Germany’s Auto Comeback: VW and BMW Master EV Transition

5 min read

2024 was the darkest year for Germany’s electric car industry: after the unexpected end of the purchase premium, new BEV registrations collapsed by 27.4 percent. VW faced the threat of plant closures, and suppliers were bleeding. But the turnaround came in 2025: 545,000 all-electric cars were newly registered – an increase of 43.2 percent. With 78 percent BEV growth, VW is back at the top in Europe. Germany’s automotive industry has put the low point behind it.

Key Takeaways

The Collapse: How Germany Destroyed Its EV Market

On December 17, 2023, the German federal government scrapped the electric car purchase premium – overnight, with no transition period. The result was a market collapse that even pessimists had not expected: 380,609 new BEV registrations in 2024, a decline of 27.4 percent. Market share fell to 13.5 percent.

The cancellation primarily hit private buyers and leasing customers, for whom the premium of up to 6,750 euros had often been the deciding factor in choosing an electric vehicle. Fleet customers, who had to buy anyway, partially cushioned the crash – but the damage was done. Similar ruptures can be seen in other industries, where political changes of course throw entire supply chains off balance.

VW: From Turnaround Case to Market Leader

Volkswagen was at the epicenter of the crisis. In China, the group slipped to third place behind BYD and Geely. Its software subsidiary Cariad spent years producing no usable results. Plant closures in Osnabrück and Dresden loomed.

CEO Oliver Blume’s response was radical: massive cost-cutting programs, wage negotiations with the union, and above all – the joint venture with Rivian. RV Tech already employs 1,500 people worldwide and is developing the software platform for VW’s next generation, the SSP architecture, which is intended to run on 30 million vehicles.

The results are becoming visible in 2025: VW increased its European BEV sales by 78 percent and, with a 27 percent market share, is once again the clear European market leader in electric cars. The ID.4 and ID.5 sold 128,900 units in nine months, the ID.3 reached 88,800, and the ID.7 55,500. The ID. Buzz doubled its global sales. Germany’s startup scene is showing a similar comeback after the funding winter.

BMW: The Neue Klasse Is Coming

BMW is taking a different path from VW – and investing in a completely new platform in one major move. The Neue Klasse, whose production starts in Munich in 2025, is the group’s first platform designed from the ground up as an electric vehicle. Until now, BMW has built its electric models on combustion-engine platforms – a transitional solution that forced compromises on range and efficiency.

At the same time, BMW is building a dedicated vehicle plant in Debrecen, Hungary. The investments in converting the main Munich plant and developing the new platform amount to several billion euros. For BMW, the Neue Klasse is a bet: if the platform convinces, BMW will have a technological edge. If not, the group will have invested years and billions in a direction the market does not reward. Transformation bets like this require consistent change management – where technology alone is not enough.

“2025 must become the year of a fresh start in order to become the year of the turnaround. The German automotive industry is investing 320 billion euros in research and development through 2029.”
– Hildegard Müller, President of the VDA, annual press conference January 2025

The Suppliers: Those Who Adapt Will Survive

The transformation of the OEMs is pulling the entire supply chain along with it. As Europe’s largest automotive chip manufacturer, Bosch is in a key position and is investing in silicon carbide semiconductors for electric vehicles in Dresden – a location that is also central to Europe’s chip offensive. ZF is expanding its electric drive business, even as the group is simultaneously cutting jobs in conventional areas.

The industry is becoming smaller and different. Employees who developed combustion engines need new qualifications. Suppliers that have only one product, one that no longer appears in electric cars – exhaust systems, oil coolers, injection systems – have to completely reinvent themselves or they will disappear. Many of these medium-sized suppliers are among the 1,307 Hidden Champions that make up Germany’s industrial strength. That is brutal, but it is the price of transformation.

Frequently Asked Questions

Further Reading

• AI as a turnaround lever: Four medium-sized companies show how it works – MyBusinessFuture
• Cybersecurity trends 2026: The 7 developments security teams need to know – SecurityToday
• EU AI Act 2026: What companies need to implement now – Digital Chiefs

Featured image source: Pexels / I’m Zion