Iran’s Shahed-136 drones—known in Russia as Geran-2—have been called one of the deadliest weapons of the war in Ukraine, and not without reason. Their destructive strikes against civilian targets have drawn widespread condemnation, but it is their sheer presence that underscores Moscow’s reliance on Tehran. Without Iran’s drones, Russia’s invasion would look very different. Local production of the Geran-2 variant now allows Moscow to adapt, upgrade, and mass-produce these drones while cutting costs significantly.
Recent intelligence reports show that the cost of producing each drone has dropped sharply, raising concerns about the economic feasibility of defending against them. Using expensive cruise missiles to shoot down Shaheds is increasingly impractical, especially as supplies of Western munitions tighten. Early in 2024, the hacker group Prana Network leaked details of Russia’s secret contract with Iran, revealing plans to license-produce 6,000 drones over two and a half years starting in 2022. Initially priced at 23 million rubles each (about $375,000), the deal was renegotiated to between 12 million and 18 million rubles ($193,000–$290,000) per drone, depending on order size.
The total contract—including technology transfer, equipment, drone kits, and software—was valued at a staggering 108.5 billion rubles ($1.75 billion). Analysts at the time warned Moscow was overpaying, since the Shahed is a relatively simple loitering munition often estimated at just tens of thousands of dollars per unit. But now the math has changed.
According to Ukrainian intelligence, Russia has accelerated production at its Alabuga Special Economic Zone, where the Geran-2 is assembled. The reported target: 6,000 drones per month—about 200 per day, or more than 72,000 annually. This surge has slashed unit costs. Citing Ukrainian military intelligence, CNN reported that a Russian-made Shahed now costs about $70,000, nearly three times cheaper than the first batches.
Other estimates differ. The Center for Strategic and International Studies (CSIS) suggested earlier this year that unit costs could be as low as $35,000, and in its latest assessments places the range between $20,000 and $50,000. While the lower figure is disputed, analysts agree that $50,000–$70,000 is more realistic. Wreckage of downed drones indicates Russia has been cutting costs by simplifying designs, such as using engines without starters or flywheels.
For comparison, Ukraine’s long-range FP-1 drones cost about $55,000 each and are being produced at a rate of roughly 100 per day. That puts the two sides’ loitering munitions on similar economic footing—but with Russia pushing production volumes even higher.
The implication is clear: Moscow can now build Shaheds faster and cheaper than ever before, overwhelming Ukrainian air defenses and unleashing wave after wave of attacks not only on military targets but also on cities and civilian infrastructure.
