A $2 million interceptor instead of $4 million: Boeing and Lockheed in a program to lower missile costs

In Huntsville, Alabama, this week, the largest US defense contractors presented plans for cheaper missiles that can be produced at a significantly faster pace. Boeing, Lockheed Martin, Northrop Grumman, and RTX (Raytheon) arrived at the missile defense conference with a shared goal: to move away from expensive models that take years to build and cost upwards of $4 million per missile.

The war with Iran has depleted about two-thirds of the US Patriot interceptor inventory, reducing it from approximately 2,200 missiles to 800. THAAD inventory has dropped by about 38%. Using a multi-million dollar interceptor against a low-cost drone is a calculation the army can no longer sustain, prompting industry leaders to prioritize cost-efficiency and production volume alongside range and accuracy.

Boeing has developed a seeker head version with a significantly lower cost, utilizing commercial parts adapted for military use. It has already undergone successful flight tests. Meanwhile, Lockheed Martin recently unveiled the PAC-3 ACE, a lower-cost version of the Patriot interceptor that integrates with existing fire control systems. Market estimates place the price at around $2 million per unit, less than half the cost of the PAC-3 MSE.

The Pentagon has given the industry 21 days to submit plans for aggressive production acceleration: tripling Patriot output, quadrupling THAAD production, and increasing Tomahawk output to 1,000 missiles per year. The US Army has also opened a competition for low-cost interceptors, signing multi-year framework agreements with companies like Anduril, Kratos, and Castellan.

Northrop Grumman has pursued a different strategy, presenting a 50mm cannon system designed to counter drones and cruise missiles, with shells costing only a few thousand dollars. The first test flight of the ACE is scheduled for 2028, with initial production expected to begin by mid-2029.