German Chancellor Merz Calls Chinese EV Takeover of Local Plant a Temporary Measure

German Chancellor Friedrich Merz stated that while the government would not interfere in corporate cooperation deals—such as Chinese automakers taking over German factories—it views such Chinese investments as merely an "emergency measure" incapable of resolving the structural challenges facing Germany's auto industry. Currently, the sector is under mounting pressure from weak consumer demand in Europe, U.S. tariff hikes, and rising competitiveness from Chinese electric vehicle (EV) manufacturers, exacerbating operational difficulties. Volkswagen Group has already announced large-scale layoffs and significant job cuts, with factory capacity sitting largely idle. Against this backdrop, some industry voices have proposed bringing in Chinese automakers like BYD to revitalize idle production lines or take over loss-making plants, thereby alleviating unemployment and reducing wasted capacity. Merz emphasized that changes in factory ownership are autonomous business decisions in which the government will not intervene. However, he expressed reservations about relying on Chinese capital, noting that Germany’s core industrial problems lie in high production costs, stringent regulations, and lagging progress in electrification—issues that external investment alone cannot solve for long-term recovery. Nevertheless, collaborations between European and Chinese automakers have become increasingly common, such as the joint venture between Stellantis and Dongfeng Motor.