Volkswagen is considering expanding its business scope into the defense sector. According to the Financial Times, the German automotive giant is in talks with Israeli company Rafael Advanced Defense Systems to repurpose one of its factories. The discussions involve the Osnabrück plant, located in northwestern Germany, which could potentially start manufacturing components for missile defense systems instead of cars.
The plant currently employs 2,300 workers, but it is facing the loss of production of its last model, the T-Roc convertible, in 2027, putting its economic stability at risk. A source cited by the British financial media stated, “The goal is to save everyone, even to create growth,” adding, “The potential is huge. But it is also up to the workers to individually decide if they want to be part of this project.”
If the project goes through, the Osnabrück plant, owned by the German automaker, would begin producing various parts of the Iron Dome (an Israeli mobile missile defense system). This would include heavy trucks carrying the system’s missiles, launchers, and electric generators, but not the projectiles themselves. Production could start within 12 to 18 months, pending approval from employees and local stakeholders.
A second source mentioned by the Financial Times explained that the project would require a minimal investment from Volkswagen. It is worth noting that the German car manufacturer already produces military trucks through a joint venture between its subsidiary MAN and German armament group Rheinmetall.
However, this new partnership with Rafael Advanced Defense Systems would signify Volkswagen’s reentry into the defense industry. The automaker had previously manufactured military vehicles and the V1 flying bomb for Hitler’s Wehrmacht during World War II.
Volkswagen has seen a decline in profitability in recent years due to decreased demand in key markets, rising production costs in Germany, and substantial investments in electric and connected vehicles. Chinese competition and trade tensions have also impacted its financial performance.
If the deal is finalized, Volkswagen would be the first major carmaker to actively venture into defense. Other automotive companies are also considering reinventing themselves, such as Renault, which announced the ability to produce up to 600 aerial drones per month at its Le Mans site in partnership with Turgis & Gaillard under the Chorus program overseen by the DGA. Renault, however, emphasized that it does not intend to become a major player in the military sector.
