The Illusion of "Technology Openness": Why the VDA’s Strategy Risks Germany’s Automotive Future

A commentary by Sebastian Hentschler

The German automotive industry stands at a crossroads, caught between the gravity of its historic success and the cold, hard reality of a global market in rapid flux. Recently, the German Association of the Automotive Industry (VDA) sounded a familiar alarm: up to 125,000 additional jobs could be lost in the sector by 2035. This figure, layered on top of the 100,000 roles already shed since 2019, is statistically sound but strategically misleading. While the pain of the industrial transformation is undeniable, the VDA’s proposed remedy—a push for "technology openness"—reveals a dangerous disconnect between industry lobbying and global consumer behavior.

The VDA’s Alarmist Pivot: The Call for "Technology Openness"

The VDA’s current narrative centers on the claim that the European Union’s CO2 fleet regulations are a threat to 50,000 domestic jobs. The association argues that if the EU does not soften its 2035 combustion engine phase-out, German manufacturers will be forced to retreat, leading to mass unemployment. Their solution is a call for "technology openness": the continued subsidization and production of plug-in hybrids, range extenders, and vehicles powered by synthetic fuels (e-fuels) well beyond the current 2035 deadline.

To the casual observer, this sounds like industrial pragmatism—a buffer against economic volatility. However, when measured against the performance of German carmakers in their most critical growth markets, the VDA’s plea appears less like a strategy for survival and more like a stalling tactic for companies struggling to keep pace with the electrification curve.

Chronology of a Shift: The European Market’s Clear Verdict

To understand why the call for "technology openness" is so contentious, one must look at the data from the first quarter of 2026. Europe is not shrinking away from the electric vehicle (EV); it is embracing it.

• Q1 2026: BMW reported a 3% increase in European deliveries compared to the previous year, with German domestic sales surging by 10.7%. Crucially, EV orders in Europe rose by 40% year-on-year. For BMW, the transition is already visible: more than one in every two BMW X3s ordered is now the fully electric iX3.
• Wester European Trends: Volkswagen saw its electric vehicle share rise from 19% to 20% in Western Europe, with a 15% increase in back-orders compared to late 2025.
• The Mercedes Surge: Mercedes-Benz reported a staggering 34% growth in electric vehicle sales across Europe, with a 36% jump in Germany. Demand for the new electric CLA has been so high that the Rastatt production plant is operating at full capacity in a three-shift rotation.
• April 2026: European EV sales grew by 27% year-on-year, exceeding 400,000 units in a single month.

The data confirms a simple reality: Europe is the primary growth engine for the electric car market. The markets where German manufacturers are currently losing ground—China and the United States—are not suffering because of EU regulations. They are suffering due to geopolitical tensions, the erosion of local subsidies, and, most importantly, the rise of superior, locally produced electric alternatives.

The China Factor: Where the "Technology Openness" Argument Collapses

The VDA suggests that maintaining a combustion engine portfolio is key to competing globally. Yet, in China—the world’s largest car market—the decision has already been made by the consumer. In April 2026, the market penetration of New Energy Vehicles (NEVs), including hybrids and full EVs, hit a historic 61.4%.

Of the ten best-selling passenger cars in China, nine are electrified. The only remaining combustion-engine model scraped into eighth place. Domestic Chinese manufacturers have already achieved an electrification rate exceeding 80%. When Volkswagen, BMW, and Mercedes lose market share in China, it is not because of Brussels’ regulations; it is because local Chinese competitors have arrived at the market with more affordable, software-optimized, and better-integrated electric products.

"Technology openness" in this context is a fallacy. It does not solve the competitiveness gap; it exacerbates it. Every Euro and every engineering hour spent perfecting a combustion engine for a market that has already moved on is capital stolen from the development of competitive EVs.

Supporting Data: The Internal Divide

The internal consensus within the German industry is far from unanimous. A comprehensive survey by the Fraunhofer Institute for Systems and Innovation Research (ISI) revealed a sharp divide among industry leaders.

Approximately 60% of the surveyed companies are skeptical of relaxing CO2 fleet limits, preferring to stick to the EU’s current trajectory. The opposition to a "policy zigzag" is strongest among those companies that invested early and heavily in electric infrastructure and supply chains. For these firms, a relaxation of rules is a competitive disadvantage that rewards those who failed to innovate, punishing those who took the risk of transformation.

Implications: A Strategic Misalignment

The VDA is right about one thing: there is a structural crisis at the German industrial base. High energy costs, cumbersome bureaucracy, and high labor costs are indeed driving production away from Germany. However, these are not problems created by the 2035 combustion engine ban; they are systemic challenges that exist regardless of the powertrain.

By focusing the discourse on "technology openness," the VDA is misdiagnosing the illness. If the government follows the lobby’s advice to roll back emissions targets, the result will not be a return to the glory days of the internal combustion engine. Instead, it will be:

1. Lost Innovation Lead: A delay in the adoption of electric tech will weaken Germany’s future position in autonomous and software-defined vehicles.
2. Market Irrelevance: German cars will become less attractive to the global market, which is already shifting toward EVs.
3. Wasted Time: The industry will consume its remaining capital on legacy technology instead of building the next generation of competitive, high-margin electric platforms.

The success of the Škoda Elroq—which became the best-selling EV in the entire Volkswagen Group in Q1 2026—proves that when manufacturers produce what the market actually wants, they win. The Elroq is not a product of "technology openness"; it is the product of a clear, decisive product strategy.

Conclusion: Securing a Future, Not Just Protecting the Past

The pain felt by the automotive supply chain is real, particularly in regions where the industry is the sole employer. This pain warrants empathy and targeted economic policy to support workers during the transition. However, the VDA’s current strategy asks us to save the jobs of yesterday at the expense of the jobs of tomorrow.

If BMW is growing in Germany precisely because it is successfully selling EVs, then the most logical conclusion is that the path forward lies in doubling down on electrification, not in clinging to the past. The industry needs to pivot from lobbying for the status quo to addressing the true cost factors of the German location: energy policy, digital infrastructure, and the speed of bureaucratic approval.

The VDA asks for "technology openness" to save the industry. But in a world that is rapidly electrifying, the only real "openness" that matters is the ability to adapt to the future. To stall now is to ensure that when 2035 finally arrives, the German automotive industry will be even less prepared than it is today.