Palmer Luckey has come a long way from hacking together virtual reality headsets in a garage. Today, the Oculus VR founder’s defense tech startup, Anduril, announced that it has raised $1.5 billion in addition to developing a new manufacturing platform to produce “tens of thousands of autonomous weapons” a year.

The funding round, led by Founders Fund and Sands Capital, could help the seven-year-old Anduril transition from a flashy defense industry upstart to a more serious US defense contractor.

It also reflects a shift in military thinking, as policymakers adapt to the prospect of battlefields ruled not only by tanks and fighter jets, but also by drones and artificial intelligence, and they search for ways to ramp up America’s capacity to produce military hardware to match that of a prospective adversary such as China.

In addition, Anduril is betting that it can parlay a lean and efficient tech industry approach to manufacturing into a new way of producing weapons systems at scale. The company says it has developed an AI-powered manufacturing platform, called Arsenal, to speed up the production of its growing armory of drones and other hardware.

Greg Allen, an expert at the Center for Strategic and International Studies, says the Pentagon is getting more serious about working with nontraditional defense contractors and investing in small, cheap, autonomous systems. “The stars are aligning in terms of the [Department of Defense] changing its approach, new companies coming with a different approach, and the venture capital community finally willing to put big money at risk to make things change,” he says.

Anduril says that Arsenal will follow the kind of approach used in high-tech manufacturing by companies like Apple and Tesla. This means designing products with manufacturing in mind and using software to monitor and optimize manufacturing operations. The company says it will also rely on a supply chain that is more resilient because it will source components primarily from the US or allied nations.

The company says it will spend several hundred million dollars to build the first factory of this kind, the sleek Arsenal-1, at an undisclosed location. Anduril has already ramped up its manufacturing capabilities in recent years, with a factory in Mississippi for building solid rocket motors and another in Rhode Island for producing drones.

Rendering of Anduril's planned Arsenal-1 factory.Anduril

In a manifesto titled “Rebuilding the Arsenal of Democracy,” Anduril says the moves are designed to counter a critical US military weakness that was exposed when the war in Ukraine quickly depleted US weapons caches. “Our stockpile of critical munitions has taken years to produce and would take just as long to replace,” the report reads. “Years of war games suggest the US military would run out of these weapons in less than one week of a war with China.”

Anduril’s manifesto also references Tesla’s software-heavy approach to car design and its ability to rapidly scale up the production of electric vehicles, despite industry skepticism, as inspiration for its manufacturing tilt. “Leading commercial companies are achieving what many thought impossible because they are, first and foremost, software companies, and it is software that enables them to design, develop, and manufacture their hardware products in entirely new and different ways,” the report reads.

Anduril’s move also appears inspired by a Pentagon initiative called Replicator, launched last August, which is funneling money into companies capable of producing thousands of “attritable,” or expendable, autonomous systems per year. The program has allocated money to AeroVironment, the company that makes Switchblade drones, as well as makers of autonomous surface vessels, details of which are classified.

The war in Ukraine is also prompting a shift in military thinking around the importance of low-cost drones equipped with AI software. In May, Anduril won a contract to develop a new kind of drone for the US Air Force and Navy, called the Collaborative Combat Aircraft, which will have sophisticated autonomous and swarming capabilities.

A study on the Collaborative Combat Aircraft program coauthored by CSIS’s Allen notes that the project signals a new approach from the Department of Defense, inspired by Russia’s invasion of Ukraine as well as reports suggesting that the Chinese military is preparing to be ready to invade Taiwan by 2027. “Everything needs to change, and it needs to change fast,” he says.