The M1 Abrams was developed during the Cold War as a successor to the canceled MBT-70. The M1 Abrams contract went to Chrysler Defense and was the first vehicle to adopt Chobham armor. Adaptations before the Persian Gulf War (Operations Desert Shield and Desert Storm) gave the vehicle better firepower and NBC (Nuclear, Biological and Chemical) protection. Being vastly superior to Iraqi tanks, very few M1 tanks were hit by enemy fire. Upgrades after the war improved the tank's weapons sights and fire control unit. The invasion of Iraq in 2003 destroyed Iraq's military. The subsequent insurgency exposed the tanks' vulnerability to rocket-propelled grenades and mines. These problems were partially rectified with the TUSK modification. The Marine Corps sent a company of M1A1 Abrams to Afghanistan in late 2010.
The first attempt to replace the aging M60 tank was the MBT-70, developed in partnership with West Germany in the 1960s. The MBT-70 had advanced features such as a height-adjustable air suspension and a very small body with the driver in a turret design that allowed the driver to always face the direction of travel. The MBT-70 ultimately proved to be too heavy, complex, and expensive. As a result of the imminent failure of this project, the U.S. Army introduced the XM803, using some technologies from the MBT-70 but removing some of the more troublesome features. This succeeded only in producing an expensive system with capabilities similar to the M60.
Congress canceled the MBT-70 in November and XM803 December 1971, and redistributed the funds to the new XM815, later renamed the XM1 Abrams after General Creighton Abrams. Prototypes were delivered in 1976 by Chrysler Defense and General Motors armed with the license-built version of the 105 mm Royal Ordnance L7 gun along with a Leopard 2 for comparison. The turbine-powered Chrysler Defense design was selected for development as the M1; Chrysler had significant experience designing turbine-powered land vehicles going back to the 1950s. In March 1982, General Dynamics Land Systems Division (GDLS) purchased Chrysler Defense, after Chrysler built over 1,000 M1s.
A total of 3,273 M1 Abrams were produced 1979–85 and first entered U.S. Army service in 1980. Production at the government-owned, GDLS-operated Lima Army Tank Plant in Lima, Ohio, was joined by vehicles built at the Detroit Arsenal Tank Plant in Warren, Michigan from 1982 to 1996. The M1 was armed with the license-built version of the 105 mm Royal Ordnance L7 gun. An improved model called the M1IP was produced briefly in 1984 and contained small upgrades. The M1IP models were used in the Canadian Army Trophy NATO tank gunnery competition in 1985 and 1987.
About 6,000 M1A1 Abrams were produced from 1986–92 and featured the M256 120 mm (4.7 in) smoothbore cannon developed by Rheinmetall AG of Germany for the Leopard 2, improved armor, and a CBRN protection system. Production of M1 and M1A1 tanks totaled some 9,000 tanks at a cost of approximately $4.3 million per unit. By 1999, costs for the tank were upwards of US$5 million a vehicle.
In 1990, Project on Government Oversight in a report criticized the M1's high costs and low fuel efficiency in comparison with other tanks of similar power and effectiveness such as the Leopard 2. The report was based on data from U.S. Army sources and the Congressional record.
As the Abrams entered service in the 1980s, they operated alongside M60A3 within the United States military, and with other NATO tanks in numerous Cold War exercises. These exercises usually took place in Western Europe, especially West Germany, but also in some other countries, including South Korea. The exercises were aimed at countering Soviet forces. However, by January 1991 the Berlin Wall had fallen and the Abrams was instead deployed in the Middle East.