Struggling Auto Industry in the East Provides Openings for Congress to Make a Move

In the heart of Leipzig, the Automotive Cluster Ostdeutschland (ACOD) held its annual congress, bringing together around 200 guests from politics, business, and science to discuss the future of the industry. The event was a testament to the industry's resilience and its determination to adapt in the face of numerous challenges.

One of the key issues at the forefront is the shift towards electric vehicles (EVs). Porsche, BMW, and Volkswagen, three major players in the East German automotive landscape, are reporting growing shares of electric models. In the first half of 2025, almost 60 percent of the Macan models delivered by Porsche were fully electric. BMW and Volkswagen are also seeing rising shares and production numbers of EVs.

However, the transition to EVs comes with its own set of challenges. Jens Katzek, an industry expert, described the situation as a "catch-22": high costs, much bureaucracy, and the simultaneous pressure to make new technologies market-ready in the shortest time.

The governments of Saxony and Thuringia, along with industry and science representatives, are acknowledging these challenges and are taking steps to address them. They are focusing on cooperation, interdisciplinary networking, and fostering new dynamics to strengthen the automotive sector against increasing competition from Asia.

Saxony, with its strong supplier and research landscape, has a solid foundation. However, some topics need to be completely rethought, including stable costs, reliable infrastructure, and people ready to take new paths. After a dip in 2024, the registration of EVs in Saxony is picking up again, with 6,677 battery-powered vehicles newly registered from January to July, around 2,500 more than in the previous year.

Cooperation presents opportunities for the automotive industry: new business models, more stable value chains, and an innovation boost that strengthens employment and competitiveness. Dirk Panter, Saxony's Economics Minister, called the automotive industry a fundamental key industry for the state and emphasized the importance of education and research.

Thuringia's Economics Minister, Colette Boos-John, highlighted her state's role as a guarantor of innovation but expressed concerns about protectionist measures like US trade policy. She urged for a balanced approach that promotes innovation while avoiding protectionism.

Christian Growitsch from the Hamburg Institute advocates for closer cooperation between the automotive and defense industries, particularly in technologies like batteries, charging infrastructure, and autonomous systems, which are crucial for both civilian and security applications.

Petra Peterhänsel, ACOD's chairwoman, identified geopolitical tensions, volatile supply chains, increased competition from Asia, and ongoing technological shift as significant challenges for the East German automotive industry. She emphasized flexibility and innovation as keys to staying competitive amid geopolitical tensions and technological change.

Incentives to buy electric vehicles are still considered necessary by industry experts. The shift towards EVs is in full swing, and the pace at which the eastern German automotive industry adapts depends on political frameworks and the innovative power of the companies. The governments and industry leaders are working together to create a conducive environment for the industry to thrive in the new era.

Struggling Auto Industry in the East Provides Openings for Congress to Make a Move