Volkswagen is considering expanding its business scope into the defense sector. According to the Financial Times, the German automotive giant is in talks with the Israeli company Rafael Advanced Defense Systems to potentially repurpose one of its factories. These discussions involve the Osnabrück plant, which has been struggling in northwestern Germany, and could transition to manufacturing components for missile defense systems instead of cars.
Currently employing 2,300 workers, the plant is facing the loss of production for its last model, the T-Roc convertible, in 2027, which poses a threat to its economic viability. A source cited by the British financial media stated, “The goal is to save everyone, and even to create growth.” They added, “The potential is enormous. However, it is also up to the workers to individually decide if they want to join this project.”
If the project proceeds, the factory in Osnabrück, owned by the German automaker, would start producing various parts of the Iron Dome (an Israeli missile defense system). This would include heavy trucks carrying the system’s missiles, as well as launchers and electric generators, but not the projectiles themselves. Production could commence within 12 to 18 months, pending approval from employees and local stakeholders.
Another source mentioned by the Financial Times explained that the project would require minimal investment from Volkswagen. They stated, “It does require some money for the transition to the new production, but it’s relatively simple.” It’s worth noting that the German car brand already manufactures military trucks through a joint venture between its subsidiary MAN and the German armament group Rheinmetall.
This new partnership with Rafael Advanced Defense Systems would mark Volkswagen’s reentry into the defense industry. During World War II, the automaker produced military vehicles and the V1 flying bomb for Hitler’s Wehrmacht.
Volkswagen has seen a decline in profitability in recent years due to reduced demand in key markets, higher production costs in Germany, and significant investments in electric and connected vehicles. Competition from China and trade tensions have also impacted its financial performance.
If the contract is finalized, Volkswagen would be the first automaker to actively engage in defense. Other car manufacturers are also considering reinventing themselves. For instance, Renault has announced the ability to produce up to 600 aerial drones per month at its site in Le Mans, in partnership with Turgis & Gaillard, under the Chorus program led by the DGA. However, the company emphasized that it does not intend to become a major player in the military sector.
