We must not punish car industry so it can't develop, says Germany's Angela Merkel

It is not in Germany's interests to weaken its scandal-hit car industry so much that it is no longer able to invest in future technologies, Chancellor Angela Merkel told lawmakers on Wednesday.

She also called for Europe to support the development of battery and software technologies needed if electric vehicles become the cars of the future, since otherwise Europe risks losing its manufacturing abilities to Asia and North America.

"It's our responsibility to tell the industry, it's your duty to regain the lost trust yourself," she said in a debate on Germany's upcoming budget, but set herself against calls to further increase the burden on carmakers to retrofit vehicles that produce excessive emissions.