The government is hoping to cut carbon dioxide (CO2) emissions in half by 2030. To help meet that target, Berlin has introduced a number of measures to promote greener modes of transport, including offering subsidies of up to €4,000 ($4,400) to offset the cost of a new electric vehicle.
Merkel said further electric car buyers could be attracted if the government and industry share the cost of increased subsidies.
The chancellor's comments came ahead of a planned meeting with car industry executives on Monday.
Merkel said the event would focus on how Germany's car sector can meet emissions targets by promoting alternatives to gasoline and diesel vehicles, and how Germany's shift towards electric car production will impact workers.
"We want to take our specialist workers along on the road to a modern, climate-friendly future," Merkel said.