-c439b7bd9030ecf9d5a4287dc361ba31.jpg "Photo of Katherina Popilnichenko")
Volkswagen is in talks with the Israeli company Rafael Advanced Defense Systems for a deal that would change production at one of the German group’s factories from cars to missile defense.
Тhe two companies intend to convert a plant in Osnabrueck that is currently at risk of closing. The facility would produce components for the Iron Dome air defense system owned by the Israeli state group, according to Financial Times on March 24.
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This partnership would be a major example of the shift in the German automotive industry. Profits in the sector have dropped due to competition from China and difficulties in moving toward electric vehicles.
As a result, the industry is looking for partnerships in the growing defense sector. The two companies want to save all 2300 jobs at the plant in Lower Saxony. They also hope to sell these defense systems to European governments.
“The goal is to save everyone, maybe even ensure growth,” said one person familiar with the plans. “The potential is very high. But it is also a personal decision for the employees whether they want to be part of this idea.” According to a second person, the German government actively supports the proposal.
Volkswagen already manufactures military trucks through a joint venture between its subsidiary MAN and the German arms company Rheinmetall.
However, a partnership with Rafael would be a significant return to weapons production for the company. During World War II, Volkswagen produced military vehicles and the V1 flying bomb for the German military.
Under the current plans, the Osnabrueck factory would make various parts for the Iron Dome. These would include heavy trucks that carry the system's missiles, as well as launch units and power generators. The plant would not produce the missiles themselves.
One source said this concept would require minimal new investment. “Some funds are needed for the transition to new production, but it is quite easy.”
The source added that the idea was to combine proven defense technologies with German manufacturing to create the system. Production could start within 12 to 18 months if the workers agree to move to weapons manufacturing. Rafael plans to build a separate facility in Germany for the system's missiles because they must be handled at a specialized site.
The company hopes to sell the Iron Dome system to governments across Europe, including Germany. Last year, Germany received the first of three batteries of the Arrow 3 air defense system, which is made by Israel Aerospace Industries.
This move comes as Germany plans to spend over 500 billion euros on defense by the end of the decade. Officials say air defense is one of the top priorities for this spending.
Israel reports that its air defense network, which includes several systems, has intercepted more than 90 percent of missiles fired at the country.
However, some experts have questioned if the Iron Dome is the right fit for European countries. The system has a range of 70 kilometers and has mostly been used to stop rocket strikes from Gaza. Some believe European countries may face threats from a longer range.
Rafael already produces Spike missiles for European countries in Germany through a venture with Rheinmetall and Diehl Defense. It also makes a system called Trophy that protects tanks and armored vehicles.
Volkswagen is looking for a solution for the Osnabrueck plant, where car production is scheduled to end next year under a cost-cutting plan from 2024. Around 35,000 workers at various Volkswagen plants plan to leave the company by 2030, though all departures are voluntary.
European air defenses were unprepared for mass drone and missile attacks as Russian drones battered Ukraine's skies.
In 2025, experts warned that missile stockpiles would have been depleted quickly by drone swarms, a vulnerability highlighted when a Russian drone struck Poland near a NATO base. This incident, along with others in Lithuania and Romania, revealed significant gaps in Europe's radar networks and low-altitude defenses.
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