Germany's Automotive Sector Faces 125,000 Job Losses by 2035

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  //automotive-transportation.news-articles.net/co .. ive-sector-faces-125-000-job-losses-by-2035.html
  Published in Automotive and Transportation on Wednesday, May 13th 2026 at 3:03 GMT by reuters.com
      Locale: GERMANY

The Core of the Labor Risk

The projected loss of jobs is not merely a result of economic downturns but is fundamentally linked to the technological divergence between Internal Combustion Engines (ICE) and Electric Vehicles (EVs). The mechanical complexity of a traditional combustion engine--comprising thousands of precision-engineered parts--is significantly higher than that of an electric drivetrain. Because EVs require fewer components to operate, the demand for the specialized labor and the vast network of suppliers that produced ICE components has plummeted.

This shift creates a void in the supply chain. Many of the small and medium-sized enterprises (the Mittelstand) that formed the backbone of Germany's industrial success are specialized in components like pistons, exhaust systems, and fuel injection. As the industry pivots, these specialized roles are becoming obsolete, and the current pace of new job creation in battery technology and software development has not been sufficient to offset the losses.

Competitive Pressures and Global Dynamics

Germany is not navigating this transition in a vacuum. The industry is grappling with intense international competition, most notably from China, which has rapidly scaled its EV infrastructure and battery production. The VDA emphasizes that the risk to employment is compounded by high energy costs and regulatory burdens within Germany, which make it more expensive to pivot production lines and innovate compared to global competitors.

Furthermore, the reliance on a traditional manufacturing model has left some sectors of the workforce vulnerable. The transition requires a massive upskilling effort, moving labor from mechanical engineering to electrical engineering and software development. The gap between the existing skill set of the current workforce and the requirements of the "software-defined vehicle" is a primary driver of the projected job losses.

Key Details of the Crisis

• Job Loss Projection: An estimated 125,000 additional positions are at risk by 2035.
• Primary Driver: The transition from Internal Combustion Engines (ICE) to Electric Vehicles (EV), which simplifies the vehicle's mechanical architecture.
• Supply Chain Impact: High vulnerability for mid-sized suppliers specializing in combustion engine components.
• Competitive Factors: Increased pressure from Chinese EV manufacturers and high domestic energy costs.
• Urgency: The VDA calls for immediate government intervention to reduce bureaucracy and lower energy costs to maintain competitiveness.
• Timeframe: The risk is projected to accelerate leading up to the 2035 milestone.

Economic Implications and the Path Forward

The potential loss of over 100,000 jobs carries weight far beyond the factory floors. The automotive sector is a primary contributor to Germany's GDP, and a contraction in employment often leads to a ripple effect in regional economies, affecting everything from local services to real estate in industrial hubs.

To mitigate these risks, the industry body is advocating for a more supportive policy framework. This includes streamlining regulations to allow for faster innovation and implementing energy policies that ensure industrial electricity prices remain competitive. The goal is to create an environment where the transition to green mobility does not result in a hollowed-out industrial base, but rather a modernized one capable of sustaining long-term employment.

Without a coordinated effort between the state and private industry to facilitate workforce retraining and provide economic incentives for EV production, the projected job losses may serve as a permanent contraction of Germany's industrial capacity.