Volkswagen is considering plans to convert one of its German car factories into a production hub for Israel’s missile defence systems, the Financial Times reported on Tuesday.
The carmaker has held talks with Israel’s Rafael Advanced Defense Systems about repurposing its Osnabruck plant, shifting from vehicle production to manufacturing components for Israel’s Iron Dome system.
The move underscores growing pressure on Germany’s automotive sector, which is struggling to compete with Chinese electric vehicle makers.
It also carries historical resonance: during the Second World War, Volkswagen halted car production and switched to arms manufacturing for Nazi Germany.
The proposal points to a wider shift, as parts of German industry move closer to defence production with support from Berlin.
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Under the plan, the factory would produce key Iron Dome components, including launch platforms, power units and heavy-duty vehicles used to transport missile systems. Production could begin within 12 to 18 months with limited new investment.
Germany approves $3.1bn Israel arms deal despite Gaza genocide
Germany has ramped up military spending and deepened defence ties with Israel, cementing its role as one of its strongest European backers.
In December, Berlin approved a $3.1bn deal to purchase Israel’s Arrow 3 missile defence system, following a $3.5bn agreement two years earlier. Together, the contracts mark Israel’s largest arms sale to date, worth more than $6.6bn.
The deals boost Israel’s defence industry as it faces growing international isolation over its war on Gaza.
Israeli Prime Minister Benjamin Netanyahu and former Defence Minister Yoav Gallant are wanted by the International Criminal Court for war crimes and crimes against humanity.
Germany supplies about 30 percent of Israel’s imported weapons, second only to the United States, which accounts for nearly 60 percent.
Meanwhile, South Africa’s case at the International Court of Justice accuses Israel of genocide in Gaza. The court has recognised a plausible risk of genocide, placing legal obligations on states not to support Israel’s actions.