customers as well as investors in order to make the drone sector a catalyst for economic growth (after the war).
"Ukraine has made it clear that they intend on being the drone capital of the planet once this war is over," said Derek Whitley, co-founder of startup Vivum, which sells its AI software for autonomous systems to the Defense Department.
Ukrainian drones, which are extremely cheaper compared to the American options, have proven on the battlefield that they can work even when radio and satellite communication is blocked by electronic jamming.
American startups are slower to build, deliver and update their drones, which also have often failed to weather severe electronic warfare. Many US companies that brought their drones to Ukraine watched them fall out of the sky or fail to complete missions.
The Defense Innovation Unit (DIU), for the first time, has chosen a Ukrainian drone maker to add to its list of approved potential suppliers for the US military. DIU is an arm of the Defense Department that sources new technology for the military.
A company named Skyfall, which builds thousands of drones a day, has completed more than 1.5 million missions for Ukraine. Its bomber drones — loaded with software and a sensor package from CX2 — will likely be offered to the US military this year, reported WSJ.
Pittsburgh startup, KEF Robotics, formed a joint venture with a Ukrainian company Sensorama Lab to build software and sensor systems in Kyiv that will enable drones to navigate in jammed airspace and locate targets while remaining relatively undetected. The joint venture, called Blue Arrow, has orders from European militaries and is raising funding from US venture capitalists. It will test its drones with an elite Ukrainian unit on the front lines within the next two weeks.
"Nobody stateside is keeping up with the level of production that's happening in Ukraine," said Olga Pogoda, a co-founder of Blue Arrow.
Meanwhile, the roadblock ...
Ukrainian President Volodymyr Zelenskyy announced last year that the government was considering the possibility of exporting weapons to those countries which had supplied Ukraine with arms for the ongoing war. But the country's restrictions on drone exports stand as one of the major hurdles to bringing Ukraine's drones to the world.
Ukrainian drone producers have now organized to lobby Kyiv to end the ban on selling their drones outside the country and are joining their new US partners to find workarounds.
Skyfall is seeking special permission from the Ukrainian government to sell its bomber drones to the US. "The parts that we cannot sell to Ukraine because they don't have the money, we can sell to the Americans or Europeans or Baltic countries," WSJ quoted Elena Dushenok, head of growth at Skyfall, as saying.
Another factor is Ukrainian manufacturers often rely on parts from China. To sell to the Defense Department, they will have to find suppliers elsewhere.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
