Volkswagen, Israeli firm agree on sale of Osnabrueck plant

Under the deal, air defense systems from the Israeli Iron Dome manufacturer Rafael are to be produced at the factory.

“Aurelius and the State of Lower Saxony intend to develop the site over the coming years into a competence center for security and defense solutions.

"As an initial anchor project, Aurelius and the State of Lower Saxony are planning to cooperate with Rafael Advanced Defense Systems,” VW said in a statement.

The plant is expected to manufacture systems and components for air defense systems for Germany and Europe, he said.

The cooperation is also intended to pave the way for further partnerships and projects, VW said.

Two years ago, the carmaker decided to phase out vehicle production at the Osnabrueck site by the summer of 2027.

As part of the plans, Aurelius will acquire a majority stake in the plant, while the state of Lower Saxony will take a minority stake.

The details of the deal are to be negotiated in the coming months.

VW facing major criticism

Volkswagen has been grappling in recent years with sluggish demand, persistently high production costs in Germany, the negative impact of trade tensions with the US, and fierce competition from Chinese electric-vehicle makers.

Volkswagen CEO Oliver Blume had said in March that the company will stop manufacturing Volkswagen Group vehicles at Osnabruck starting in 2027 and confirmed talks with several defense firms about shifting the plant for military vehicles production.

The proposal, since then, has sparked significant controversy within Germany.

Volkswagen employees, peace activists and opposition politicians have criticized the plan, arguing the automaker should focus exclusively on civilian production.

The Osnabruck Peace Initiative (OFRI) has also organized multiple protests urging Volkswagen to abandon any defense contracts.

Germany’s opposition Left Party called Volkswagen’s planned cooperation with Israel’s state-owned Rafael Advanced Defense Systems “unacceptable,” citing the Netanyahu government’s war crimes and genocide against Palestinians in Gaza.

Rafael, meanwhile, has been expanding its European footprint as governments across the continent boost defense spending and procurement following the war in Ukraine.