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The Panzer I Ausf. C was designed jointly between Krauss-Maffei and Daimler-Benz in 1939 to provide an amply armoured and armed reconnaissance light tank.

The Ausf. C boasted a completely new chassis and turret, a modern torsion-bar suspension and five Schachtellaufwerk-style interleaved roadwheels. It also had a maximum armor thickness of 30 millimeters (1.18 in), over twice that of either the Ausf. A or B, and was armed with a Mauser EW 141 semi-automatic anti-tank rifle, with a 50-round drum, firing powerful armor-piercing 7.92x94mm Patrone 318 anti-tank rounds. Forty of these tanks were produced, along with six prototypes. Two tanks were deployed to 1st Panzer Division in 1943, and the other thirty-eight were deployed to the LVIII Panzer Reserve Corps during the Normandy landings.

Panzer I Ausf. C. Only related to the Ausf. A and B by name, it had a newly engineered chassis and suspension system. It was intented as an armed and armoured reconnaissance tank.

It served with the 1. Panzer-Division and later in Normandy with the LVIII Panzer-Reserve-Korps.

Only 46 were built.