Volkswagen and Rafael Advanced Defense Systems plan to transform the plant in Osnabrück, at risk of closure, into a factory of components for the Iron Dome air defense system, owned by the Israeli state-owned company, the Financial Times found.
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German car industry profits have plummeted amid growing competition from China and a slow shift to electric vehicles. VW seeks partnership with the dynamically developing defense sector.
Both the companies hope to save all 2,300 jobs at the plant in Lower Saxonywhich is at risk of closure, and sell the systems to European governments.
“The goal is to save everyone and maybe even develop it,” one source told the FT.
Trails and explosions of missiles intercepted by the Israeli Iron Dome missile defense system over Tel Aviv on February 28, 2026.
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JACK GUEZ/AFP/East News / East News
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Volkswagen is negotiating with Israel. The German government supports the project
According to another person, the German government actively supports this proposal.
Volkswagen already produces military trucks as part of a joint venture between a MAN subsidiary and the German arms company Rheinmetall.
However, a partnership with Rafael would mean a significant return to arms production for VW. VW produced military vehicles and the V1 “flying bomb” for Hitler's Wehrmacht during World War II.
As planned the factory in Osnabrück would produce various parts of the Iron Dome systemincluding trucks carrying missiles, as well as launchers and power generators. However, it would not produce the missiles themselves.
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Volkswagen returns to the arms industry
According to the person behind the concept, it would require minimal new investment. “Some funding is needed to transition to new production, but it's quite simple.”
Production could start within 12 to 18 months, another person said.
Rafael plans to set up a separate production facility in Germany for the missiles, which must be handled in a specialized facility.
The company hopes to sell the Iron Dome system to governments across Europeincluding Germany, as countries strengthen their air defenses as part of a sweeping rearmament in response to Russia's full-scale invasion of Ukraine. Last year, Germany took delivery of the first of three batteries of Israel's Arrow 3 air defense system, manufactured by another Israeli company, Israel Aerospace Industries.
Source: Financial Times
