Iran War Ignites US Demand for Cheaper Drone Defense Systems

The Pentagon is tired of bringing a $4 million missile to a $500 drone fight. 

Since the US and Israel launched strikes on Iran on February 28, Tehran has responded by sending thousands of kamikaze drones to strike military and civilian targets across the Gulf, including US bases. 

Most have been intercepted, but expensively so. The Pentagon’s approach to drone warfare could get major updates this week.

Discount Defenders

From an economic lens, this is straightforward. Iran’s Shahed drones, which Tehran has stockpiled in the thousands, cost roughly $30,000 each. The US and its regional allies are intercepting them with Patriot air defense missiles, which cost millions of dollars, and other pricey interceptors. On top of this, drones can be mass-produced. Patriot interceptor production is limited to roughly 600 units annually (manufacturer Lockheed Martin is slated to increase that to 2,000 as part of a seven-year agreement with the US government). Admiral Brad Cooper, the head of US Central Command, said last week that Tehran had already launched over 2,000 drones. If it’s not obvious, this suggests an imbalance that’s adding up quickly. Experts have raised concerns that interceptor stockpiles could be strained if the conflict continues much longer.

But the one country that happens to be the world leader in defeating Shahed drones is a US ally: Ukraine. Russia has used Shaheds since it launched its full-scale invasion of its neighbor in 2022 and, dealing with its own shortage of interceptor missiles, Ukraine pioneered cheap, effective, mass-produced counter-drones to destroy them. One of the best-known, the “Sting”, can reach speeds of 185 miles per hour, climb several thousand feet, and provide a roughly 15-mile operational range — all at a unit cost as low as $2,500. That capability, developed for Ukraine by the volunteer nonprofit Wild Hornets, opened a window for Kyiv:

• On Thursday, Ukrainian President Volodymyr Zelenskyy said his country was providing specialists and assistance at the request of the US, while the Financial Times reported that the Pentagon and at least one Gulf country are in talks to buy Ukrainian interceptors. Zelenskyy also said he was open to swapping them for Patriot missiles.
• Last month, through its Drone Dominance Program, the Pentagon invited 25 drone manufacturers, including two from Ukraine, to compete for a $150 million prototype order for 30,000 small, one-way attack drones. 

Invest It Old School: The US government is still committed to increasing traditional missile-interceptor production, something investors have greater access to in public markets than the startup-laden drone sector. When L3Harris Technologies announced a spinoff of its solid rocket motor business in January, the Pentagon said it would invest $1 billion in its IPO. Last week, the US Army approved a $184 million contract for Raytheon to deliver new hardware and services for Patriot systems operated by the UAE, which is taking steps to shore up its aerial defenses amid Iranian attacks.