Volkswagen in talks to become missile defense manufacturer — but not for Germany

Auto manufacturer Volkswagen is reportedly looking to diversify its portfolio.

The German company, founded by Adolf Hitler's Nazi government in 1937, has been discussing a transition for its Osnabrück, Germany, factory for the better part of a year.

Besides representing a historical 180-degree turn, a deal with the Israeli defense company would likely be quite lucrative.

Since March 2025, manufacturers have had their eye on the Osnabrück factory, a 4.6 million-square-foot facility with 2,300 employees. The location started its vehicle production in just 2011, but some think it may be better suited for defense manufacturing.

Last March, the CEO from vehicle and weapons manufacturer Rheinmetall said he thought the factory "would be very suitable" for a transition to defense production, particularly to build tanks.

"One thing is clear: Before I'll build a new tank factory in Germany, we'll of course take a look at it," said CEO Armin Papperger. The CEO followed his statements up with a visit later that month.

However, Volkswagen did not strike a deal and is now being sought by a state-owned Israeli defense group called Rafael Advanced Defense Systems.

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Photo by Jose Sarmento Matos/Bloomberg via Getty Images

According to the Financial Times, Rafael's idea is to convert the German factory to a components maker for Israel's Iron Dome missile defense system.

At the same time, Reuters reported that Volkswagen is looking to either sell or reconfigure the production facility once it has finished production of its T-Roc Cabriolet car, set to conclude in 2027.

After talks with Rheinmetall allegedly stalled, Volkswagen CEO Oliver Blume reportedly said that the company has since continued discussions with defense companies to come to a final decision about Osnabrück.

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Photographer: Krisztian Bocsi/Bloomberg via Getty Images

Besides representing a historical 180-degree turn, a deal with the Israeli defense company would likely be quite lucrative given the cost of Iron Dome interceptions. According to Israel Hayom, each missile interception costs upwards of $80,000.

However, these missiles could sit around, or during war time, they could be used hundreds of times per day. During a conflict, the costs could jump up to $2 million per interception when the David's Sling system is used to intercept larger missiles at a longer range.

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