The German automotive industry began to experience an unexpected problem as the demand for electric cars increased rapidly.
Volkswagen, BMW and Mercedes-Benz, which have had difficulty selling their electric models for many years, are now having difficulty meeting increasing orders.
While the demand for new generation electric cars exceeds manufacturers' expectations, the fact that these vehicles have lower profit margins compared to internal combustion engine models puts pressure on the financial performance of companies.
SALES EXCEEDED EXPECTATIONS
It is stated that the increase in oil prices following the war in Iran is also effective in increasing the demand for electric cars.
The rapid rise in fuel prices following the US and Israel's military operations against Iran accelerated consumers' search for alternatives to gasoline and diesel cars.
While this development led to an increase in electric car sales in Europe, it created a new dilemma for German manufacturers.
According to Handelsblatt's report, companies face the risk of losing their customers to Chinese competitors that offer more affordable models if they cannot meet the increasing demand.
On the other hand, increasing electric car sales negatively affects their financial results due to low profit margins.
MARKET SHARE INCREASED TO 26 PERCENT
The share of electric cars in the total sales of Volkswagen, Mercedes-Benz and BMW was 19.5 percent in the third quarter of 2025, and increased to 26 percent in the same period of 2026.
According to data from consultancy firm EY, 37 percent of newly registered cars in Europe in October had an electric powertrain.
However, the production costs of electric cars remain high compared to models with internal combustion engines, especially due to batteries. This situation causes the increase in electric vehicle sales not to be equally reflected in the profitability of manufacturers.
One of the most concrete statements on this subject came from Volkswagen.
Volkswagen Chief Financial Officer Arno Antlitz stated that the success of electric cars in the market puts pressure on the company's financial results.
Antlitz also pointed out that the demand for internal combustion engine cars has declined in key markets such as Europe and China.
WAITING TIMES ARE LONGER
The faster-than-expected increase in demand for electric cars also complicates the production plans of German manufacturers.
While delivery times for some electric models are extended, shutting down the production lines of internal combustion engine vehicles ahead of schedule creates additional costs for companies.
Although the profit gap between electric cars and internal combustion engine vehicles has started to narrow for many models, Volkswagen and Mercedes-Benz expect the two technologies to reach similar profit levels only around 2030.
Bank of America automotive analyst Horst Schneider states that consumers have moved away from their prejudices towards electric cars and shares his prediction that electric car sales will continue to increase in the long term even if oil prices fall again.
EMPLOYMENT IS IN DECLINE IN GERMAN AUTOMOTIVE
The transition to electric cars and increasing competition from Chinese manufacturers also affect employment in Germany's automotive sector.
In the first half of 2026, the number of employees in the German automotive industry fell below 700 thousand, falling to its lowest level since 2005.
Employment in the sector decreased by 42 thousand 300 people compared to the same period of the previous year.
The German Automotive Industry Association (VDA) states that comprehensive decisions must be taken in order to compete with China and other competitors, and warns that otherwise employment in the European automotive industry may decline significantly.
ONE IN EVERY FOUR CARS IS ELECTRIC
On the other hand, one in every four newly registered cars in Germany in the first eight months of 2026 will be fully electric models.
While the market share of electric cars increased to approximately one third in August, this rate was at one fifth in 2025.
On the other hand, Germany and France's agreement in October to relax the European Union's automobile emission rules and effectively lift the ban on sales of new internal combustion engine cars also caused controversy.
The European automotive industry thus faces pressure to reduce production costs, maintain profitability and compete with Chinese manufacturers, while trying to meet the rapidly growing demand for electric cars.
