Center-left parties emerged as the biggest winners of the election. Both the SPD and the Greens gained more than 5% compared to their results in the last federal election in 2017.
The conservative bloc suffered heavy losses as the Angela Merkel era comes to an end. They came in down over 8% on the previous election, which was their worst result since World War II.
What this means
In such a tight race, coalition possibilities remain unclear.
According to these preliminary results, one option is a continuation of the "grand coalition" of the conservative CDU/CSU bloc and the SPD that has governed Germany since 2013.
However, with the two biggest parties both vowing to build the next government, Germany could be headed for a three-way coalition for the first time since the 1960s at the federal level.
Options include a coalition between the CDU/CSU, the Greens and the FDP.
Alternatively, the SPD could also seek to partner up with the Greens and the FDP.
All parties have ruled out entering into a coalition with the AfD.
The election of Germany's new chancellor by the Bundestag won't take place until a governing coalition has been formed. This could take months. But SPD chancellor candidate Olaf Scholz said he hoped coalition talks would be wrapped up by Christmas.
"To name an exact date would be absurd, but it must be the case that I, that we, do everything to ensure that we are ready before Christmas — a little earlier would also be good," Scholz said during a round-table discussion with other party candidates on Sunday night.
CDU chancellor candidate Armin Laschet also called for a government to "definitely" be formed before Christmas. In the meantime, Angela Merkel will remain in office in a caretaker role.
What the parties are saying
Scholz celebrated the projected election results at the SPD's party headquarters in Berlin, telling a crowd of cheering supporters that voters had made it clear they want him to be the "next chancellor."
"We have what it takes to govern a country," he said. "Let's wait for the final results, but then we will get down to work."
Laschet said the conservative bloc would do "everything we can" to form a new government, despite the election setback.
"We cannot be satisfied with the results of the election," Laschet told his supporters.
"We will do everything we can to build a conservative-led government because Germans now need a future coalition that modernizes our country," he said. "It will probably be the first time that we will have a government with three partners."
Laschet said the conservative bloc would do "everything we can" to form a new government, despite the election setback.
"We cannot be satisfied with the results of the election," Laschet told his supporters.
"We will do everything we can to build a conservative-led government because Germans now need a future coalition that modernizes our country," he said. "It will probably be the first time that we will have a government with three partners."
Greens chancellor candidate Annalena Baerbock admitted that her party hadn't performed as well as expected, despite winning more votes than in the last federal election.
"We wanted more. We didn't achieve that, partly because of our own mistakes at the beginning of the campaign —mistakes on my part," Baerbock told supporters.
The Greens enjoyed a surge in support earlier in the year, even taking the lead in polls, but their popularity took a hit after a series of missteps, including a plagiarism scandal. Although the Greens don't have a shot at the chancellorship, they could play a role in the next governing coalition.
