Ukraine's rapidly scaling defense industry is changing how the West thinks about future wars

Business Insider

09-07-2025

In Ukraine, a defense tech revolution is helping to redefine military supply playbooks in real time.
While Russia leans on the brute force of its military-industrial complex — nearly 695,000 troops, relentless missile barrages, and escalating drone strikes — Ukraine has turned necessity into invention.
Its growing defense sector is producing drones, robotic land vehicles, and other advanced systems on timelines and budgets that would be unthinkable for most Western militaries.
"The ability of Ukraine's industry to build drones at scale and adapt them in response to changing battlefield conditions creates a model that other militaries are striving now to follow," Bryan Clark, a senior fellow at the Hudson Institute, told Business Insider.
He added: "Although the small FPV drones used by both sides may not have utility in a war against China, the approach of building systems on demand using modular components is beginning to emerge in the US industrial base as well."
This transformation has been made possible by Ukraine upending traditional military procurement models.
"Necessity and urgency breed true innovation," Emily Harding, vice president of the defense and security department at the Center for Strategic and International Studies, told BI.
"Ukraine has found a way to upend normal cycles of development and procurement to get troops updated equipment within weeks," she added.
One key aspect has been to directly connect defense startups with soldiers on the ground.
"Linking companies directly with units in the field turns the innovation cycle into a flywheel — rapid feedback, adaptation, sales, and deployment to the front lines," Harding said.
Doug Klain, a nonresident fellow at the Atlantic Council's Eurasia Center, argues that Ukraine isn't just catching up — it's pointing the way forward for other countries.
"Where American defense producers take years to iterate and update systems based on testing before redeploying, Ukrainians are making significant updates within weeks to overcome Russian countermeasures," he said.
Meanwhile, Ukraine's shift toward indigenous production is accelerating.
Ukrainian President Volodymyr Zelenskyy said that roughly 40% of Ukraine's weapons now come from domestic sources — an impressive figure for a country under attack.
Klain said that Ukraine is also becoming more than just the frontline of Europe's defense.
"Far from being a recipient of assistance, Ukraine is a value-add," he told BI. "There is no more experienced army in resisting Russian aggression today, and its defense industry is increasingly tailored to the scale and specialties required for defending Europe."
Ukrainian defense startups like TenCore — founded in early 2024 with five employees — highlight this shift. With 175 employees and projecting $80 million in revenue this year, the company has delivered more than 2,000 battlefield systems and turned down acquisition offers to remain independent.
Western militaries are taking notice.
Ukraine's innovative use of drones and other AI-enabled autonomous systems has "revolutionized the role these technologies play in modern warfare — from logistics to long-range strikes," Lauren Speranza, a fellow at the Center for European Policy Analysis, told BI.
"Modern war between peer competitors is clearly a war of defense industrial bases as much as of men and maneuver," added Harding. "A country that cannot adapt to developments on the battlefield and sustain the warfighters is sure to lose."
Even so, military experts caution against wholesale replication in the West.
"Western militaries can't over-index on what Ukraine is doing in terms of specific systems because the conditions are unique," Hudson Institute's Clark said.
However, he added that leveraging militarily relevant commercial technology "will be essential for gaining an advantage in the 21st century."
Lessons may also extend to how future wars are conceptualized.
"Ukraine has effectively replaced artillery with drones for entrenched warfare," said Michael O'Hanlon, director of research in foreign policy at the Brookings Institution.
"That doesn't change everything about modern combat, but it changes a lot," he added, "and points the way to future close-in fights where drone swarms may dominate."
Still, Ukraine's ability to scale remains limited by one major factor: money. With a $12 billion defense budget, officials estimate that the country's production capacity is a third of its true potential.
Kyiv is now pushing to attract more Western investment and is eyeing initiatives like the EU's proposed SAFE project — a $150 billion fund designed to strengthen European defense manufacturing.
"Ukraine is integral in any future European security architecture," Klain said. "It has genuine lessons to offer as we all figure out how to revitalize defense industries that just aren't up to the needs of modern warfare."