Volkswagen announced on Monday that its Osnabrück plant will be repurposed as Germany's first dedicated defence manufacturing site. The Lower Saxony state government and Israeli investment fund Aurelius will acquire the facility, with Aurelius taking a majority stake and the state retaining a minority interest. The parties said detailed terms will be finalised in the coming months.
Under the plan, the factory will become a competence centre for the defence sector, initially focusing on air‑defence systems produced by Israeli firm Rafael, best known for the Iron Dome missile‑intercept system. Volkswagen CEO Oliver Blume described the move as a "significant step" toward securing a new industrial future for the location.
The plant currently employs roughly 1,800 workers. According to Volkswagen works council chair Daniela Cavallo, about 1,200 staff have been offered long‑term contracts as part of the transition. Efforts are ongoing to find a solution for the remaining workforce, with union leader Christiane Benner of IG Metall highlighting the collaborative effort between the company, the state, and employee representatives.
The conversion follows Volkswagen's December 2024 decision to cease production of the T‑Roc Cabriolet at the former Karmann facility in Osnabrück by summer 2027. Earlier discussions explored a direct handover to Rafael, but a sale was blocked by Qatar, Volkswagen's largest external shareholder, due to geopolitical sensitivities. The joint‑venture structure with Lower Saxony and Aurelius circumvents those concerns.
Lower Saxony Minister‑President Olaf Lies said the agreement creates a "real industrial opportunity" for the region, emphasizing the need for Europe to strengthen its defence capabilities and achieve greater strategic independence. Rafael CEO Yoav Tourgeman added that the partnership aims to produce the technology entirely within Germany, supporting both German and broader European security needs.
The restructuring is expected to preserve the bulk of the plant's workforce while shifting its output from automotive to defence products, marking a notable diversification for Volkswagen and a rare example of a major car manufacturer entering the European defence supply chain.
