Spain initially leased 109 Leopard 2A4 tanks, after Krauss-Maffei withdrew from the Lince development, a special lighter version of the Leopard 2 developed together with Santa Bárbara Sistemas. Before the end of the Lince tank, Spain already had rejected the M1A1 Abrams and the Vickers Valiant tank. After deciding to purchase the leased tanks, Santa Bárbara Sistemas acquired the licence to locally produce 219 Leopard 2A6 tanks for the Spanish army. A memorandum of understanding was signed on 9 June 1995 between the German and Spanish governments, setting the foundations for an acquisition of up to 308 brand-new Leopard 2Es. These were to be assembled in Spain by Santa Bárbara Sistemas, with 60–70 percent of the components manufactured by Spanish companies, and production taking place between 1998 and 2003.
The Leopard 2E (E stands for España, Spanish for Spain) is a derivative of the 2A6, with greater armour protection, developed under a programme of co-production between the defence industries of Spain and Germany. The programme was developed within the frame of collaboration decided in 1995 between the Defence Ministries of both countries, in which also was included the cession of use by a period of five years of 108 Leopard 2A4 from the German Army to the Spanish Army. However, this cession was extended up to 2016, and after that those tanks will be the sole property of the Spanish Army, as has been made public on 24 January 2006, then having been paid a total of 15,124,014 euros in ten yearly installments, giving the Spanish co-ownership from 2006.
The Leopard 2E is a major improvement over the M60 Patton tank, which it replaced in Spain’s mechanized and armored units. Its development represented a total of 2.6 million man-hours worth of work, 9,600 of them in Germany, at a total cost of 2.4 billion euros. This makes it one of the most expensive Leopard 2s built. Indigenous production amounted to 60% and the vehicles were assembled locally at Sevilla by Santa Bárbara Sistemas. It has thicker armor on the turret and glacis plate than the German Leopard 2A6, and uses a Spanish-designed tank command and control system, similar to the one fitted in German Leopard 2s.
In 1998, the Spanish government agreed to contract 219 tanks of the Leopard 2E line, 16 recovery tanks Leopard 2ER (Bufalo) and 4 training vehicles. They chose Santa Bárbara Sistemas as the main contractor. The programme, with a budget of 1,939.4 million Euros, also includes the integrated logistical support, training courses for crew instructors and maintenance engineers and driving, turret, maintenance, aiming and shooting simulators. Deliveries of the first batch began in 2004. Despite postponement of production owing to the 2003 merger between Santa Bárbara Sistemas and General Dynamics, and continued fabrication issues between 2006 and 2007, 219 Leopard 2Es have been delivered to the Spanish army. The Leopard 2E is expected to remain in service until 2025.