Volkswagen has finalized a preliminary agreement to convert its Osnabrück factory from automobile production to defense manufacturing. The deal, announced on September 7, 2026, involves Israeli firm Aurelius Capital acquiring a majority stake in Volkswagen Osnabrück GmbH, with support from the government of Lower Saxony, where VW is headquartered. This move aims to repurpose the 125-year-old facility, which was slated to cease vehicle production next year, providing a new direction for the plant and its 2,300 employees.
Under the new arrangement, the Osnabrück plant will become a hub for innovative security and defense solutions. While the Iron Dome's Tamir interceptor missile itself will not be manufactured there, the facility will produce military vehicles, launchers, generators, and other critical equipment for air defense systems. This strategic shift is being undertaken in partnership with Rafael Advanced Defense Systems, an Israeli defense company, which will establish production for Iron Dome components in Germany.
This agreement reflects a broader trend in the European automotive sector, where companies are increasingly exploring defense manufacturing due to challenges like excess capacity and rising costs. Olaf Lies, Minister-President of Lower Saxony, highlighted the partnership's potential for creating long-term, highly skilled employment and strengthening Germany's and Europe's independence in the security and defense industry. The deal also builds on existing defense ties, following Germany's prior $3.5 billion Arrow 3 contract and a subsequent $3.1 billion follow-up contract with Israel.
Earlier in March 2026, Volkswagen had been in talks with Rafael regarding this shift, but had initially stated that it ruled out weapons production. However, the current deal, which involves Aurelius Capital and the Lower Saxony government, signifies a pivot towards defense-related manufacturing for the plant. Aurelius Capital, co-founded by Alon Lifshitz and Tomer Jacob, along with former NSA director Michael Rogers and former IAF commander Maj.-Gen. (res.) Amir Eshel, emphasized that this initiative strengthens the security of both Germany and Israel while creating significant value for all parties involved.
