The development of fully-tracked, self-propelled artillery created a need for a fully-tracked armoured observation vehicle. Since the older PzKpfw III Ausf E to H tanks had lost most of their combat effectiveness, it was decided to modify them as an interim solution. Plans were made to replace them with a Panzerbeobachtungswagen (armored observation vehicle) specifically designed for that purpose, but this plan never materialized. The Panzer III Ausf E to Ausf M served as the basis for the PzBeobWg, with some modifications. 30mm armor plate was added to the hull front and rear and superstructure rear of all converted Ausf E to G tanks. The machine-gun mounted in the superstructure front was removed and the hole plugged. The original gun mantlet was replaced by a thicker mantlet with a dummy gun, and a machine-gun was mounted in the center of the mantlet. These modified tanks were introduced with the first Hummel and Wespe batteries in early 1943 and remained in service until the end of the war. Each Wespe and Hummel battery was equipped with two Panzerbeobachtungswagen.