Berlin, FRG (Weltexpress). With the kind support of the German government: A new study paints a bleak picture with little hope. Suppliers have their backs to the wall. The green ideology, which lives on in the CDU/CSU/SPD government, has dismantled not only the automotive industry, but the entire economy. Looking ahead: into the abyss.
On Tuesday this week, August 26, the economic consulting firm EY published a study that poured cold water not only on the German automotive industry, but also on the entire German economy. The figures speak for themselves: the industry, once the shining flagship of the German economic miracle, is teetering on the brink of collapse. Sales are shrinking, jobs are disappearing, and suppliers are fighting for survival. But don’t worry, dear voters of the CDU/CSU/SPD/Greens and Left Party, German politicians and their unelected comrades-in-arms in the EU Commission in Brussels have everything under control. At least that’s what they claim, while they drive the cart even deeper into the mire.
Below, we will examine the main reasons for this spectacular failure of the German “elites” in politics, business, and the media, and why the population continues to stand by and watch as these amateurs not only slash the tires of the former luxury limousine “Germany,” but also throw sand in the gears.
A bleak picture with little hope
The EY study is part of the current “Industry Barometer.” It paints a picture that leaves even the most pessimistic prophets of doom speechless. In the second quarter of 2025, German industrial sales fell by 2.1 percent compared to the previous year, the eighth consecutive quarter of declining figures. The automotive industry bears the brunt of the burden: within a year, 51,500 jobs – just under seven percent of the total – were lost, almost half of all industrial jobs lost in Germany. Sales in the industry shrank by five percent to 536 billion euros in 2024, and employment figures fell by 2.4 percent at the end of the year. Suppliers are under particular pressure because electric mobility has not taken off as hoped, contrary to what was naively but mistakenly believed, resulting in tens of billions of dollars of expensive investments in new technologies being lost, as other countries – especially China – had long since overtaken Germany and the rest of the Western automotive industry in these technologies and their low-cost mass production.
Constantin M. Gall, Managing Partner and Head of the Mobility Department at EY, speaks of a “ massive and comprehensive crisis .” Weak demand, high costs, and the expensive coexistence of combustion engines and electric cars are weighing on the industry. According to Gall, suppliers have their backs to the wall as the ramp-up of electric mobility stalls and the regulatory framework remains unclear. The study highlights that exports, once the backbone of the industry, are particularly weak – especially to China, where sales have slumped by 14 percent.
But while the figures relentlessly reveal the reality, the true art of failure lies in the political decisions that have led Germany and the EU into this mess with a mixture of ideological zeal and bureaucratic blindness.
Green climate madness: when ideology dismantles the economy
Let’s start with the heart of political failure: the green climate madness that is revered as dogma in Berlin and Brussels. With the “Green Deal” and the ban on combustion engines from 2035, the EU has set itself a pie-in-the-sky goal that simply ignores reality in its ambitions. The idea of forcing the automotive industry into a purely electric future may sound sustainable in the hip cafés of Brussels, but in the production halls of Stuttgart and Wolfsburg, it is now causing sheer horror. The EY study shows that investments in electric mobility are swallowing up large sums of money without delivering the hoped-for market success. In many EU countries, the market share of electric cars is less than ten percent – a clear sign that consumers are not playing along.
But why should politicians pay attention to the needs of citizens or feasibility when they can score points with bans? The combustion engine ban, a masterpiece of bureaucratic arrogance, is forcing manufacturers to rebuild their production chains, while the infrastructure for electric cars – i.e., charging stations and affordable batteries – remains a pipe dream. The result? Jobs in traditional car manufacturing are being lost, while new jobs in electric mobility are either not being created or are migrating to China, where the batteries are produced. Bravo and a big “Avanti Dilettanti” to the desk jockeys in Brussels! But it gets worse!
Artificial energy price increases: farewell to reason
While German industry groans under rising energy prices, our brilliant politicians have decided in their wisdom to do without inexpensive Russian gas. The deliberate boycott of the Russian supplier – a geopolitical masterpiece – has catapulted energy costs into the stratosphere. The EY study highlights that high energy and material prices are eating into suppliers’ margins. Who needs affordable energy when you can demonstrate moral superiority with sanctions instead? German industry, especially energy-intensive automotive production, and the jobs and incomes that depend on it, are paying the price for this political madness on the road to self-destruction.
