The German automotive industry in Germany faces the potential loss of a further 125,000 jobs by 2035, unless the EU embraces greater technological openness and sustainably and significantly improves the competitiveness of the country as a business location. In light of these 125,000 jobs, the decline in employment would be more severe than previously assumed; the risk is that approximately 35,000 more jobs could be eliminated than we most recently anticipated.

A particularly critical issue is Brussels’ CO2 fleet regulation for passenger cars and vans, under which – starting in 2035 – only new battery-electric and fuel-cell vehicles may be newly registered. Without adjustments, this regulation jeopardizes 50,000 jobs in Germany. These jobs could be preserved by assigning a more prominent role to plug-in hybrids (PHEVs), range extenders, and internal combustion engines – including those powered by renewable fuels in 2035 and beyond. Globally, these powertrain technologies will continue to play a role in the long term. Therefore, the VDA emphatically demands that Brussels’ stated commitment to technological openness finally be backed by concrete measures and the necessary regulatory flexibility.

The Problem: New jobs are being created in Germany with increasing rarity due to poor location conditions

Previously, in the context of a study conducted with Prognos (2024), the VDA had assumed that, in the course of the transformation toward climate-neutral mobility, approximately 190,000 jobs could be lost by 2035 compared to 2019 levels. The reason for this is that manufacturing an electric vehicle is less complex and requires fewer parts than manufacturing a vehicle with a combustion engine. Consequently, the shift toward electromobility is accompanied by job losses – particularly within the automotive supply industry.

However, developments over the past two years indicate that the decline in employment is proceeding more rapidly than previously assumed. The underlying reason is that – contrary to expectations – Germany is no longer generating a sufficient number of new jobs, owing to poor domestic business conditions that are becoming increasingly uncompetitive on an international level. Thus, the jobs being created as part of the transition toward climate-neutral and digital mobility are increasingly emerging abroad.

Based on this trend in employment and assuming the continuation of the current regulatory framework, the projected decline in employment figures is now steeper than previously anticipated: by 2035, a net loss of approximately 225,000 jobs is now expected compared to 2019 levels. Measured from the present day – given that around 100,000 jobs have already been lost since 2019 – this corresponds to a further reduction of approximately 125,000 employees. Specifically, this means that approximately 35,000 more jobs will be lost than would have been expected based on calculations from 2024.

"Everything that creates growth must be the top priority"

VDA President Hildegard Müller: "This trend is concerning and demonstrates that Germany is facing a persistent and severe crisis as a business location. Conditions for production in Germany are visibly deteriorating. High taxes and levies, expensive energy, high labor costs, excessive bureaucracy – the list of challenges goes on. The consequence is that, for economic reasons, companies are unfortunately compelled all too frequently to decide against Germany and Europe as production sites in order to maintain their competitiveness and preserve remaining jobs here at home."

Müller warns: "The exodus of investment and employment will not be without consequences for our country’s prosperity, nor for its social and political stability. This realization is painful – making it all the more crucial that the right conclusions are drawn from it. Everything that fosters growth must be given top priority in Brussels and Berlin. This has been and remains the expectation of the business community, and it must be the aspiration of the Federal Government. An environment conducive to investment and innovation is essential for our industrial location to regain its relevance. The competitiveness of it will ultimately determine where the jobs of the future are created."

Technological openness could preserve 50,000 jobs in Germany

VDA calculations indicate that future employment trends depend significantly on the powertrain mix. Under the current CO2 fleet regulations for passenger cars and vans, only battery-electric and fuel-cell vehicles may be newly registered starting in 2035 – a requirement that has corresponding implications for production. Compared to the currently applicable CO2 regulations, a higher share of plug-in hybrids (PHEVs), range extenders, and combustion engines (increasingly powered by renewable fuels) within domestic passenger car production would result in less disruption to the employment structure. In such a scenario, an employment decline of approximately 75,000 jobs could be expected by 2035. This would mean that around 50,000 jobs could be preserved in Germany. The negative effects of this transformation on employment would thus be tangibly mitigated. Nevertheless, the path toward the climate-neutral mobility of the future would continue to be pursued.

A German voice in Brussels is decisive

"Whether in China, India, the USA, or Canada – in other regions and automotive markets, there is no move to abandon technologies that can help achieve climate goals while simultaneously safeguarding jobs. Europe’s distinct regulatory path is not the right one. The concept of excessive regulation has also failed. Crucial to success is the recognition that climate protection constitutes a viable business model – that it must be conceived together with growth, prosperity, and, by extension, jobs. Only in this way climate protection can gain broad acceptance and prove successful.

Therefore, genuine technological openness is required. A strength lies in a mix of propulsion systems - particularly with a view to achieving climate targets. Crucially, however: technological openness must not remain a mere lip service. Rather, it must be genuinely feasible in practice. In this regard, the European Commission’s current proposals are unfortunately inadequate. Instead of a course correction and a necessary, more flexible approach, the focus remains on further regulation – thereby changing nothing. This makes it all the more imperative that the European Parliament and the Member States urgently make improvements and introduce greater flexibility during the upcoming negotiations," the VDA President stated.

Müller welcomes the fact that the Federal Government has reached a consensus on key points regarding the so-called EU Automotive Package. "The Federal Government’s clear commitment to a technology-neutral path toward climate-neutral mobility – including plug-in hybrids, range extenders, and vehicles with combustion engines running on increasingly renewable fuels – sends a strong signal for the upcoming negotiations in Brussels and can be instrumental in helping to preserve jobs and prosperity here at home. It is therefore crucial, now more than ever, that Germany speaks with a strong, united voice in Brussels."