(de-news.net) – While discussing trade policies, industrial competitiveness, and EU automotive regulations, Germany is changing its electric vehicle policy to support European manufacturing. Demand for EVs is growing at the same time, but infrastructure for charging them and high electricity costs continue to be significant obstacles.
According to a document from their parliamentary caucus meeting cited by numerous media outlets, coalition leaders from Germany’s CDU/CSU and SPD have agreed to amend the country’s electric-vehicle subsidy program with the aim of strengthening domestic production. The revised framework is expected to incorporate EU preference rules now under development, including legally compliant “local-content” standards that could eventually be harmonized across the European Union. The proposal follows growing calls within the governing coalition for subsidies to provide more direct support to European manufacturers.
Alexander Hoffmann, leader of the CSU parliamentary group, had argued earlier this month that additional eligibility requirements were necessary because the existing incentive disproportionately benefits manufacturers from outside Europe. Sebastian Roloff, the SPD’s economic policy spokesman, similarly identified the electric-vehicle subsidy as a particularly appropriate area in which to apply local-content requirements. Taken together, the proposals reflect a broader effort to connect public support for electric vehicles more closely to where their production and economic value are generated.
The European Commission is developing the local-content regulations as part of the proposed Industrial Accelerator Act. Under the approach, a specified share of value creation associated with certain procurements would have to take place within the EU. France has become the policy’s most prominent supporter, while the German government has so far approached the proposal more cautiously, reflecting concerns that such requirements could place additional restrictions on free trade. The debate therefore places industrial policy and trade openness in direct tension as Europe seeks to strengthen its manufacturing base.
The coalition factions are also seeking changes to the European Union’s broader automotive policy. In particular, they want the planned reduction in the “utility factor” for hybrid vehicles to be suspended next year. Because that factor influences the extent to which hybrid and electric vehicles count toward manufacturers’ fleet CO2 targets, a lower figure would increase the compliance burden associated with hybrids. The coalition groups have also called for greater flexibility concerning emissions above the applicable target while emphasizing that the EU’s green-steel objective must ultimately be achieved. Their demands thus extend beyond consumer incentives to the regulatory conditions governing vehicle production and emissions performance.
Roland Busch, the CEO of Siemens, has meanwhile opposed broad EU tariffs on Chinese goods, arguing that any levies should be narrowly targeted rather than used to shield European companies from legitimate competitive pressure. In his assessment, Europe’s trade difficulties with China cannot be attributed solely to unfair business practices or government subsidies. Chinese companies are increasingly competitive because of strong engineering capabilities, highly skilled teams, rapid adoption of new technologies and continuing innovation, including in artificial intelligence. European industry, he argued, therefore needs to recognize that the competitive environment has changed and adjust its response accordingly.
Busch has also called on the EU to accelerate the approval of AI technologies. He warned that regulation can quickly become outdated because AI models may pass through several substantial development cycles during the years required to negotiate, adopt and implement legislation. From his perspective, the pace of technological change creates a persistent risk that regulatory frameworks will lag behind the technologies they are intended to govern. He considers the current possibility of an AI investment bubble manageable, in part because a substantial share of the spending is being financed by companies with significant cash flow rather than through borrowing. Busch maintains that AI investment is already producing positive effects and expects the technology to improve productivity, conserve resources and accelerate innovation.
Private buyers drive Germany’s EV growth as industry seeks policy certainty
By contrast, Environment Minister Carsten Schneider (SPD) has advocated tariffs on Chinese plug-in hybrids comparable to those already imposed on fully electric vehicles. He has pointed to several factors, including the undervaluation of the Chinese yuan, as evidence that Germany does not currently compete with China on what he considers fair terms. Schneider’s broader objective is to preserve or rebuild strategic industrial capabilities within Germany, particularly in automobile manufacturing and battery technology. His position reflects a concern that the transition to electric mobility could weaken domestic industrial capacity if key technologies and production capabilities remain concentrated abroad.
If Germany cannot establish sufficient domestic battery manufacturing in the coming years, Schneider said the country should also consider joint ventures with Chinese companies, whose technological expertise in batteries currently gives them a significant advantage. Under such an approach, Chinese companies would produce batteries and components within Europe rather than supplying the European market primarily from Asia. The proposal illustrates the balance Schneider seeks between protecting strategic industrial capabilities and making use of technological expertise that is already more advanced in some areas outside Germany.
At the same time, Germany’s electric-vehicle market is expanding faster than previously expected. The Central Association of German Motor Vehicle Trades, known by its German acronym ZDK, now projects that 817,000 new battery-electric passenger cars will be registered in Germany in 2026. That would be about 109,000 more vehicles than the association anticipated at the beginning of the year and roughly 50 percent above the level recorded in 2025. The revised forecast indicates that demand is gaining momentum even as policymakers continue to debate the design and longer-term direction of government support.
Private buyers are expected to account for a particularly substantial share of that increase. Based on a survey of its members, the ZDK forecasts more than 370,000 private registrations of electric vehicles in 2026, approximately twice the number recorded the previous year. The increase is expected to come at the expense of sales of vehicles powered by conventional combustion engines. The figures point to a continuing shift in Germany’s passenger-car market, with the pace of change exceeding the expectations held by the industry at the beginning of the year.
The ZDK credits the federal electric-vehicle subsidy as one factor contributing to the stronger market and is urging lawmakers to provide greater certainty about how long the program will remain available. Despite its euro 3 billion budget, the association argues that the subsidy should not end prematurely because available funding is exhausted before the scheduled conclusion of the program. It is also pressing policymakers to provide early information so that consumers and dealers are not left uncertain about whether support will remain available.
Yet the industry’s assessment suggests that subsidies are not the only, or even the principal, constraint on further electric-vehicle adoption. A ZDK survey found that high electricity prices in Germany represent the biggest obstacle to broader use of electric vehicles, ranking ahead of concerns about insufficient government support. Charging infrastructure was identified as the second-largest concern. The findings underscore the extent to which the transition to electric mobility depends not only on purchase incentives but also on the wider cost and infrastructure conditions facing consumers.