As if that weren’t enough, the increase in CO₂ levies and taxes is driving costs even higher. The idea of penalizing companies for their CO₂ emissions while at the same time demanding the production of electric cars, which are hardly being bought due to a lack of infrastructure and high costs, is a prime example of economic masochism. The EY study makes it clear that the industry can hardly remain competitive under these conditions, especially when China is represented on the world market with inexpensive and high-quality electric cars.
Further reasons for the debacle: the list of failures
But the list of political missteps does not end there. Here are a few more gems from German and European economic policy:
Germany and the EU hold the world championship title for bureaucracy, as they have a talent for strangling companies with a jungle of regulations. The EY study mentions complex tax regulations and new reporting requirements for sustainability as increasing obstacles to production. Why promote innovation when you can have people fill out forms instead?
- Next, we have the shortage of skilled workers due to the failure of German education policy: The automotive industry urgently needs skilled workers, especially in areas such as mechatronics and IT, in order to achieve the transformation. However, German education policy has failed to establish a sustainable education system in recent decades. The Prognos study by the German Association of the Automotive Industry shows that professions with increasing relevance, such as IT administration or mechatronics, are already suffering from a shortage of skilled workers. Who needs engineers when you can promote the much more important gender studies instead?
- Then there is the lack of infrastructure funding. While the political elite and their media courtiers have been preaching electric cars for years, the infrastructure for charging stations for electric cars has remained a joke. The EY study suggests that at least part of the weak demand for electric cars is related to the lack of infrastructure for good, fast charging stations. But why invest in charging stations when you can instead present CO₂ targets as progress?
- Another aggravating factor in this disaster is the breathtaking ignorance and culturally conditioned arrogance that the German and European so-called elites have shown towards global competition. However, the dream that the German electric car would save the world is now over, as China and Silicon Valley in the US are pushing their way onto the market with new business models and affordable electric cars, while Germany and the EU continue to get bogged down in bureaucratic debates. (The EY study shows that German car companies have suffered double-digit sales declines in China, while Tesla has grown by 30 percent there. The political elite in Germany and their water carriers seem to believe that global competition can be defeated with moralizing lectures.)
- Last but not least, we also have the subsidy chaos. This is evidenced by the way German politicians have pumped billions into electric mobility without any clear ideas or strategy. Currently, for example, we hear almost daily in the news how production facilities already under construction are being abandoned as part of the planned transition to e-mobility. In the process, subsidies – often distributed with exaggerated haste and sometimes amounting to hundreds of millions of euros – are being wasted without the politicians responsible being held accountable or even criticized.
- Meanwhile, things continue as before: subsidy programs come and go, and the lack of a strategy creates additional uncertainties that distort the market. The EY study points out that the unclear regulatory framework inhibits willingness to invest. But who needs planning security when you can buy votes for politicians with short-term subsidies?
Looking ahead: into the abyss
The EY study is not just a snapshot, but a mirror that mercilessly holds up Germany’s political failures. The automotive industry, a key sector of the German economy, is suffering from a combination of green ideological delusions, artificially inflated energy prices, bureaucratic overregulation, and an ignorant attitude toward global competition. While the industry is fighting for survival, politicians in Berlin and Brussels seem to continue living in a parallel world where good intentions override the laws of economics.
The VDA’s Prognos study estimates that a further 186,000 jobs in the industry could disappear by 2035. But instead of setting the course for a competitive future, politicians in Berlin and Brussels seem to be continuing to focus on ideology and symbolic politics.
What would be the alternative? Perhaps a policy that focuses on affordable and reliable energy, which was previously guaranteed by supplies from Russia, which were deliberately stopped by the federal government. And by expanding infrastructure, reducing bureaucracy, and promoting education—but that would be far too sensible. Instead, we can look forward to further CO₂ tax increases, bans on combustion engines, and moral lectures, while China and the US conquer the markets. The German automotive industry, once the engine of the economy, is becoming a memorial to political failure.
In their ignorant arrogance, the self-proclaimed political elites have managed to drive one of the world’s strongest industries into the ground. Now the only question that remains is who will clean up the mess—and who will pay for it. It will be the average consumer—because in view of the €9 billion per year recently promised by Finance Minister Klingbeil in Kiev for the continuation of the proxy war in Ukraine, all this can only be financed by massive cuts in social benefits, for which the Merz government is already preparing us.
