A boost in production and sales of electric cars has injected cautious optimism into Germany's all-important automotive industry, following a years-long slump typified by factory closures and job losses. Production volumes at German car plants rose to 340,800 units in January 2025 – the highest figure for any January since 2020. The national automotive industry association, VDA, also reported on Wednesday that one-in-three German-manufactured cars is now electric, with 1.35 million EVs produced in 2024.

Hybrid cars gain ground. The overall number of cars registered by federal authority KBA in January 2025 was lower than in January 2024, but figures show increased demand for electric vehicles. Industry and governments expect electric vehicles to account for the bulk, if not the entirety, of the future car market. 16.6% of the 207,640 cars registered in January 2025 were battery-electric vehicles (BEVs) – marking a 53.5% increase from January 2024, the first month after the country's previous EV purchase subsidy was cancelled. Plug-in hybrid cars (PHEV) accounted for another 8.5% of new registrations, making them 23.1% more popular than in January 2024. Supportive policies for EVs by the German government – such as extension of charging infrastructure, income-based purchase bonuses and leasing schemes – could further increase demand, said Sandra Wappelhorst of the International Council on Clean Transportation (ICCT). All major political parties except the far-right Alternative for Germany have made government subsidies for electromobility part of their manifestos ahead of federal elections on 23 February.

Hope lies in corporate buyers. Given that nearly two-thirds of all new registrations in Germany were commercial vehicles, corporate fleets – collections of vehicles owned by or leased to companies – could also drive demand increases. The European Commission has said it will propose a new law to boost the electrification of corporate fleets, as part of its 'industry deal' for Europe's carmakers. According to Brussels-based NGO Transport and Environment (T&E), such a proposal 'would guarantee a market demand for European carmakers of more than 2.1 million EVs in 2030', with particularly large potential in the two major markets of Germany and France. T&E predicts corporate buyers are likely to give priority to domestic brands, and these sales would put manufacturers in a position to meet their emission targets by 2030.

Sparks of hope for Germany’s struggling car industry

A boost in production and sales of electric cars has injected cautious optimism into Germany's automotive industry, with production volumes at German car plants rising to 340,800 units in January 2025, and one-in-three German-manufactured cars being electric, with 1.35 million EVs produced in 2024. The national automotive industry association, VDA, reported a 53.5% increase in battery-electric vehicles (BEVs) registered in January 2025 compared to January 2024. Hybrid cars are also gaining ground. Corporate fleets, particularly in Germany, could drive demand increases. The European Commission has proposed a new law to boost the electrification of corporate fleets, with significant potential in Germany and France. The far-right Alternative for Germany does not support government subsidies for electromobility.