Ozdemir discusses the automobile manufacturing strategies of Baden-Württemberg
German Automakers Adapt to Competition with New Strategies
The German automobile industry, led by Mercedes-Benz and Porsche, is adapting to intense competition from China and the U.S. by pursuing regionally differentiated strategies, shifting from globalized models to flexible, localized production and technology tailored to local markets and customer preferences.
In response to this competitive landscape, German OEMs are intensifying software and AI integration throughout the product lifecycle. This includes vehicle development, manufacturing, and supply chain optimization. AI and generative AI are being used to accelerate design, simulate crash tests, and improve autonomous driving capabilities. BMW, for example, has showcased AI-powered digital assistants for vehicles, with similar initiatives expected across German luxury automakers to enhance user experience and vehicle intelligence.
German manufacturers are also expanding their electric vehicle (EV) portfolios amid rising global demand and regulatory pressure. Germany produced 864,000 electric cars in the first half of 2025, representing 40% of total production, with EV registrations growing rapidly. Mercedes-Benz and Porsche develop high-performance electric models as part of their transition plans, appealing to customers in Europe, China, and the U.S. To balance practicality and cost, plug-in hybrid electric vehicles (PHEVs) remain part of the strategy, with attention to battery size and range to meet market expectations.
Future technologies like robotics, software, new-generation batteries without rare earths, and autonomous driving are also key factors for success in the automobile industry. Germany is boosting robotics and automation within manufacturing to improve productivity amid cost pressures and geopolitical uncertainties. Autonomous driving technology development is heavily reliant on AI, with German OEMs investing in systems that enable vehicles to learn and adapt innovatively over time. Germany’s automotive industry is also fostering software independence to counterbalance dominance by U.S. and Chinese technology players, aiming to build scalable, competitive software ecosystems in Europe.
Chinese competitors command growing EV market shares with strong local infrastructure and state support, capturing roughly 93% of China’s EV market versus German brands’ 7%. U.S. policy shifts and tariffs add cost pressures, prompting German firms to localize supply chains and decentralize management to sustain profitability and resilience. This geo-economic environment requires German OEMs to be more agile and regionally specific in product offerings.
Cem Özdemir, the Green Party's top candidate for the upcoming spring election in Baden-Württemberg, supports the continuation of car manufacturing. He expresses concern about the future of Germany's automobile industry and its employees, implying a need to find solutions to avoid being left behind. Özdemir acknowledges that Germany's automobile industry has already invested heavily in these future technologies, and he mentions the USA not playing by fair rules, possibly referring to tariffs.
These strategies align with Germany’s larger industrial revival and AI initiatives that support innovation and sustainability while addressing cost and competitive pressures.
The finance industry is essential for German automakers, as they seek funding for their new strategies and investments in various technologies.
In the realm of transportation, German car manufacturers are adapting their electric vehicle portfolios to cater to growing global demand and meet regulatory requirements.
Merging technology and the automotive industry, German OEMs are intensifying AI integration in their product lifecycle, particularly in autonomous driving capabilities and digital assistant development.
