“We are all aware that the industry is going through a difficult phase that affects hundreds of thousands of jobs,” Economy Minister Peter Altmaier said Tuesday in Berlin. “We know this isn’t just a question that touches large carmakers but rather a question that deeply affects mid-sized companies,” which make components.

Carmakers and parts suppliers, which employ nearly 800,000 people in Germany, were spending heavily on electric cars before the pandemic hit. That left companies exposed to the sudden drop in demand from the fallout. Auto production plunged 97% in April and has yet to recover to pre-pandemic levels, with curbs to stem the latest wave threatening to further sap demand.

Germany’s carmakers, once world leaders in automotive innovation, have been playing catch up on electric cars. Volkswagen AG, Daimler AG and BMW AG combined are valued at less than half of Tesla Inc., which is building a factory just outside Berlin to challenge the German car giants on their home turf.

The struggles extend to hundreds of parts makers — companies often specialized in combustion-engine components and with fewer resources than global carmakers. Even big suppliers like Continental AG are suffering. Europe’s second-largest parts maker has widened cuts this year and last week forecast that profitability will shrink for the fourth time in five years.

“The car industry isn’t just any branch of industry. It’s the workhorse,” Labor Minister Hubertus Heil said. “This is about the state, the industry and unions working hand in hand.”