Vocal minority of laggard companies hinder German car industry transition – survey

Germany's automotive industry is more advanced in its shift towards electric vehicles than public debates suggest, but a minority of laggard companies is skewing the debate and risks slowing the transition, according to a survey of car industry managers by the University of Sussex and the Fraunhofer Institute for Systems and Innovation Research (ISI). Weakening combustion engine phase-out policies would "punish precisely the firms that are best positioned to compete in the global innovation race towards net-zero technologies," the accompanying report warned, adding that managers see only low political will to support the transformation.

The survey of 74 managers, completed in late 2025, found that a 61-percent majority of firms are advancing rapidly towards e-mobility, while it classified 39 percent as “slow transformers”. Only one in eight companies surveyed had not yet begun the shift toward electric mobility.

The decarbonisation of the transport sector remains a major hurdle in Germany’s energy transition, as the country struggles to reduce emissions from millions of combustion engine vehicles to meet its climate targets. Ensuring the domestic car industry remains globally competitive while shifting to clean technologies is considered essential for the long-term success of the wider shift to a climate-neutral economy. 

But recent policies have sent mixed signals: While the government re-introduced subsidies for electric vehicles earlier this year, it has also pushed the EU to soften its 2035 de facto ban on the sale of new combustion engine cars, citing industry concerns, and has introduced temporary tax cuts on petrol and diesel to cushion price increases resulting from the US and Israeli attacks on Iran.

“Germany should not just listen to the appeals of slow transformers, but also take those companies seriously that have already invested in electric mobility,” project coordinator Karoline Rogge said. “It is precisely these companies that can bring Germany back to the forefront of the global innovation race.”

The EU has not yet formally agreed to weaken the phase-out, and the report strongly advises against this move. “The EU phase-out policies leading to an ICE sales ban by 2035 are a cornerstone of the transformation of the German automotive industry, driving change within firms. Weakening these policies through frequent amendments or reversals undermines planning certainty and disrupts coordination across the automotive ecosystem,” the report said.

The survey also showed that sudden policy shifts and abrupt funding cuts during the previous government’s budget crisis have severely damaged the credibility of the political commitment to electric mobility, making companies hesitant to invest. “Our findings show that repeatedly changing course only weakens planning certainty and Germany’s innovative strength in future technologies. The transformation of the German automotive industry will only succeed with credible and reliable political backing,” Rogge said.