• Germany's center-right alliance is headed to victory in the country's latest federal election.
• The CDU and its Bavarian sister party, the CSU, are set to win about 29% of the vote, exit polls say.
• The far-right Alternative for Germany party is set to take second place.

Germany's center-right alliance appears set to win the country's latest federal election, which comes at a critical moment for Europe's largest economy.

The latest exit polls show the Christian Democratic Union and its Bavarian sister party, the Christian Social Union, with roughly 29% of the vote, with the Elon Musk-backed Alternative for Germany in second with around 21% of the vote.

German Chancellor Olaf Scholz's center-left Social Democratic Party is set to come in third, the polls showed.

This means the CDU's Friedrich Merz is poised to become Germany's next chancellor.

Single parties rarely win majorities in German elections, so Merz will need the support of one or more parties to secure a majority in government. Merz's most likely options for a coalition will be with the Social Democrats or the Green Party, with the possibility of a three-party coalition pending the final results.

The snap election followed the collapse of Germany's governing coalition in November after Scholz fired then-Finance Minister Christian Lindner, the chair of the Free Democratic Party, after Lindner rejected Scholz's demand to suspend Germany's debt brake, which requires the federal government to limit annual net borrowing to 0.35% of GDP.

Scholz called a vote of confidence which he then lost in December, paving the way for early national elections.

The CDU/CSU bloc had been projected to win the vote, polling at about 30% in the run-up to the election.

The CDU's popularity seems to have been boosted by its harder line on major policy issues such as migration, pledging to enforce stricter border controls and accelerate asylum proceedings.

It also wants to retain Germany's debt brake, cut corporate tax rates to a maximum of 25%, and "eliminate unnecessary red tape."

The CDU has also pledged continued support to Ukraine.

The vote comes at a pivotal time for Berlin, which faces an increasingly assertive Trump administration that has threatened tariffs on the European Union and looked to sideline Europe on negotiations with Russia over the Ukraine war.

Germany is a leading NATO member and a key provider of military aid to Ukraine — and it will play an important role in carving out Europe's future relations with the Trump administration.

Merz has pledged to bolster Germany's role on the world stage. In televised remarks on Sunday, the businessman outlined his view of the United States' posture toward Europe.

"My absolute priority will be to strengthen Europe as quickly as possible so that, step by step, we can really achieve independence from the USA," he said. "I never thought I would have to say something like this on a television program. But after last week's comments from Donald Trump, it's clear that this administration is largely indifferent to Europe's fate, or at least to this part of it."

Trump on Sunday congratulated the CDU/CSU bloc on his Truth Social platform — and then praised himself.

"Much like the USA, the people of Germany got tired of the no common sense agenda, especially on energy and immigration, that has prevailed for so many years," he said. "This is a great day for Germany, and for the United States of America under the leadership of a gentleman named Donald J. Trump."

The far-right AfD party came into Election Day in good spirits, buoyed by support from Musk and several strong showings in regional elections.

Musk — who appeared virtually at a party campaign event alongside AfD leader Alice Weidel in January — has praised the group's staunchly anti-immigration stance.

"Only the AfD can save Germany," Musk posted on X in December.

However, despite the AfD posting its best-ever result, it is unlikely to have a role in coalition talks.