A decision on how many of the Army’s Challenger 2 tanks will be upgraded will not be made until 2021.
Defence Minister Stuart Andrew said assessments were still being made but said he expects the order for the new mechanised infantry vehicles, the 'Boxer', will be put in by the Ministry of Defence by the end of this year.
He visited Telford for the launch of a new joint venture between the two defence companies that are hoping to deliver both programmes.
The Boxer can reach speeds of up to 70 miles per hour. It is hardened to protect against the effects of a nuclear explosion.
There are also a number of different variants, but it can be used for a range of things - from troop transport to heavy artillery.
It is a vehicle which will provide the Forces with the capability they are looking for, explained RBSL Managing Director Peter Hardisty.
Lance Corporal Mark MacKellar had the chance to be in it a Boxer lent to British Forces by the Dutch Army.
"It is much better than the Mastiff," he said.
Four-hundred-and-fifty jobs are to be sustained by the merger between Rheinmetall and BAE Systems Land UK, with the venture being based in Telford, in the West Midlands.
Prior to the announcement, the two companies had been individually bidding for the contract to extend the life of the Challenger 2 to 2035.
However, it has not been decided which proposal will be taken forward.
The vehicle was originally designed and manufactured by BAE Systems and entered service in 1998.
Last year, BAE showcased its prototype for the upgraded Challenger 2, the Mark 2 Demonstrator, nicknamed the 'Black Night'.
The new partnership, named Rheinmetall BAE Systems Land (RBSL), will see the companies combine their market-leading specialisms to compete on a global scale.
Defence Secretary Penny Mordaunt said: "This announcement is a clear vote of confidence in the UK’s defence industry as a world-leader in designing, supplying and supporting military vehicles."
RBSL will draw on Rheinmetall’s leading military vehicle technologies and BAE Systems’ UK portfolio of capabilities from the Challenger 2 main battle tank to various armoured vehicles, military bridging and the AS90 self-propelled artillery system.
The new venture is expected to present competitive proposals to the British Army for the programme to upgrade the Challenger 2 battle tank fleet and the delivery of the Boxer project - the Army’s armoured transport vehicle.
It will also see the companies continue to support other battle-winning combat vehicles such as Warrior, Trojan and Terrier.