Volkswagen to convert German car plant to produce Israeli defense equipment
Times of Israel · LC · trust 35/100
German auto giant Volkswagen said Monday that one of its plants would be converted to make defense equipment for the Israeli group Rafael after car production ends there next year.
The struggling carmaker said it would sell the Osnabrueck plant to Tel Aviv-based Aurelius Capital as well as the German state of Lower Saxony, a major VW shareholder, with an initial air defense project planned for Rafael Advanced Defense Systems.
“These plans involve the potential manufacture of systems and components for air defense systems for Germany and Europe,” Volkswagen said, adding the cooperation could pave the way for further such deals.
“With today’s agreement, we are taking an important step towards opening up a new industrial future for the site,” Volkswagen CEO Oliver Blume said. “Volkswagen stands by its responsibility for Osnabrueck.”
The company, which is struggling with weak demand, had already decided in 2024 to end vehicle production at the site in northwest Germany by 2027.
The deal will guarantee at least 1,200 jobs are preserved at the factory, VW’s works council said.
The long-term future of four other German factories is also uncertain. The 10-brand auto giant, whose brands range from Audi to Porsche and Seat, is battling fierce Chinese competition amid a troubled shift to electric vehicles.
Management and unions last week struck a deal to shed 50,000 more jobs across the group, taking the total number of positions set to be lost in coming years to 100,000.
Under the proposal, Aurelius would take a majority stake in the site alongside Lower Saxony.
“Osnabrueck brings with it something that cannot be built from scratch: many years of experience with demanding products, precise manufacturing processes and high-quality, well-coordinated teams and a strong tradition,” Aurelius Capital’s Tomer Jacob said.
The investor lists cybersecurity, drone technology and satellite systems among its focus areas.
The deal offers a potential blueprint for other Volkswagen sites facing an uncertain future as Europe’s largest carmaker embarks on its biggest ever restructuring. Volkswagen has warned that up to four German plants could face closure or repurposing unless alternative uses can be found amid weak demand, high costs and growing competition from China.
Defense production is increasingly being seen as a solution for underused automotive plants, with companies including Rheinmetall and Continental pursuing similar initiatives.
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