In a high-stakes race to modernize Canada’s aging naval fleet, the Canadian government has narrowed its choice for new submarines to two global heavyweights: Germany’s ThyssenKrupp Marine Systems (TKMS) and South Korea’s Hanwha Ocean Ltd.
This decision, announced on August 25, 2025, marks a pivotal moment in Canada’s defense strategy, as Prime Minister Mark Carney navigates complex geopolitical and economic considerations during his European tour.
With a potential $8.1-billion deal on the table, the world is watching to see which nation will secure this lucrative contract and shape the future of Canada’s naval capabilities.
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A Strategic Pivot for Canada’s Navy
Canada’s Victoria-class submarines, long plagued by operational issues and nearing the end of their service life, are set to be replaced by a fleet of 12 conventionally powered submarines.
The new vessels are expected to bolster Canada’s maritime defense, particularly in the strategically vital Arctic region, where melting ice is opening new shipping routes and intensifying global competition.
The government aims to have the first submarine delivered by 2035, with a final decision on the procurement process expected by 2027.
The selection of TKMS and Hanwha Ocean as the final contenders follows a rigorous evaluation of Canada’s submarine requirements, including construction timelines, technological capabilities, and economic benefits.
Other shipyards from Sweden and Spain also submitted proposals but were eliminated after a thorough assessment by Public Works and Procurement Minister Joël Lightbound.
The decision underscores Canada’s commitment to a transparent and competitive process, as emphasized by Carney during his visit to Germany.
Carney’s European Mission: Defense and Diplomacy
Prime Minister Mark Carney’s trip to Berlin on August 25, 2025, was a carefully orchestrated blend of defense discussions and economic diplomacy.
Meeting with German Chancellor Friedrich Merz, Carney participated in a business roundtable aimed at diversifying Canada’s trade and forging a critical minerals partnership.
This collaboration seeks to secure supply chains for minerals essential to industries like renewable energy and advanced manufacturing, reflecting Canada’s broader economic strategy.
However, defense remained a top priority.
Carney’s itinerary included a tour of TKMS’s shipyard, a clear signal of Germany’s strong position in the submarine race.
Chancellor Merz personally advocated for the visit, highlighting the strategic importance of drawing Canada into a submarine partnership with Germany and Norway.
This alliance, centered on the German-designed, Norwegian-partnered Type 212CD submarine, is being pitched as a cornerstone of Transatlantic security.
Carney, mindful of maintaining fairness, announced plans to visit Hanwha Ocean’s shipyard in South Korea later this fall.
“We are committed to a transparent and competitive process,” Carney said in Berlin, sidestepping questions about whether Canada would opt for a full competition or negotiate directly with a preferred bidder.
This ambiguity has fueled speculation about the government’s next steps, as federal officials weigh the merits of requesting detailed proposals versus fast-tracking negotiations.
The Contenders: Germany’s Type 212CD vs. South Korea’s Hanwha Ocean
The German-Norwegian Type 212CD is a leading contender, renowned for its advanced technology and Arctic-ready design.
Based on the proven Type 212A platform, the 212CD (Common Design) is a diesel-electric submarine equipped with an air-independent propulsion system, allowing it to remain submerged for over three weeks.
At 73 meters long and 2,800 tonnes when submerged, it boasts eight torpedo tubes and is designed for operations in challenging environments like the Arctic Ocean.
Germany and Norway have already committed to building 12 Type 212CD submarines, with Germany expecting its first delivery in 2028 and Norway in 2029.
TKMS’s CEO, Oliver Burkhard, has pitched Canada as a potential “family member” in this joint venture, emphasizing cost savings through shared supply chains and maintenance.
Burkhard also highlighted the economic benefits for Canada, including a proposed submarine maintenance facility that would create jobs and boost local industry—a key consideration for the Liberal government.
South Korea’s Hanwha Ocean, meanwhile, has emerged as a formidable competitor.
In March 2025, Hanwha submitted an unsolicited bid, showcasing its confidence in meeting Canada’s needs.
While specific details of Hanwha’s proposal remain undisclosed, the company is known for its advanced shipbuilding capabilities and competitive pricing.
South Korea’s growing reputation in the global defense industry, coupled with its strategic partnership with Canada, makes Hanwha a serious contender.
The Stakes: Security, Jobs, and Geopolitics
The submarine procurement decision is about more than just replacing outdated vessels.
It’s a strategic move to strengthen Canada’s position in a rapidly changing global security landscape.
The Arctic, where Russia and China are expanding their influence, is a key theater for Canada’s defense strategy.
The Type 212CD’s Arctic capabilities make it a strong fit, but Hanwha’s offering could provide a cost-effective alternative with similar operational strengths.
Economically, the project is a boon for Canada.
The construction of a maintenance facility, whether by TKMS or Hanwha, promises to create high-skilled jobs and stimulate local economies.
The government has emphasized the importance of industrial benefits, ensuring that the winning bidder delivers long-term value to Canada.
Geopolitically, the decision could reshape Canada’s alliances.
Partnering with Germany and Norway would deepen ties with NATO allies, reinforcing Transatlantic security.
A deal with South Korea, however, would strengthen Canada’s Indo-Pacific partnerships, aligning with efforts to counterbalance China’s growing influence.
Carney’s diplomatic engagements in Berlin and planned visit to South Korea reflect the delicate balancing act Canada faces.
The Procurement Debate: Competition or Negotiation?
Within the Canadian government, a heated debate is underway about how to proceed.
One option is to request full proposals from TKMS and Hanwha, allowing for a detailed comparison of costs, timelines, and capabilities.
The other is to select a preferred bidder and enter direct contract negotiations, potentially accelerating the process but risking perceptions of favoritism.
TKMS has already submitted comprehensive responses to Canada’s request for information, while Hanwha’s unsolicited bid demonstrates its proactive approach.
Burkhard suggested that Canada could join the Type 212CD production line by redesignating one of the submarines originally intended for Germany or Norway, potentially delivering the first Canadian boat as early as 2032-33.
However, this timeline depends on swift decision-making—a challenge given Canada’s history of protracted defense procurements.
Why This Matters Now
The submarine decision comes at a critical juncture for Canada.
With global tensions rising and the Arctic emerging as a geopolitical hotspot, modernizing the Royal Canadian Navy is a national priority.
The Victoria-class submarines, acquired second-hand from the UK in the 1990s, have been plagued by maintenance issues and limited operational availability.
A new fleet will enhance Canada’s ability to patrol its vast coastline, protect its sovereignty, and contribute to NATO and NORAD missions.
Public interest in the submarine program is high, as it touches on issues of national security, economic growth, and international partnerships.
Carney’s high-profile visits to Germany and South Korea are likely to generate significant media attention, amplifying the stakes of this multibillion-dollar decision.
What’s Next for Canada’s Submarine Program?
As Carney continues his European tour, all eyes are on the next steps in the procurement process.
Will Canada opt for the proven, Arctic-ready Type 212CD, backed by Germany and Norway’s “strategic partnership”?
Or will Hanwha Ocean’s competitive bid and South Korea’s rising defense prowess sway decision-makers?
The government’s commitment to a 2027 decision deadline adds urgency to the process, but the complexity of the choice ensures it will remain a topic of intense debate.
For now, Carney’s diplomatic tightrope walk continues.
His visits to TKMS and Hanwha shipyards signal Canada’s intent to thoroughly evaluate its options.
As the world watches, the outcome of this submarine showdown will shape Canada’s naval future and its role on the global stage for decades to come.
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