Volkswagen’s Osnabrück Plant Set to Become DefenseTech Factory for Israel’s Rafael
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Volkswagen is selling its Osnabrück plant to an Israeli investment firm and to the German state of Lower Saxony. Instead of cars, the site is to build components for air defense systems, with Israel’s state-owned Rafael Advanced Defense Systems, the maker of the Iron Dome, lined up as the anchor customer. The conversion is the most prominent case yet of Germany’s struggling auto industry redirecting idle capacity into a booming defense sector.
Who Is Taking Over the Plant
Aurelius Capital, an investment firm based in Tel Aviv, will hold the majority stake in Volkswagen Osnabrück GmbH. The second shareholder will be Lower Saxony, which already owns about 20 percent of Volkswagen and is one of its largest investors. Volkswagen itself steps back as owner while pledging to support the transition with expertise and infrastructure. According to Volkswagen’s statement, the plant is to become a “competence center for security and defense solutions.” What has been signed so far is a letter of intent, and closing still depends on board approvals and regulatory clearance.
This Aurelius Capital is a separate company from the Munich-based investment group of the same name. The fund was founded by Alon Lifshitz and Tomer Jacob, both formerly of the Israeli venture firm Hanaco Ventures. Its team includes former NSA director Michael Rogers, former Israeli Air Force chief Amir Eshel and former Mossad deputy director Udi Lavi, The Jerusalem Post reported. The fund launched with 50 million US dollars and aims to grow to 150 million, investing in what it describes as “shields, not swords”: cybersecurity, counter-drone technology and satellite systems. “Osnabrück brings with it something that cannot be built from scratch: many years of experience with demanding products, precise manufacturing processes and well-coordinated teams,” Tomer Jacob said.
What Will Be Produced
The first joint venture between Aurelius, Lower Saxony and Rafael is an anchor project in air defense. Plans cover the manufacture of “systems and components for air defense systems for Germany and Europe.” Early work is reported to center on carrier vehicles, launch systems and generators around the Iron Dome. Rafael chief executive Yoav Turgeman described the goal as a long-term industrial relationship “with the idea that the technology will be fully produced in Germany, to protect Germany and Europe.” Further customers are expected to follow.
The timing is deliberate. Berlin plans to spend roughly 700 billion euros on defense over the next five years, and Rafael is separately hoping to sell the German government its Iron Dome system, which has a range of about 70 kilometers.
How the Qatar Conflict Is Being Sidestepped
A direct partnership between Volkswagen and Rafael had previously stalled against resistance from the Qatar Investment Authority, which holds about 17 percent of Volkswagen’s voting rights and whose relationship with Israel has been strained since the autumn of 2023. Selling the site to Aurelius and Lower Saxony places the defense production outside the carmaker, as Ynet reported. According to that report, Lower Saxony is contributing around 200 million euros. State premier Olaf Lies justified the investment by arguing that Germany and Europe need to become more capable and more independent on security.
What It Means for the Workforce
About 1,800 people currently work in Osnabrück, where the T-Roc Cabriolet is the last model on the line. Vehicle production ends in the summer of 2027, a decision already taken in the cost-cutting package agreed in late 2024. Under the current plan, roughly 1,400 employees would move to the new company, about 1,200 jobs are considered secure through the end of 2029, and collective bargaining agreements remain in place. Works council head Daniela Cavallo called the agreement an important milestone while stressing that labor representatives continue to seek a solution for the entire core workforce. The future of some 500 positions remains open, mainly in technical development.
The deal lands in the middle of the largest restructuring in the group’s history. Its supervisory board approved the elimination of another 50,000 jobs last week, bringing the total number of positions set to disappear to about 100,000. Up to four German plants are under review, and quarterly profit recently fell by nearly a third. Osnabrück could therefore serve as a blueprint. Rheinmetall and Continental are pursuing similar models for shifting car factories into defense production.
Criticism of the Plans
Opposition to the move is building. The alliance “Aktion Aufschrei, Stop the Arms Trade,” which says it represents more than 100 organizations including Misereor, pax christi and the Federation of German Catholic Youth, considers the course a mistake. Alliance coordinator Andreas Seifert points to Osnabrück as a site of the Peace of Westphalia of 1648 and argues that a turn toward armaments fails both that symbolic place and Volkswagen’s own responsibility, as Kirche und Leben reported. Critics also cite Volkswagen’s history as an arms producer under Nazi rule, along with Rafael’s role in the Gaza war. An online petition demands that Osnabrück remain a city of peace.
Supporters counter that a full closure of the plant was the realistic alternative and that the options for the site were limited. Rheinmetall and KNDS had also been discussed as possible partners, and Volkswagen presented military vehicle prototypes of its own earlier this year.
