Germany faces significant challenges. Low acceptance of regulatory interventions, a rather slow expansion of charging infrastructure, and fragmented industrial policy are hindering progress in the mobility transition. These structural problems affect not only individual sectors but permeate the entire value chain, impairing electromobility as a whole.
The third and final part of our analysis of electromobility in the DACH region focuses on the political course and structural challenges that Germany must address. After examining the initial situation and international role models, we now focus on specific areas of action.
Fields of action and political decisions for Germany
To overcome the challenges outlined above, targeted and well-thought-out measures are needed. Germany faces the urgent task of both addressing structural deficits and simultaneously developing long-term strategies to remain internationally competitive. To achieve this, key areas of action must be addressed.
- Investments in charging infrastructure: A comprehensive, dense network of charging points enables broad market penetration. In addition to urban centers, rural areas must also be considered. This is crucial to increasing the acceptance and spread of electric vehicles.
- Promoting talent and innovation: Germany needs a targeted initiative in tertiary and vocational education with a focus on future technologies. This measure can counteract the shortage of skilled workers and secure talent for key industries. At the same time, increased funding for research and development is necessary. Innovations, particularly in battery technologies, play a central role. Advances in recycling technologies, such as the recovery of valuable raw materials from used batteries and electric vehicles, are also essential. Furthermore, greater focus should be placed on the development of innovative software solutions, such as those for autonomous driving.
- Strengthening local value creation: An important starting point is reducing dependence on imports, especially from China. Promoting regional supply chains and building domestic production capacities for batteries and semiconductors in Germany can contribute to this. Mining and processing lithium within the country would also reduce dependence on external raw material suppliers. Overall, greater vertical integration in key areas of the value chain not only brings economic benefits but also reduces geopolitical risks.
- Reducing location costs: Reducing high location costs is crucial for staying competitive internationally. More than 300 automotive production facilities are spread across the continent – 213 within the EU alone. Closer collaboration between automotive brands within a group and the utilization of synergies offer considerable potential here. Optimizing production processes – for example, through investments in energy-efficient technologies – can also enable significant savings. Tax incentives for companies that invest in energy-efficient production facilities could accelerate this change. In addition, closer European cooperation within the industry is necessary to secure supply chains and harmonize standards.
- Consumer incentives: Tax incentives and purchase premiums for individuals and companies can help increase sales of locally produced electric vehicles and strengthen domestic production. However, these measures must be consistent and long-term to create stable conditions and trust.
- Clear and reliable framework conditions: A stable political environment is essential to strengthening the electromobility market. Technological openness must not be used as an excuse to denigrate and ultimately slow down electromobility. Instead, clear, long-term, and reliable framework conditions are needed to enable companies to plan and invest strategically.
What is the federal government doing?With the 2025 budget, the Federal Government has already taken the first important steps. The adopted growth initiative encompasses both economic and structural measures to strengthen Germany as a business location. Key elements include incentives for companies to invest in new facilities and production capacities, strengthening the capital supply, and the targeted reduction of bureaucratic hurdles. These measures are already beginning to show initial success, for example, through accelerated momentum in the expansion of renewable energies and the establishment of future-oriented industries. Particularly relevant for electromobility are the tax improvements for purely electric and zero-emission vehicles approved by the Federal Cabinet. This will make it easier for companies to make their fleets more environmentally friendly. At the same time, the permanent extension of the electricity tax reduction for the manufacturing sector and planned measures to reduce grid costs will ensure that both industry and private households benefit from electricity costs. Another instrument is the newly created Raw Materials Fund, which gives companies greater independence from other countries. This not only strengthens the resilience of the economy but also makes an important contribution to securing supply chains. In addition, the government plans to offer tax incentives for foreign skilled workers with specialized qualifications and accelerate the implementation of the Skilled Immigration Act. |
Conclusion: Germany must act
Successful implementation of the proposed measures requires closer coordination and more effective cooperation between policymakers and industry to specifically address existing locational disadvantages such as high energy costs, skilled labor shortages, and bureaucratic hurdles. Policymakers have a crucial role to play in creating clear, long-term frameworks that provide companies with much-needed planning security. Above all, however, policymakers should be careful not to send contradictory signals that could slow down innovation or hamper investment.
It is now up to the newly elected Bundestag and the new coalition government to implement these measures swiftly and decisively. The mobility transition is a key task for the future, the success of which depends significantly on a forward-looking and coherent strategy. It is time to set the course toward becoming a sustainable and competitive business location. Germany has the opportunity to get its stuttering economic engine running again and emerge from the crisis stronger. This opportunity must not be wasted.
