The German state of Lower Saxony, Rafael Advanced Defense Systems and Aurelius Capital have signed a letter of intent to purchase Volkswagen’s Osnabrück plant, allowing the Israeli defense company to establish production of Iron Dome components in Germany.
The agreement, signed at the factory on Monday, will see the Volkswagen site in Osnabrück developed into a center of excellence for innovative security and defense solutions. It will combine German engineering expertise, industrial capital and quality standards.
First reported by the German publication WirtschaftsWoche and confirmed to D&T, is a change in direction from the original plan, which initially called for the German car-maker to cooperate with Rafael to produce the parts. Qatar, Volkswagen’s largest foreign shareholder, blocked that plan. D&T understands that while Qatar also opposed to this deal, the German government was able to move forward with it.
Following the statement of intent, the consortium will hold detailed negotiations, assessments of regulatory requirements, and the necessary internal decision-making processes by all parties involved. D&T understands that this is the first step towards Berlin procuring the missile defense system, marking the second time the system has been sold to a European country.
The Osnabruck plant currently employs 2,300 people and produces the T-Roc Cabriolet, Porsche Cayman and Porsche Boxster. According to reports, Volkswagen will leave the site in the second half of 2027, and while the Iron Dome’s Tamir interceptor itself will not be manufactured there, military vehicles, launchers, generators, and other equipment will be.
Initially designed to shoot down short-range rockets, the Iron Dome has become an integral component of Israel’s multi-layered defense array.
The system’s modular architecture enables seamless integration with additional defense layers, and it can operate independently or as part of a broader air defense network that includes the the Arrow (Arrow 2 and Arrow 3) system, which intercepts ballistic missiles outside of the Earth’s atmosphere, and the David’s Sling missile defense system which is designed to intercept tactical ballistic missiles, medium- to long-range rockets, as well as cruise missiles fired at ranges between 40 to 300 kilometers. Rafael has also manufactured the Iron Beam laser defense system which has been operational along Israel’s northern border.
‘Defense of today, tomorrow and well beyond’
Olaf Lies, Minister-President of Lower Saxony said that “this partnership creates realistic opportunities for long-term, highly skilled employment at a location that has stood for industrial excellence for 125 years.”
Lies added that the country’s “security environment has changed fundamentally. Germany and Europe must strengthen their capabilities in the security and defense industry and become more independent. This is both a responsibility and an economic opportunity. Osnabrück can play an important role in this effort. The workforce has repeatedly demonstrated its ability to achieve outstanding results. We are building on that strength.”
Rafael has been active in Germany for over 20 years and has established a strong presence in the country with various subsidiaries including Dynamit Nobel Defence, EuroSpike and EuroTrophy Gmbh.
Yoav Tourgeman, President and CEO, Rafael Advanced Defense Systems said that the partnership with Germany is part of a long-term relationship with the country “with the idea that the technology will be fully produced in Germany, to protect Germany and Europe.”
“The technology at the heart of this partnership is built for the defense of today, tomorrow, and well beyond. Our outstanding combat proven technology evolves constantly in order to be ahead of the threats, so that highly reliable defense will always be provided,” he added.
Aurelius Capital was co-founded by Alon Lifshitz and Tomer Jacob, alongside former NSA director Michael Rogers and former IAF commander Maj.-Gen. (res.) Amir Eshel and former Mossad deputy director Udi Lavi.
“At Aurelius, we are very proud to partner with Rafael and transform an advanced automotive manufacturing facility in Osnabrück into a leading defense production center. This initiative is made possible by Rafael’s groundbreaking technology, the highly important partnership with the Government of Lower Saxony, and the close cooperation with Volkswagen. Its goal is to strengthen the security of both Germany and Israel while creating significant value for all parties involved. This is only the first step in a strategic partnership that will continue to grow and deepen over time,” Jacob said in a statement.
Aurelius, which is understood to have played a key role in the negotiations, is expected to take over the site together with Lower Saxony and develop new business there.
German defenses
Germany has also purchased Israel’s Arrow 3 as a response to Russia’s war against Ukraine and the growing proliferation of advanced missile systems.
Germany signed the $3.5 billion Arrow 3 contract in November 2023, the largest defense deal in Israel’s history at the time. In December, the two countries signed a $3.1 billion follow-up contract to expand interceptor and launcher stocks.
The Bundeswehr announced on June 30 that the second Arrow air defense battery site would be in the greater Kaufbeuren area of Bavaria and would house the ELM-2080 Green Pine Block C radar to detect and track threats. The second location would complement the initial battery at Fliegerhorst Holzdorf/Schönewalde, south of Berlin, the capital. That battery was the first time the system had been deployed outside of Israel.
Arrow 3, developed by Israel Aerospace Industries (IAI) is a highly maneuverable system designed to provide ultimate air defense by intercepting ballistic missiles when they are still outside the Earth’s atmosphere.