Volkswagen discusses converting Osnabrück plant for Iron Dome production

Volkswagen CEO Oliver Blume has confirmed that the company is in advanced negotiations to convert its Osnabrück plant in Germany to military production. The proposed partnership with Israeli defense firm Rafael Advanced Defense Systems aims to produce components for the Iron Dome air defense system, including heavy-duty military trucks, launchers, and power generators.

The move is seen as a potential lifeline for the Osnabrück facility, which employs approximately 2,300 people and faces an uncertain future after current automotive production is slated to end in 2027. To navigate opposition from the Qatari investment fund—which holds a 17% stake in Volkswagen—and local protesters, a “Lower Saxony formula” is being discussed. This plan would involve the state government of Lower Saxony and the German federal government taking a central role, potentially establishing a joint venture with Rafael to allow Volkswagen to avoid direct involvement in arms manufacturing.

This development comes amid a broader restructuring crisis at Volkswagen. The company is facing significant financial pressure due to declining sales in China and high production costs. As part of a radical transformation plan, Blume has also announced intentions to cut approximately one-quarter of the company's management positions to address these economic challenges.