Germany’s auto industry risks falling behind in self-driving race

Germany is racing to turn its strength in carmaking into leadership in self-driving technology. Engineers and startups are rolling out pilot projects, but widespread adoption remains far behind rivals in the United States and China.

Michael Spengler showed how far German research has come in a report by DW. He tapped a route on his phone, rested his hands, and watched as a compact NeMo car navigated the grounds at 7 km/h. “It can go faster, 20 to 25 km/h is no problem,” Spengler said. “I’m only here as backup.”

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The vehicle relies on cameras, radar, LiDAR sensors, and a high-performance computer. It was part of a demonstration by NeMo, a coalition of 75 partners from academia and industry aiming to make Germany a leader in the field.

“We’re not retrofitting existing cars for autonomy; we’re building entirely new vehicles,” said Thomas Tröster of Paderborn University. He added the NeMo “swarm” concept combines lightweight electric cabs for short trips with larger tractor units for longer distances, charging cabs on the move and cutting energy use. The rollout in Paderborn is expected by 2026.

Yet barriers remain. With 48 million private cars, strong taxi unions, and robust public transport, Germany offers little space for newcomers. Once government funding runs dry, many projects stall. “German manufacturers won’t release an immature system,” said ADAC, the nation’s biggest motorists’ group. “That’s why progress feels slow.”

Meanwhile, driverless taxis already roam streets in U.S. cities like San Francisco and Chinese hubs such as Shenzhen. In Germany, deployments remain limited to shuttles and minibuses on fixed routes.

In Hamburg, transit operator Hochbahn is testing 20 autonomous vehicles with MOIA, Volkswagen’s ride-hailing arm, and supplier HOLON. The fleet, covering a 37-sq-km area, will be bookable via app and eventually operate without drivers. “The vehicles are technically mature and legally permitted,” said the Association of German Transport Companies (VDV). “But without nationwide support, pilots will not scale.”

Etteln, a village near Paderborn, sees autonomy as vital for rural mobility. Mayor Ulrich Ahle said residents already book rides via smartphone, but self-driving cabs would be “the next logical step.” Etteln, named the world’s “smartest village” by IEEE in 2024, has even created a 3D digital twin for testing.

The German government has authorised Level 4 autonomy, which allows passengers to sleep or work under certain conditions. But for Germany to catch up, analysts say policymakers must shift from small pilots to national rollout.