The AC1 Sentinel's problems were readily aparent to republican armoured units from the onset; its gun was underpowered against hard targets such as bunkers or other tanks, the hull machinegun was a liability, the armour scheme could be somewhat improved, and the ramshackle three-engine solution on the AC1 proved somewhat unreliable. As a response, in 1942, the Oceanykan Council ordered a revamp of the AC1 Sentinel; the hull machinegunner would be removed to make space for ammunition, the frontal armour plate would be smoothed over and sloped even more, the engine would be streamlined into a single three-part piece similar to that on the M4 Sherman and, most importantly, a 25 pounder gun would be installed, giving the tank much greater capabilities against all targets. The resulting AC3 Thunderbolt would begin production in 1943, as the tide turned in favour of the Oceanykan Council.
The AC3 Thunderbolt, compared to other medium tanks of the era, was a truly modern design and had similar or greater capabilities to its peers in the world stage. Its final iteration was the Australian Cruiser Tank Mk. IV "Lightning".