Volkswagen plant to be converted into arms facility
Carmaker Volkswagen's factory in Osnabrück, Germany, will begin producing defence industry goods from next year.
RastinewsVolkswagen, the German state of Lower Saxony and Tel Aviv-based investment firm Aurelius Capital said in a joint statement that they had agreed on the key terms of the plant's sale. Car production at the site will end in 2027, after which the facility will be gradually converted into a hub producing security and defence "solutions."
Under the plan, Israel's Aurelius will take over Volkswagen Osnabrück as majority shareholder alongside the state government. The aim is to secure the plant's long-term future and keep production running there.
According to the works council, the proposed arrangement offers a future for roughly 1,400 of the plant's 1,800 employees — preserving about three-quarters of the workforce.
Partnership with Iron Dome maker
The statement said the Osnabrück site will work in cooperation with Israeli defence giant Rafael.
Rafael makes air defence systems, guided missiles and electronic warfare systems, and is known as the manufacturer of Israel's Iron Dome, used against rockets, cruise missiles and drones.
The partnership is expected to open the door to further joint ventures and projects under the new company. Rafael CEO Yoav Tourgeman said: "Today we are building a long-term industrial partnership with our German partners. The goal is for the technology that will protect Germany and Europe to be fully manufactured in Germany."
Under the agreement, the initial focus will be on developing and producing air defence system components. Volkswagen said the Osnabrück workforce will play a central role in setting up and industrialising production.
Although the terms have been agreed, the sale has not yet formally closed. The joint statement said the agreement forms the basis for further steps, including determining responsibilities, economic and organisational structuring, and a possible transition process.
Completion of the sale still depends on final agreements, approval by the relevant boards, and official authorisation. Further details of the partnership are expected once these steps are completed.
Israeli-made "Iron Beam" air defence system on display in an open field. A large device mounted on a military platform, fitted with sensors and lenses
What else does Rafael make?
Israel-based Rafael also produces Iron Beam, a laser weapon system used against aerial targets. The company also supplies the Trophy active protection system, which can destroy incoming rockets and anti-tank weapons and is fitted to the German Leopard tank.
The company traces its roots to a research organisation founded by the Israeli military in 1948.
Volkswagen took over the plant from Karmann
According to a report by DW, the Volkswagen plant in Osnabrück was originally opened in 1901 by Karmann, a long-established vehicle body manufacturer.
From 1949, the company built what would become a classic car, known in Turkey as the "Tosbağa." Karmann went on to build niche models for various manufacturers — particularly convertibles and sports cars — with clients including Volkswagen, BMW, Renault, Jaguar, Kia and Mercedes-Benz. It was the VW Karmann Ghia, produced from 1955 to 1974, that made Karmann a globally recognised name.
After the company ran into financial trouble in 2009, Volkswagen took over most of the plant. Christian Wulff, then premier of Lower Saxony and a member of Volkswagen's supervisory board at the time, played a key role in the process. Wulff, who later became German president and whose constituency was Osnabrück, had pushed for Volkswagen to invest in the city and take over most of the facility.
Car production coming to an end
After taking over the plant, Volkswagen used it to build small and compact models, along with some models from other brands under the group.
More recently, workers at the plant had grown pessimistic about its future. Production of Porsche models there ended at the close of 2025, and Porsche also halted production of electric vehicles at the site.
Currently, the Osnabrück plant builds only the Volkswagen T-Roc Cabrio. As a result, the question of what to do with the facility beyond conventional passenger car production had been under discussion for some time.