German automaker Volkswagen is reportedly planning to switch production at one of its plants from cars to missile defense systems, according to the Financial Times.

Sources familiar with the plan told the FT that Volkswagen is in talks with Israel’s Rafael Advanced Defense Systems to convert its Osnabrück plant into a facility producing components for the Israeli state-owned group’s Iron Dome air defense system.

The partnership would mark the most high-profile example to date of Volkswagen seeking to enter the booming defense sector amid declining car profits, growing competition from China, and a challenging transition to electric vehicles.

According to the reported plans, the Osnabrück plant would manufacture various Iron Dome components, including the heavy-duty trucks that carry the system’s missiles, launchers, and power generators. The missiles themselves, however, would not be produced at the site.

Volkswagen is seeking a solution for its Osnabrück plant, where vehicle production is scheduled to end next year under a cost-cutting plan agreed in 2024. Around 35,000 workers across Volkswagen factories are expected to leave the company by 2030, although the redundancies are entirely voluntary.

The two companies aim to preserve all 2,300 jobs at the plant in Lower Saxony, which faces closure, and hope to sell the systems to European governments.

“The goal is to save everyone, maybe even grow the business,” said one person familiar with the plans. “The potential is too great. However, it is ultimately up to the employees whether they want to participate in the idea.” The FT also reports that the German government is actively supporting the proposal.

Volkswagen already produces military trucks through a joint venture between its subsidiary MAN and German arms group Rheinmetall. However, the Rafael partnership would represent a notable return to the defense sector for Volkswagen, which manufactured military vehicles and the V1 flying bomb for Hitler’s Wehrmacht during World War II.

According to a source, the transition would require minimal new investment. “It takes some money to convert to the new production, but that’s manageable,” they said.

Rafael plans to establish a separate production facility in Germany for the Iron Dome missiles themselves. Production could begin within 12–18 months, provided employees agree to switch to defense manufacturing.

Volkswagen did not immediately respond to a request for comment submitted by the Financial Times.