The Terrex started off as a private venture between Singapore Technologies Engineering and Timoney Technology, intended for export sales. The initial AV-81 design utilised conventional coil springs shock absorbers but later variants have seen the introduction of hydro-pneumatic struts with real-time damping control. A electric-hybrid drive system was also developed.
In mid-2004, one prototype and one pre-production model had been built and was evaluated throughout Asia and Europe, where the vehicle was offered for a number of emerging wheeled armoured vehicle requirements. This was further influenced by the emerging United States' Interim Brigade Combat Team (IBCT) concept, which calls for the need of wheeled armoured fighting vehicles (AFV) as opposed to tracked AFVs.
The Terrex AV-82 was developed in 2005 equipped with a more advanced driveline and hydro-pneumatic suspension system, and a number of changes from the AV81 including a flat underbody instead of a V-shaped hull and revised rear suspension.
The Singapore Armed Forces will acquire at least 135 Terrex ICVs to replace its V-200 armoured vehicles, with all active infantry and Guards battalions to begin training to operate from the vehicle in February 2010. The Indonesian Army has plans to purchase 420 units and has also expressed intent to produce the Terrex locally under license. Turkish automaker Otokar has also joined with ST Kinetics to produce the Terrex AV-82 (renamed Yavuz) for the Turkish Armed Forces.