Israel Germany | Business Guide | 2026

G ermany’s automotive industry is standing at a historic turning point. After more than a century defined by mechanical excellence, precision engineering, and world-leading manufacturing, the foundations of the industry are undergoing a profound transformation. European climate and safety regulations are reshaping product development, global competition is intensifying, and the driving experience is increasingly defined by software, connectivity, artificial intelligence, and advanced safety features. Despite these rapid changes, the automotive sector remains a pillar of German economy – yet it is clear that the traditional capabilities that shaped its success are no longer sufficient on their own. To remain competitive, manufacturers and suppliers must adopt new technologies at a pace that exceeds their internal capacity. This is precisely where Israeli innovation becomes relevant. Even though Israel is not a car-producing country, it has become a significant global source of technological expertise in areas that now stand at the center of smart mobility. These include computer vision, advanced sensing, artificial intelligence, data management, cybersecurity, and digital platforms for vehicles and public transport systems. German manufacturers, Tier- 1 suppliers, and mobility operators increasingly identify these capabilities as complementary assets that can help themmeet new technological and regulatory challenges. A time of structural change for the European automotive sector Strategic documents published in recent years by major German OEMs show a clear shift toward a software-centric future. The emerging model, described as the Software Defined Vehicle, turns the car into a dynamic, upgradeable digital platform. Functions that were once mechanical are now software-based, and the competitive edge is defined by the ability to deliver advanced features via continuous updates. To implement this model at an industrial scale, manufacturers require capabilities that extend far beyond their traditional engineering disciplines. At the same time, European regulations impose new obligations. Updated General Safety Regulation standards require the integration of advanced driver assistance systems. Cybersecurity regulations defined by UNECE demand comprehensive risk management, both at the vehicle level and across the supply chain. These shifts create a need for mature, reliable technological solutions that can be integrated rapidly and in compliance with stringent safety standards. Israeli expertise in AI, sensing, and computer vision One of the most significant forces shaping the future of mobility in Germany is the advancement of ADAS and AI-based perception systems. Israel has developed an innovation ecosystem specializing in these domains, combining academic excellence, algorithmic engineering, Israeli Innovation as a Strategic Complement to Germany’s Automotive Transformation As Germany’s automotive industry shifts toward software-driven, connected and intelligent mobility, Israeli technologies are emerging as natural partners in accelerating next-generation transportation Israel-Germany > Business Guide > Celebrating 60 years of diplomatic relations > 2026 22 > Smart Mobility > Industry Overview