German automotive group Volkswagen (VW) is reportedly in talks with Israeli defence company Rafael Advanced Defence Systems over plans to convert a struggling German car factory into a missile defence production site.
The potential deal would see a VW plant in Osnabrück in Lower Saxony start producing components for Rafael’s Iron Dome air defence system . That is the Israeli missile defence system that has successfully intercepted most of the ballistic missiles fired at the country by the Islamist regime in Iran in the past month.
The VW plant would produce various parts for Iron Dome, including heavy-duty trucks that carry missiles as well as launchers. The projectiles themselves would reportedly not be produced in the plant but at a different location in Germany that has not been chosen yet.
A VW spokesman said the company was exploring “viable prospects” to preserve the Osnabrück plant.
The plant employs around 2,300 people. Currently, the factory primarily produces VW’s T-Roc convertible. As this model is being phased out by mid-2027, though, the plant’s fate is hanging in the balance.
Reportedly, the deal with Rafael would preserve most of the jobs in Osnabrück. An anonymous insider told newspaper Financial Times that the aim was to “save everybody, maybe even to grow”. Production could be started within a 12 to 18 months timeframe.
Rafael reportedly intends to sell the Iron Dome system to European governments including to Germany itself. In 2025, Germany already put into operation the Israeli-made Arrow 3 missile defence system.
Reportedly, Rafael chose Germany as a production location due to the German government’s pro-Israeli stance as well as the country’s tradition of high-quality mechanical engineering.
The deal with Rafael may be the last chance to save the Osnabrück plant, after German defence group Rheinmetall recently axed plans to take over the factory.
In March 2025, Rheinmetall had announced plans to take over the Osnabrück site and convert it into a production facility for six-wheeled armoured vehicles.
On March 13, though, a Rheinmetall spokesman said the deal had fallen through, confirming earlier indications from Rheinmetall CEO Armin Papperger.
According to the spokesman Rheinmetall does not need any additional production capacity for six-wheeled tanks at the moment. The defence group will, rather, focus on eight-wheeled vehicles at extend capacity at its existing plant in Kassel (Hesse).
VW is Germany’s biggest carmakers including the brands Volkswagen, Audi, Porsche, Skoda and Seat. The automotive group has been struggling recently, posting dismal results for the 2025 fiscal year earlier in March.
State-owned Rafael is one of Israel’s top three defence companies with revenues of almost $5 billion (€4.3 billion) in 2024.
