Hägglunds faces setback as Estonia drops 500 million euro vehicle plan

Estonia has decided to halt a planned 500 million euro procurement of new combat vehicles.

This removes a significant potential order for BAE Systems Hägglunds and signals a shift in military priorities away from tracked armoured platforms such as the CV90.

The government will instead redirect funding towards air defence, drones and unmanned systems, following updated military advice and lessons drawn from the war in Ukraine. The cancelled vehicles had been scheduled for delivery in 2029 and 2030.

While no supplier had been formally selected, the CV90 - developed by Sweden-based BAE Systems Hägglunds, a subsidiary of UK-based BAE Systems - is already in service in Estonia and widely used across the Nordic region, positioning it as a likely contender.

- To move forward with other necessary solutions and extend the service life of existing combat vehicles, this decision had to be made now, defence minister of Estonia Hanno Pevkur said according to Estonian media ERR.

Defence Nordic has reached out to BAE Systems Hägglunds for a comment but has yet to recieve an answer.

Upgrade over replacement

Instead of procuring new vehicles, Estonia plans to extend the lifespan of its existing CV90 fleet by up to ten years, further limiting near-term replacement opportunities for manufacturers such as BAE Systems Hägglunds.

The defence ministry assesses this approach as significantly more cost-effective than acquiring new platforms, particularly as vehicle prices continue to rise.

The decision reflects a broader reassessment of heavy armoured platforms, with Estonian defence planners pointing to reduced relevance over the next decade relative to emerging capabilities.

- The role of heavy equipment on the battlefield is decreasing. Hence the advice from the commander of the defence forces that, over a ten-year perspective, it is not reasonable to replace them, but rather to upgrade existing vehicles, Pevkur said according to ERR.

Funds will instead be directed towards air defence systems and so-called “eyes and ears” capabilities - military terminology for sensors and surveillance systems - as well as counter-drone technologies.

Diverging Nordic demand

The Estonian move comes as other Nordic countries continue to invest in the CV90, underlining an uneven demand outlook for BAE Systems Hägglunds across the region.

Norway has expanded its investment in the platform, committing approximately NOK 19.7 billion to new vehicles, additional variants and upgrades.

The order, placed with BAE Systems Hägglunds, includes 80 new infantry fighting vehicles and reinforces an existing fleet, sustaining production and support activity.

The contrast highlights diverging procurement strategies: while Norway is scaling up a known platform for operational and industrial continuity, Estonia is stepping back from fleet expansion in favour of flexibility and newer technologies.