VW: From People’s Car Maker to Defense Contractor?

The Volkswagen plant in Osnabrück, threatened with closure, could soon produce components for Israel’s Iron Dome. The crisis in the automotive industry is opening the door to new deals between arms manufacturers and struggling carmakers.

The Volkswagen plant in Osnabrück, where talks on possible defence production could secure the site’s future. Photo: picture alliance/Getty Images

The Volkswagen Group is in talks with the Israeli defense company Rafael Advanced Defense Systems over possible future weapons production in Osnabrück. The plant is one of the largest employers in the city, the third-largest in Lower Saxony. It currently produces the T-Roc Cabriolet and selected Porsche models. Production of the T-Roc is due to run only until mid-2027, while Porsche manufacturing at the site will end during 2026. Without a successor product, Volkswagen’s smallest vehicle plant in Germany faces closure.

Iron Dome from Osnabrück

Rafael Advanced Defense Systems manufactures, among other things, the ‘Iron Dome’ missile defense system, which protects Israeli airspace. According to the Financial Times, citing people familiar with the matter, Volkswagen could in future produce components of the system at the Osnabrück site. The company has been searching for a viable future for the plant for some time. A deal with Rafael would preserve around 2,300 jobs; without it, the entire site would face closure.

If the agreement goes ahead, the systems produced in Osnabrück could also be sold to European countries. The German government is said to support the plan, the Financial Times reports. A Volkswagen spokesperson said the company continues to examine sustainable options for the Osnabrück site.

A Volkswagen Kübelwagen in service during the Second World War, June 1942 – a reminder of the company’s earlier role in military production. Photo: ullstein bild/ullstein bild via Getty Images

Historically, defense production is not new territory for Volkswagen. Between August 1940 and April 1945, the Volkswagen plant in Fallersleben produced the VW Type 82, known as the Kübelwagen, a light military vehicle. The company also manufactured specialized off-road vehicles for the Bundeswehr, including the Type 181 and Type 182, at its Wolfsburg and Hanover sites.

Military Vehicle Prototypes

Volkswagen is already involved in military vehicle production through a joint venture between its subsidiary MAN and the German defense group Rheinmetall, which manufactures military trucks. In recent months, the Osnabrück plant has developed several vehicle concepts to explore potential opportunities in the military sector.

At the Enforce Tac security trade fair, the MV1 and MV2 concept vehicles were presented publicly for the first time. Whether and to what extent concrete projects will emerge for the Osnabrück plant remains unclear, the company said. A spokesperson also stressed that the production of weapons by Volkswagen AG itself is excluded.

You might be interested Will there be a redesign of combustion engines?

Under current plans, the Osnabrück plant would manufacture various components for the "Iron Dome" system. These include a heavy-duty truck to transport the system’s missiles, as well as launch platforms and power generators. No missiles would be produced at the site.

A Booming Defense Industry

"With the planned agreement, a trend is becoming apparent in which the German automotive industry is increasingly seeking closer ties with the defense sector", the German-Israeli Chamber of Industry and Commerce told Handelsblatt. The forced transition to electric mobility has pushed German carmakers into a severe crisis. Orders from the defense industry could offer new prospects for underutilized production facilities. The rapid growth of the defense sector is making such partnerships more attractive once again.

Israel’s defense industry, for its part, is keen to draw on German precision engineering and manufacturing capacity. A potential partnership between Volkswagen and Rafael Advanced Defense Systems would be the most prominent example of such cooperation to date.