Austro-Italian ironclad arms race
Seizing upon the decline of the Regia Marina in the years immediately after the Battle of Lissa, Tegetthoff worked to continue the efforts of Archduke Ferdinand Max of expanding the ironclad fleet of the now Austro-Hungarian Navy. Tegetthoff found political allies in the Austro-Hungarian Minister of War Carl von Franck and retired Admiral Bernhard von Wüllerstorf-Urbair. Wüllerstorf's and Franck's primary arguments in favor of continuing with the ironclad program Austria had engaged in prior to the Seven Weeks War lay largely along economic grounds. The two believed that constructing new ironclad warships would rejuvenate Austria-Hungary's economy following the defeat at the hands of Prussia and Italy, and that such a fleet would help to open up new commercial opportunities in the Levant and the Middle East. These proposals would be shelved however while Austria continued to reel from the military defeats inflicted by Prussia, and several cabinet reshufflings by Emperor Franz Joseph I resulted in a government more interested in pursuing revenge against Prussia than constructing new ironclads, which would be of little use in a hypothetical second war with Prussia.
Silesian Wars
After entering Bohemia, Prussian forces converged upon Prague by the beginning of September, seizing the city on 16 September. This new threat drew the Austrian army back from Alsace through Bavaria; the French, however, failed to harass and disrupt the Austrian redeployment, so Austria's army was able to return to Bohemia quickly and at full strength, though it was forced to abandon control of Alsace and Bavaria. Frederick gathered his forces around Prague and tried repeatedly to force a decisive engagement, but Austrian commander Otto Ferdinand von Traun focused on harassing the invaders' supply lines, eventually forcing the Prussians to abandon Prague and Bohemia and retreat into Upper Silesia in November.
With the January 1745 Treaty of Warsaw, Austria established a new "Quadruple Alliance" among Austria, Britain, Saxony, and the Dutch Republic, followed by a secret offensive alliance between Austria and Saxony, which envisioned a territorial partition of Prussia. Meanwhile, Emperor Charles died on 20 January, destroying the rationale behind Frederick's alliance. These events combined to produce a major shift in the direction of the war in Germany. Austria renewed its offensive against Bavaria in March 1745, decisively defeating the Franco-Bavarian army at the 15 April Battle of Pfaffenhofen, and making peace with Maximilian III of Bavaria (the son of the late Emperor Charles) by the Treaty of Füssen on 22 April.