Vetronics Market Report 2026

The vetronics market size has grown steadily in recent years. It will grow from $3.94 billion in 2025 to $4.13 billion in 2026 at a compound annual growth rate (CAGR) of 4.9%. The growth in the historic period can be attributed to rise in deployment of legacy vehicle control units, expansion of traditional military communication systems, adoption of early-generation surveillance modules, increased modernization of armored vehicle fleets, growing reliance on analog electrical control systems.

The vetronics market size is expected to see steady growth in the next few years. It will grow to $5.02 billion in 2030 at a compound annual growth rate (CAGR) of 5%. The growth in the forecast period can be attributed to increased demand for advanced defense mobility systems, expansion of autonomous battlefield technologies, rising focus on interoperable military communication networks, growth of digital battlefield awareness platforms, development of next-generation power and control systems. Major trends in the forecast period include integration of AI-driven vehicle control systems, expansion of autonomous combat and support platforms, advancement of cyber-secure vetronics architectures, adoption of intelligent manufacturing for defense electronics, development of IoT-enabled situational awareness systems.

The growing emphasis on military and defense services is driving the vetronics market. Increased terrorist activities, political instability worldwide, and geopolitical tensions in various countries have heightened the focus on defense and military operations, leading to the acquisition of next-generation combat vehicles. For instance, in March 2023, a report from a defense correspondent indicated that Rheinmetall's Military Vehicle Centre of Excellence (MILVEHCOE) in Queensland will produce 186 Boxer vehicles for Australia. Consequently, the rising emphasis on military and defense services is anticipated to accelerate the growth of the vetronics market in the coming years.

Major companies operating in the vetronics market are focusing on advanced innovations such as next-generation digital tank sights to enhance battlefield awareness, improve targeting accuracy, increase data flow, and support operational superiority in modern combat environments. Digital tank sights combine high-resolution optronic sensors, inertial navigation, and panoramic observation capabilities to provide commanders and gunners with accurate detection, identification, and targeting of objects at long distances under all conditions. For example, in February 2024, Nexter, a France-based provider of land-based military systems, and Safran Electronics & Defense, a France-based defense technology firm, received a contract from the French MOD’s procurement and technology agency (DGA) to develop and integrate new sights for the upgraded Leclerc XLR tank. The enhancement includes a latest-generation PASEO sight for the commander, a modernized gunner’s sight, and digital video systems, enabling improved observation, engagement, and operational effectiveness, while ensuring the Leclerc XLR remains capable against evolving battlefield threats until the arrival of its next-generation successor vehicles.

In August 2024, Rheinmetall, a Germany-based arms manufacturing company, acquired Loc Performance for USD 950 million. With this strategic acquisition in the USA, the Düsseldorf-based Rheinmetall Group is enhancing its position in the world's largest defense market and reinforcing its core business in land vehicles for military clients globally. Moreover, Rheinmetall is bolstering its production capabilities in the USA to target high-volume major orders for U.S. Army vehicle programs, which have a total potential value exceeding USD 60 billion. Rheinmetall is one of only two remaining participants in the current prototype phase of the XM30 program, aimed at introducing a new generation of infantry fighting vehicles. Loc Performance, a US-based provider of driveline, suspension, track systems, rubber products, armor products, and fabricated structures for vehicle platforms, sells directly to the government, its major prime contractors, and notable vehicle manufacturers in sectors such as agriculture, construction, mining, locomotives, mass transportation, and oil & gas industries.

Major companies operating in the vetronics market are Rheinmetall AG, Raytheon Technologies Corporation, L3Harris Technologies Inc., Lockheed Martin Corporation, Thales Group, Curtiss-Wright Corporation, General Dynamics Corporation, Leonardo SpA, Elbit Systems Ltd., Collins Aerospace, Harris Corporation, Northrop Grumman Corporation, Honeywell International Inc., Moog Inc., Ultra Electronics Holdings PLC, Kongsberg Gruppen ASA, ASELSAN AS, Cobham PLC, QinetiQ Group PLC, Meggitt PLC, Safran Electronics & Defense, Rafael Advanced Defense Systems Ltd., Israel Aerospace Industries Ltd., Aselsan Elektronik Sanayi ve Ticaret AS, BAE Systems PLC.

Note that the outlook for this market is being affected by rapid changes in trade relations and tariffs globally. The report will be updated prior to delivery to reflect the latest status, including revised forecasts and quantified impact analysis. The report’s Recommendations and Conclusions sections will be updated to give strategies for entities dealing with the fast-moving international environment.

Tariffs have raised the cost of imported electronic modules, sensors, communication circuitry, and ruggedized materials used in vetronics systems. Military and homeland security segments in North America, Europe, and Asia-Pacific face higher integration costs and longer procurement cycles. However, tariffs are supporting domestic manufacturing investments, strengthening regional defense supply chains, and accelerating innovation in resilient next-generation vetronics platforms.

The vetronics market research report is one of a series of new reports that provides vetronics market statistics, including the vetronics industry's global market size, regional shares, competitors with a vetronics market share, detailed vetronics market segments, market trends and opportunities, and any further data you may need to thrive in the vetronics industry. This vetronics market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenario of the industry.

Vetronics function as the central digital control systems for hub vehicle platforms, acting as the computerized core equipped with a controlled Ethernet switch. They are responsible for managing the electrical systems in ground combat and amphibious vehicles. The vetronics system consists of hardware and software interfaces essential for operating the vehicle's mobility systems, including propulsion, steering, self-protection mechanisms, and inter-vehicle communication. It operates as a fully redundant computer system, ensuring reliability and redundancy in critical functions.

Various types of vehicles utilize vetronics technology, such as main battle tanks, light combat vehicles, armored personnel carriers, infantry fighting vehicles, and similar platforms. Main battle tank vetronics are integral to heavily armored vehicles designed for direct fire and maneuverability, representing a crucial component of ground force strategies for decades. These systems incorporate various subsystems like weapon and control systems, command and communication setups, navigation and display interfaces, sensor and optronics modules, power systems, and other essential components. Vetronics find application in homeland security and military platforms, supporting critical operations within these sectors.North America was the largest region in the vetronics market in 2025. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the vetronics market report are Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the vetronics market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Taiwan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

The vetronics market consists of sales of C3 systems, vehicle protection systems, and power systems. Values in this market are ‘factory gate’ values, that is, the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors, and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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