No more cars are to be built at the Volkswagen plant in Osnabrück in future — air defence systems will be produced there instead. The state of Lower Saxony, the VW Group, the Tel Aviv-based investor Aurelius Capital and the Israeli defence group Rafael signed an agreement to that effect on Monday. Under the deal, Volkswagen is withdrawing from the Osnabrück site entirely.
A "letter of intent" has been signed with the aim of converting the plant "into a centre of excellence for innovative security and defence solutions", the Lower Saxony state government announced. State Premier Olaf Lies (SPD) pointed to the changed security situation in Germany and Europe. "This is both a responsibility and an economic opportunity."
As part of an initial project for the Osnabrück plant, systems and components for German and European air defence systems are to be manufactured there for Rafael Advanced Defence Systems. "Our proven combat technology is constantly evolving to stay ahead of the threats, so that highly reliable defence is always assured," said Rafael chief executive Yoav Tourgeman. The group is best known for the Iron Dome missile defence system.
Volkswagen had already decided in 2024 to phase out vehicle production in Osnabrück by mid-2027. A switch to the defence industry together with Rafael had been under discussion for some time. According to media reports, however, the plan initially failed because of resistance from the Gulf state of Qatar, which holds around 17 percent of VW's shares through its sovereign wealth fund.
The group has now reached an understanding on a "possible sale of Volkswagen Osnabrück GmbH", VW said. The state of Lower Saxony and the investment firm Aurelius Capital are to take it over. The Tel Aviv-based company says it invests "in innovative technology companies with a focus on defence, cybersecurity, artificial intelligence and critical infrastructure".
Exactly what is to be produced in Osnabrück was initially left open by the signatories to the agreement. Media reports had previously mentioned military trucks for missile defence. "Volkswagen stands by its responsibility for Osnabrück," said VW chief executive Oliver Blume. "With today's agreement we are taking an important step towards opening up a new industrial future for the site."
Volkswagen's group works council described the deal as a "milestone" for VW employees. Under the agreement, job security has been secured for 1,200 of the 1,800 people currently employed at the site until the end of 2029. The reduction in staff numbers is to be achieved primarily through retirement and partial retirement schemes.
The employee side also secured a commitment that "all collective agreements, works agreements, employment contracts and works council structures will continue to apply as before following the transfer to the new owners".
"The takeover of our plant by Aurelius and the state of Lower Saxony is a first major success," said Jürgen Placke, chairman of the works council at VW Osnabrück. "Our goal now is to bring further projects to the site that guarantee employment for all employees."
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