Volkswagen Factory to Produce Defense Equipment for Israeli Firm Rafael

German automaker Volkswagen announced on Monday that one of its factories will be repurposed to produce defense equipment for the Israeli company Rafael Advanced Defense Systems. The Osnabrück plant, which will cease car production next year, is being sold to Aurelius Capital, a Tel Aviv-based group. This move is part of a collaboration between Aurelius Capital and the German state of Lower Saxony, a major shareholder in Volkswagen, to utilize the facility for an initial air defense project for Rafael.

Volkswagen CEO Oliver Blume stated that the agreement represents a significant step towards opening new industrial prospects for the site. The company, facing weak demand, had already decided to end vehicle production at the Osnabrück plant, located in northwestern Germany, by 2027. The deal is expected to preserve at least 1,200 jobs at the factory, according to Volkswagen's works council, though the future of four other company plants in Germany remains uncertain.

The automotive giant, which owns brands like Audi, Porsche, and SEAT, is grappling with intense competition from Chinese manufacturers and the challenging transition to electric vehicles. In April, protests were held in Germany against the decision, with demonstrators arguing that supplying weapons to Israel makes Germany complicit in the suffering of Palestinians.