In 1936 the first model of the Pz Kw III was produced by Daimler-Benz and ten vehicles designated "1/ZW" underwent troop trials. Eight of these were fitted with the 3.7 cm gun and chassis numbers started at 60,001. Although the hull, superstructure and turret already took the form familiar in the later Pz Kw III models, the suspension consisted of five large double bogies, which were suspended on coil springs, plus a front driving sprocket and a rear idler together with two return rollers. Armour was between 5 and 14'5 mm thick and the overall weight was 15 tons. The power unit was a development of the Maybach DSO 12-cylinder high-performance 108 TR petrol engine of about 11 litres which produced a maximum of 250 hp. Maximum sustained output was however only 230 hp and top speed was 32 kph. Transmission was by a ZF SFG 75 five-speed gearbox. One hundred and fifty rounds were carried for the main armament and 4500 rounds for the three machine guns, two of which were coaxial with the main armament in the turret. This vehicle was known unofficially as the Pz Kw III (3.7 cm) Ausf A.
The marks B and C appeared in 1937. A new suspension was tried, consisting of eight small bogie wheels suspended on longitudinal leaf springs and the number of return rollers was increased to three. Armament remained a 3.7 cm tank gun L/45 in an internal mantlet and two MG 34s, while a third machine gun, mounted beside the driver, was worked by the wireless operator. Fifteen of each of the B (type 2/ZW) and the C (type 3a/ZW) models were constructed. Armour was retained at 14.5 mm all round. The Model D (type 3b/ZW) which finally went into quantity production, appeared at the end of 1938. With the introduction of Model D all previous trial models were redesignated Model D. The various original suspensions were retained, but these vehicles were uparmoured to 30 mm all round, increasing the total weight to about 19 tons. The ZF Aphon SSG 76 transmission was used.
From the Model E onwards the more powerful Maybach 12-cylinder HL 120 TR was fitted, which increased the maximum output to 320 hp by enlarging the bore from 100 to 105 mm and increasing the cylinder capacity to 11.9litres (torque 80 m/kg). The gearbox in this vehicle was the Maybach Variorex pre-selector with 10 forward and one reverse speed. This complicated transmission was intended to make gear changing easier as the change was carried out by a vacuum after the gear had been selected and the release valve activated by depressing the clutch pedal. The 9th and 10th gear positions were overdrives. The speed of 40 kph at 2800 rpm was not to be exceeded. Fifty-five vehicles of this version were produced.
On 27th September 1939 the Army Regulations circular announced "Panzerkampfwagen III (3.7 cm) (Sd Kfz 141), has been adopted as a result of its successful troop trials".
In the mass production which now followed the participating manufacturers were: AItmärkische Kettenfabrik GmbH (Alkett)-Spandau (assembly) and Falkensee (chassis construction); Daimler-Benz ,AG-Berlin-Marienfelde; Fahrzeug- und Motorenbau GmbH (Famo)-Breslau; Henschel & Sohn AG -Werk III, Mittelfeld-Kassel; Maschinenfabrik Augsburg-Nürnberg AG (MAN)-Nuremberg; Mülenbau und Industrie AG (MIAG)-Amme Werk, Brunswick; Waggonfabrik Wegmann AGKassel; and Maschinenfabrik Niedersachsen-Hannover- Hannover-Linden.
The Pz Kw III Ausf E (type 4/Zw) (reference order 652/17 of 23rd April 1940), which appeared in 1939, featured the finalised chassis design of this series. There were now six bogies on each side (bogie size 520 x 95-398, track roller size, 310 x 70-302), mounted on transversely-fitted torsion bars. The vehicle weighed 19.5 tons when fitted with allround armour 30 mm thick and was still equipped with the Maybach HL 120 TR engine. The chassis weighed 13.8 tons. Two coupled machine guns (MG 34s) in the turret had, until now, been coaxial with the main armament, but from this version onward a single coaxial machine gun was fitted. Some Pz Kw III Ausf E versions had the old model D type turrets with an internal mantlet and two turret machine guns however. Transmission was via a main clutch to the Maybach Variorex pre-selector gearbox already described. This gearbox was of the constant-mesh type where sliding gear switch sleeves transferred the drive to the two cog wheels required for the correct gear. The main clutch was hydraulically operated and the bevel gear and the steering gear were flanged to the variable gears. Clutch steering was affected by means of mechanical servo-internal, expanding brakes with hydraulic assistance. Steering and standard brakes were located in the same housing and from these the drive went to the driving sprocket. The rear idler wheel, in this version, consisted of a boss upon which two wheel discs were welded. The 37 mm gun now had an external mantlet. By 1940 100 of these vehicles had been built, intended as the main equipment of tank regiments. The German tank industry could only produce in limited numbers, and this low production capacity became more and more apparent. The Pz Kw III received its baptism office in Poland and there proved itself. For the attack on France on loth May 1940 a total of 349 Pz Kw IIIs was available.