Volkswagen is reportedly in talks with Israel's Rafael Advanced Defence Systems to retool its Osnabrück factory in Germany to manufacture components for the Iron Dome air defense system. This potential shift comes as the German automotive sector, including VW, faces significant challenges, with Volkswagen's operating profit collapsing 53.5% to $8.9 billion in 2025 and net profit falling 44% to $6.9 billion. The Osnabrück plant, which employs around 2,300 workers, currently produces the T-Roc Cabriolet, a model scheduled for phase-out by mid-2027.
The proposed deal would see the Osnabrück plant manufacturing support components for the Iron Dome, such as heavy-duty transport trucks, launch units, and power generators, rather than the interceptor missiles themselves. Rafael plans to produce the interceptor missiles at a separate German facility. This move is seen as a significant indicator of a broader trend in Germany's automotive industry, where manufacturers are increasingly exploring military gear production to address struggling car sales and leverage new military spending under Germany's rearmament plans and the EU's ReArm Europe framework.
While no final agreement has been reached, the discussions aim to save jobs at the Osnabrück plant, with an insider suggesting the goal is to "save everybody, maybe even to grow." The carmaker stated it is still exploring options for the factory and ruled out the production of weapons, focusing instead on components. Any conversion would require approval from the works council, which holds significant influence under German labor law. If approved, production could commence within 12 to 18 months. These talks follow Volkswagen's announcement in March to cut 50,000 jobs in Germany by 2030 across its brands, including Audi and Porsche, and failed negotiations to sell the Osnabrück plant to defense giant Rheinmetall.
