Mercedes-Benz freezes German investment amid fight over jobs and costs.

The luxury carmaker said its executive board has paused further investment at German sites “for the time being,” while it examines which plants it can still afford to keep open. Production chief Michael Schiebe said the current cost structure does not allow new investment in Germany.

Mercedes is not just cutting costs. It is telling Germany’s powerful unions that the country’s high-wage model may no longer be affordable for one of its most iconic industrial brands.

The company said future manufacturing could move outside Germany if no deal is reached with the works council and IG Metall, Germany’s largest industrial union.

Mercedes has already warned that two German plants could close if costs are not reduced. The company is now assessing which locations it can afford to keep, putting thousands of jobs and entire communities at risk.

The decision comes as Germany’s car industry faces shrinking sales, weaker profits, high labor costs, tariffs and growing competition from Chinese electric-vehicle makers.

This is a major test for Germany’s industrial model. Mercedes’ decision shows that even its most famous brands may be forced to move production abroad if labor costs and economic pressures cannot be brought under control.