Spooked by plunging profits and job cuts across the auto industry, Germany’s chancellor is insisting that the European Union allow car manufacturers, rather than regulators in Brussels, to determine how best to reach the bloc’s goal of slashing carbon emissions.
After meeting with the heads of Germany’s carmakers and other stakeholders in the auto industry, Chancellor Friedrich Merz vowed Thursday to urge the EU to back off a policy prohibiting all new vehicles sold after 2035 from producing carbon emissions. The regulation has been widely interpreted as a ban on combustion engines.
“I will be pushing for decisions to be taken in the European Union that will enable comprehensive technological advancement and climate neutrality,” Merz told reporters. “Not with a date on the calendar that we cannot achieve, that is unrealistic, but with a clear perspective that also opens up the necessary future prospects for companies in Germany.”
Stung by a drop in demand from customers in China, the world’s largest auto market, German automakers have seen sales of their cars decline steadily in recent years. President Donald Trump’s tariffs have only made things worse.
Porsche joined BMW and Mercedes-Benz on Thursday in reporting weaker sales in China, where customers prefer less expensive local brands like BYD and Xiaomi. On Wednesday, BMW’s shares plunged 7% after it cut its forecast for profit and cash flow, citing the U.S. tariffs.
The pain is being felt in communities across Germany, where the auto industry shed some 51,500 jobs from June 2024 to 2025, according to a study from EY. Industry groups have begun warning that further losses could worsen the political divide in the country.
As part of Germany’s efforts to shore up the industry and make electric vehicles more attractive, Merz announced plans for an incentive worth 3 billion euros, or about $3.5 billion, aimed at helping low-income households purchase electric cars, starting next year and running for three years.
Merz and industry leaders repeatedly stressed their support for the EU’s goal of moving toward fully electric mobility. But German automakers argue that customers are not yet convinced of the technology and that charging infrastructure across the 27-member bloc is not yet sufficient to relieve concerns about running out of power while on the road.
This article originally appeared in The New York Times.
