Overview

• Chancellor Friedrich Merz has urged scrapping or delaying the EU’s 2035 combustion-car phaseout, with German media reporting a possible compromise to permit hybrids beyond 2035 under EU review.
• Finance Minister Lars Klingbeil has drafted an extension of the motor-vehicle tax exemption for electric cars through the end of 2030, with the largest benefits for earlier buyers.
• Berlin is exploring a “steel bonus” that would ease fleet CO2 compliance or channel support if carmakers use European green steel, a step that would need EU sign-off or national funding.
• Other ideas under discussion include higher vehicle tax rates for petrol and diesel cars, a social-leasing scheme for low- and middle-income households, renewed purchase incentives, and energy-price relief for industry.
• The crisis is deepening with H1 2025 profits sliding at Mercedes-Benz, Volkswagen and BMW, Eurostat reporting car-export drops of about 42% to China and 13.6% to the U.S., and roughly 52,000 German auto jobs lost in a year alongside severe supplier strain.