With Its Own Effort Floundering, US Turns To Ukraine To Build Better Drones

The US has begun to acknowledged that it not only has a lot to learn from Ukraine about fighting a modern war, but that some of the weapons and technology the Ukrainians have developed, in desperate straits, are far superior to anything the US can produce despite its vast resources. 

As a result, the US Defense Department is turning to partnerships with Ukrainian companies, especially in developing drones. JL

Heather Somerville reports in the Wall Street Journal:

With America’s drones a disappointment, defense startups have joined with Ukrainian manufacturers to build better, war-proven aircraft for the U.S. military. U.S. startups have spent billions of venture-capital dollars to develop drones the Pentagon needs but many (are) expensive and don’t fly very well. The Ukrainians have mastered mass-producing drones despite limited resources and their drones often sell for one-tenth the price of Americans'. The U.S. can build 100,000 drones a year. Last year, Ukraine built more than two million. “No U.S. company is keeping up with Ukraine. You know their stuff works. They’ve got the ultimate high-stakes laboratory to battle-proof this stuff.”

With America’s drone technology a disappointment on the battlefield, defense startups have joined forces with Ukrainian manufacturers to build better, war-proven aircraft for the U.S. military.

U.S. startups have spent billions of venture-capital dollars in hopes of developing the small drones that the Pentagon says it needs for future conflicts, but many have produced only expensive aircraft that don’t fly very well. Ukrainian drone makers, meanwhile, have mastered mass-producing drones despite limited resources and are looking for new customers and capital.

Now, the two sides are coming together, and the unlikely pairing is getting attention from the Defense Department.

Southern California startup CX2 last year struck a deal to put its software and sensors on Ukrainian drones, a matchup that has received approval from a branch of the U.S. military and might soon arm American forces.

“No U.S. company is keeping up with Ukraine,” said CX2 co-founder Nathan Mintz. “You know their stuff works. They’ve got the ultimate high-stakes laboratory meant to battle-proof all this stuff.”

The Defense Department’s interest in Ukrainian drones underscores the challenges that have beset American drone startups and the achievements of the Ukrainians since the Russian invasion. Despite the Pentagon’s view that small, autonomous drones are essential and a funding priority, the sentiment has failed to spur an American drone-industry boom.

The U.S. has the capacity to build up to 100,000 drones a year, according to one Defense Department estimate. Last year, Ukraine built more than two million drones. Some of the Ukraine-built drones that the Defense Department wants can fly hundreds of miles with explosives and have been used in attacks inside Russia.

Ukrainian drone manufacturers are starting to contemplate a future after the war, as the U.S. and Ukraine continue talks around a possible peace process. Any diplomatic plot twists are unlikely to unravel the bond that has developed between U.S. and Ukrainian drone startups, or reverse the Defense Department’s efforts to adopt superior innovation from Ukraine, said defense officials and startup founders.

U.S. Army soldiers inspecting CX2’s Wraith drone in Germany in January. The Southern California startup last year struck a deal to put its software and sensors on Ukrainian drones. Photo: CX2

‘Drone capital of the planet’

For Ukrainian startups, growth depends on expanding outside their country, where there are caps on how much profit they can make on sales and the government can’t afford to buy all the drones produced in the country.

To make the drone sector a catalyst for economic growth after the war, the startups want American customers and investors.

“Ukraine has made it pretty clear that they intend on being the drone capital of the planet once this war is over,” said Derek Whitley, co-founder of startup Vivum, which sells its AI software for autonomous systems to the Defense Department.

Ukrainian drones often sell for one-tenth the price of American options. They have proven on the battlefield that they can work when radio and satellite communication is blocked by electronic jamming.

American startups are slower to build, deliver and update their drones, which also have often failed to weather severe electronic warfare. Many U.S. companies that brought their drones to Ukraine watched them fall out of the sky or fail to complete missions.

 

The Defense Innovation Unit, or DIU, an arm of the Defense Department that sources new technology for the military, for the first time awarded contracts in recent weeks to two Ukrainian-American partnerships. The companies will test their long-range attack drones this spring in Ukraine, where the drones are manufactured, and then have an opportunity to compete for production contracts with the Pentagon.

“We want the best, and we see the capabilities we need in Ukraine,” said Trent Emeneker, a contractor with the DIU who helps manage its autonomous-systems portfolio.

The DIU has—also for the first time—chosen a Ukrainian drone maker to add to its list of approved potential suppliers for the U.S. military.

The company, Skyfall, has completed more than 1.5 million missions for Ukraine and builds thousands of drones a day. Skyfall’s bomber drones—loaded with software and a sensor package from CX2—will likely be offered to the U.S. military this year if they pass certain security tests.

CX2 was started last year by Mintz and three co-founders, including former Andreessen Horowitz investor Porter Smith, as an answer to the electronic-warfare challenges that defeated other drone companies. Its software and sensor design help drones fly autonomously in jammed war zones and find and attack other drones and targets.

CX2 co-founder Porter Smith, far left, with a test team in Germany in January. Photo: CX2

Pittsburgh-based startup Swan is providing the autonomy software for one of the Ukrainian attack-drone companies selected for a DIU award and has staff in Ukraine who work with more local drone partners.

Another Pittsburgh startup, KEF Robotics, formed a joint venture with Ukrainian company Sensorama Lab to build software and sensor systems in Kyiv that will enable drones to navigate in jammed airspace and locate targets while remaining relatively undetected. The joint venture, called Blue Arrow, has orders from European militaries and is raising funding from U.S. venture capitalists. It will test its drones with an elite Ukrainian unit on the front lines within the next two weeks.

“Nobody stateside is keeping up with the level of production that’s happening in Ukraine,” said Olga Pogoda, a co-founder of Blue Arrow.

Headwinds

There are hurdles to bringing Ukraine’s drones to the world, not least among them the country’s restrictions on drone exports. Ukrainian drone makers have organized to lobby Kyiv to end the ban on selling their drones outside the country and are joining their new U.S. partners to find workarounds.

Skyfall is seeking special permission from the Ukrainian government to sell its bomber drones to the U.S.

“The parts that we cannot sell to Ukraine because they don’t have the money, we can sell to the Americans or Europeans or Baltic countries,” said Elena Dushenok, head of growth at Skyfall.

In October, Ukrainian President Volodymyr Zelensky told journalists that the government was considering the possibility of exporting weapons to countries that had supplied Ukraine with arms for the war. But Kyiv’s mounting distrust of Washington could complicate the effort to bring Ukrainian drones to the U.S.

 

A spokeswoman for the Ukrainian Ministry of Strategic Industries declined to comment.

Another potential pitfall for Ukrainian manufacturers is that they often rely on parts from China. To sell to the Defense Department, they will have to find suppliers elsewhere.

Drone manufacturers are undaunted by the politics.

Sine.Engineering, which sells radios and navigation software to drone manufacturers and the Ukrainian military, is in the process of opening a new European unit outside Ukraine. From that base, it aims to expand its production and sales, including to defense manufacturers in the U.S. that supply the Pentagon.

“This year, one of the main priorities for us is expansion outside of Ukraine,” Chief Executive Andriy Chulyk said. The added income will fund more drone-technology development for the fight against Russia. “This is a really big war we have here right now,” he said.