By Talha Khubaib

Talha Khubaib is a Senior HSE Leader at Changan Pakistan. He previously worked at Toyota Pakistan and has professional experience in health, safety, process safety management and management-system auditing.

When I visit Germany, I notice the cars almost automatically. Volkswagen, BMW and Mercedes-Benz do not feel like ordinary consumer brands there. They are part of the country’s industrial landscape, visible on motorways and residential streets, tied to factories that have supported towns and skilled workers for generations.

From Karachi, I grew up regarding “Made in Germany” as shorthand for engineering quality. The phrase carried an industrial meaning as much as a commercial one. Germany designed sophisticated machines and, crucially, made them at home.

That second part can no longer be taken for granted.

Around 175,000 automotive workers demonstrated across Germany on September 21 under the slogan “Zukunft statt Kahlschlag”, roughly “A Future Instead of Drastic Cuts.” IG Metall organised about 280 actions involving employees of major manufacturers and suppliers. IG Metall documented the nationwide protests.

The workers have good reason to worry. Volkswagen has approved another reduction of about 50,000 jobs worldwide, on top of roughly 50,000 positions already being eliminated. Reuters described the plan as the most extensive restructuring in Volkswagen’s 89-year history. The future of several German plants will come under scrutiny as existing models reach the end of production. Reuters reported on Volkswagen’s restructuring.

Yet something about the conventional explanation of Germany’s automobile crisis bothers me. Electric cars are often presented as the problem. The numbers suggest a different story.

Germans Are Buying Electric Cars

Germany’s electric transition is no longer theoretical.

In August, Germany registered 68,980 battery-electric cars, up 75.4 percent from a year earlier. The European Alternative Fuels Observatory said Germany recorded the highest absolute number among the 13 EU countries for which August data were available when its September update was published. The EAFO published the September data update.

VDA data tell a similar story from another direction. Domestic orders for battery-electric cars from German manufacturers rose 62 percent year on year in August. During the first eight months of 2026, those domestic BEV orders were 64 percent higher than in the corresponding period of 2025. VDA reported the August production and market figures.

Berlin is actively supporting the transition. Germany’s federal government now offers eligible private buyers subsidies of between €1,500 and €6,000 for qualifying electric cars, plug-in hybrids and range-extender vehicles. The programme applies to eligible vehicles bought or leased from January 1, 2026. The federal government explains the EV support programme here.

Germany’s central automotive contradiction is becoming clearer. Electric demand can rise while automotive employment falls.

A country can buy more EVs without guaranteeing that the factories producing the economic value behind those vehicles will remain in Germany.

The Numbers Behind the Factory Gates

EY’s September analysis of the world’s 19 largest automakers makes uncomfortable reading for Germany.

Combined revenue at Volkswagen, BMW and Mercedes-Benz fell 2.9 percent in the first half of 2026 to €284 billion. Revenue across the 19 manufacturers increased 3.6 percent to a first-half record of €1.048 trillion.

Profit reveals a sharper divergence. Operating profit at the German groups dropped 19 percent to €13 billion. Their combined operating margin slipped from 5.5 percent to 4.6 percent. EY published the comparative automotive analysis.

Germany therefore faces more than a temporary sales slowdown. Its major manufacturers are losing earning power at a moment when the transition to electric vehicles demands heavy investment. Factories need new production systems. Software capability requires money and different skills. Battery supply chains create another industrial contest over where future value will be captured.

The employment figures already show the strain. Germany’s Federal Employment Agency reported in July that manufacturing employment fell by 177,000 during 2025. Motor vehicles and motor-vehicle parts accounted for 52,000 fewer employees by the end of that year. The Federal Employment Agency published the manufacturing employment figures.

Those losses preceded Volkswagen’s newly announced restructuring.

The important distinction is no longer simply between petrol cars and electric cars. It lies between German automotive companies and automotive manufacturing in Germany.

Volkswagen can remain German while employing fewer Germans. BMW can remain a powerful global brand while deciding that another production location offers better economics for a future model. A Mercedes can carry a German identity even when a growing share of the economic activity behind the vehicle occurs somewhere else.

For workers standing outside a factory gate, corporate nationality offers little protection if the next production line goes abroad.

China Has Changed the Equation

China makes the problem harder.

For years, German manufacturers benefited enormously from the Chinese market. EY says that in 2020, four out of every ten vehicles sold worldwide by German manufacturers went to customers in China.

