Automotive giant tests military industry! German Volkswagen Group negotiates to have its "troubled subsidiary factory" switch to producing "missile defense components"
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Volkswagen is in talks with Israel's “Iron Dome” missile defense system manufacturer, planning to shift from the automotive sector to the missile defense field.
On March 24, according to the UK’s Financial Times citing people familiar with the matter, Volkswagen is in discussions with Israel’s state-owned defense company Rafael Advanced Defence Systems to cooperate and plans to convert one of its German factories on the verge of closure from car production to manufacturing missile defense system components.
According to reports, Volkswagen plans to transform its Osnabrück plant in Lower Saxony, Germany into a production base for Iron Dome air defense system parts, aiming to preserve all 2,300 jobs at the factory and sell the system to multiple European governments.
This cooperation between Volkswagen and Rafael will mark the return of Volkswagen Group to the weapons manufacturing field. During World War II, Volkswagen manufactured military vehicles and V1 missiles for Hitler’s Wehrmacht.
Reportedly, the German government is actively supporting this plan. If workers agree to switch to weapons production, the relevant production lines could be operational within 12 to 18 months.
Factory Transformation Plan: From Car Manufacturing to "Iron Dome" Components
According to reports, the Osnabrück plant will produce several key components of the Iron Dome system, including heavy trucks for missile transportation, launch devices, and generators, but will not be involved in the production of missile bodies themselves; the latter will be manufactured by Rafael at a separately established facility in Germany.
The reports, citing sources, emphasized that the required additional investment for this transition is limited. One source said:
Switching to the new production line requires some capital, but it’s quite feasible. This is a combination of mature (defense) technology and German manufacturing capabilities.
The future of the Osnabrück plant was already in jeopardy. According to Volkswagen’s cost-cutting plan finalized in 2024, complete vehicle production at the plant will end next year. About 35,000 employees of Volkswagen Group are expected to voluntarily leave the company before 2030.
In response to external inquiries, a Volkswagen spokesperson said that the company is in discussions “with multiple market participants,” but at present there is “no specific decision or conclusion” regarding the future direction of the Osnabrück plant.
Potential Controversy: Is the “Iron Dome” Suitable for Europe’s Air Defense Needs?
Although the prospect of cooperation appears promising, some experts have questioned the applicability of the Iron Dome system in the European battlefield environment.
The Iron Dome system has an effective interception range of about 70 kilometers and has previously been mainly used to intercept short-range rockets fired from Gaza into Israel. Critics believe whether this system can effectively address Europe’s medium- and long-range threats remains to be evaluated.
The Israeli side vouches for the system’s comprehensive defensive capabilities. Israel claims its multilayered air defense system, which involves multiple different systems, has successfully intercepted over 90% of incoming missiles.
From an industrial perspective, the people cited in the report expressed great ambition:
The goal is to save every job, and may even achieve revenue growth. The potential is very large.
But he also admitted that whether workers are willing to switch to arms production “ultimately is a personal choice.”
Germany’s Manufacturing Overcapacity Meets Europe’s Military Buildup
Behind this cooperation are multiple intersecting structural factors. For Rafael, Germany is a strategic foothold to enter the European market.
According to reports, one reason Rafael chose Germany as its European production base is that Germany is one of Europe’s staunchest supporters of Israel. In addition, the company has responded to calls from senior German officials to utilize the country’s idle industrial capacity.
From a market demand perspective, after the Russia-Ukraine conflict, European countries have massively ramped up rearmament, and air defense capability has become a top procurement priority.
Germany plans to spend more than 500 billion euros on defense by 2030, with officials stating that air defense is a core spending direction. Last year, Germany received the first batch of Israeli Arrow-3 air defense systems, made by another Israeli company, Israel Aerospace Industries.
Rafael is not new to Germany. The company had already produced Spike missiles in Germany through joint ventures with Rheinmetall and Diehl Defence and produced active protection systems for tanks and armored vehicles (“Trophy”).
Volkswagen has also made forays into the defense field; its subsidiary MAN has established a military truck joint venture with Rheinmetall.
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