Volkswagen signs deal to turn factory into Israeli defence hub
Israel’s Aurelius Capital is to take over a Volkswagen factory in Germany, repurposing the site to manufacture military equipment with Rafael Advanced Defence Systems. The preliminary deal marks a first in efforts by Europe's largest carmaker to restructure plants struggling to compete with lower-cost Chinese rivals. According to labour officials, the agreement would secure about 1,400 of the…
Volkswagen and Israel's Aurelius Capital have reached an agreement that will transform a German factory into a hub for producing defense equipment. This deal marks the first instance of a European carmaker restructuring a plant to manufacture military goods. The agreement aims to secure around 1,400 of the 1,800 jobs at the plant, which has a history dating back 125 years.
Volkswagen plans to collaborate with Rafael Advanced Defence Systems, a key partner behind Israel's Iron Dome, Arrow, and David's Sling defense systems. The initial project at the Osnabrück factory could involve manufacturing systems and components for air defense systems for Germany and Europe.
Volkswagen CEO Oliver Blume has stated that the company will seek investors, industrial partners, and alternative uses for factories where vehicle production is not economically viable. The deal allows Volkswagen to sell the factory in Osnabrück to Aurelius Capital as the majority owner, along with the Lower Saxony government. This structure may have helped circumvent resistance from the Qatar Investment Authority, which holds a 17% stake in Volkswagen and two supervisory board seats due to strained relations with Israel following the war in Gaza.
The deal comes amid a backdrop of rising defense spending in Europe, which may provide a new source of demand for air-defense systems. The US-Israeli confrontation with Iran and Russia's invasion of Ukraine have significantly reduced global stocks of air-defense systems. Other German carmakers like Rheinmetall and Continental are also exploring similar opportunities to repurpose underused manufacturing plants for defense production.
Lower Saxony's Premier Olaf Lies likened the state's involvement in the Volkswagen deal to its previous investment in the Meyer Werft shipyard, where the government spent €200 million for a 40% stake.
Written by urgent.news from The National UAE's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
