ThyssenKrupp has made a bid to build the next generation of submarines for Australia in a joint-venture with Adelaide-based Australian Submarine Corporation (ASC) and comes in under $20 billion, according to AFR reports.
Although no official decision has been made, Japan is likely to win the work and ASC might miss out.
The multi-billion dollar purchase could see Australia acquiring a fleet of stealth diesel engine submarines based on the Japanese Maritime Self-Defense Force's Soryu class vessels.
Australia may buy 12 4,000 ton Soryu class stealth diesel engine submarines and would replace six outdated Collin-class boats by 2030.
The Australian Government had earlier promised that all the next generation submarines would be built indigenously.
Australia might look at options of working jointly to develop the technology or import the engines and building the rest.
Other option is to build the fleet in South Australia under license from Japan to Canberra buying finished subs designed and built by Mitsubishi Heavy Industries Ltd and Kawasaki Heavy Industries Ltd.