The relationship looks very different in 2026. German manufacturers’ China sales fell 25 percent during the first half of this year. China’s share of their worldwide vehicle sales dropped from 28.9 percent to 23.5 percent in only twelve months.

Chinese consumers have become more willing to buy domestic brands, particularly in the growing electric segment. German premium vehicles also face a weaker Chinese economy and intense price competition.

Another change is occurring closer to Germany. Chinese manufacturers increased their European sales by 44 percent during the first half of 2026, according to EY. BYD’s European sales increased 168 percent.

The reversal is striking. German companies once entered China and captured part of its expanding automobile market. Chinese manufacturers are now using electric vehicles to push deeper into Europe’s home market.

Yet the Chinese success story needs an important qualification. Chinese manufacturers are not enjoying an effortless global victory. Their worldwide sales fell 8 percent during the same half-year period. Operating profit dropped 22 percent, according to EY. Severe price competition in China and the cost of international expansion are hurting them too.

The contest is therefore not a simple story of German decline and Chinese triumph. It is a fight over who can absorb the enormous costs of an industrial transformation while keeping vehicles affordable.

“Made in Germany” Meets the Cost Problem

EY automotive analyst Constantin Gall points directly at Germany’s structural disadvantages. He identifies weak labour-cost productivity and high energy prices. Regulatory costs add another burden. EY expects relocations to lower-cost locations and further employment reductions to remain part of the industry’s restructuring.

Workers and IG Metall do not accept the conclusion that labour should absorb the adjustment. Their September protests demanded future investment and protection for German industrial employment. Union leaders have also called for lower electricity prices and stronger protection against unfair competition. Reuters reported the demands behind the protests.

The dispute is sometimes described as labour versus management. I think that framing misses something important. Both sides can see the competitive pressure.

The real argument concerns who pays for the transition and where companies invest the money needed to survive it. Workers fear that “competitiveness” will become another word for removing jobs from Germany. Management faces shareholders and competitors that can manufacture at lower cost elsewhere.

Government sits directly inside the conflict because energy policy and industrial incentives influence the economics of production.

Berlin has already reduced some energy costs. The federal government says measures introduced in 2026 include a €6.5 billion federal contribution toward electricity-grid charges and permanently lower electricity tax for about 600,000 manufacturing, agricultural and forestry businesses. An industrial electricity price is also part of its response for energy-intensive companies. The German government lists its current economic measures.

Europe is intervening too. The European Commission’s automotive package includes €1.8 billion for its Battery Booster initiative, designed to strengthen an EU battery value chain. The Commission has also proposed regulatory simplification intended to reduce administrative costs for manufacturers. The European Commission describes the automotive package.

Industrial policy has therefore returned to the centre of Europe’s automobile debate. The question is what those interventions will preserve.

A German Car Industry Without German Factories?

One number keeps pulling me back to the factory question.

German manufacturers actually increased their European vehicle sales by about 3 percent in the first half of 2026, according to EY. Their overall global sales still fell 6 percent because weakness elsewhere, especially China, outweighed that improvement.

Germany’s domestic production tells another story. German factories produced about 2.65 million passenger cars during the first eight months of 2026. Production was 4 percent lower than a year earlier and remained 16 percent below the comparable level of 2019. Exports during January through August were down 5 percent year on year.

Those figures expose the danger. Germany could succeed in electrifying its roads while failing to preserve enough of the industrial activity that once made the automobile sector so valuable to its economy.

An EV subsidy can persuade a family to buy an electric car. It cannot determine where that car’s battery cells were produced or where its software was written. Nor does it guarantee that the assembly line stands in Wolfsburg, Zwickau or another German industrial town.

For decades, Germany enjoyed an unusually powerful combination. German companies owned globally desirable brands, while a large industrial workforce at home captured a substantial share of the production value.

The EV transition is testing whether those two things must continue to travel together.

I would not write off German automotive manufacturing. Germany retains formidable engineering knowledge, established production networks and companies with enormous global reach. Battery-electric demand is growing rapidly.

But brand survival sets a much lower bar than industrial survival.

A Volkswagen badge can remain German long after the geography of its production changes.

When 175,000 workers take to factory gates and public squares, they are not really protesting against the electric car. They are asking where the next car will be built.

For Germany, that may be the harder question.