FE-Schrift was designed by German typography professor and designer Karlgeorg Hoefer. It was applied to license plates starting in the 1990s as a replacement for the previous font used for license plates, DIN 1451.
DIN stands for Deutsches Institut für Normung, which translates to "German Institute for Standardization." DIN 1451 was designed for industrial uses and traffic signs as it's easy to read.
The problem was that DIN 1451 is also very easy to modify and forge; this became a problem in the 1970s and '80s when Germany was still divided, and victim to violence from the homegrown Baader-Meinhof Gang, a/k/a the Red Army Faction. This group carried out terrorist-style assassinations, bombings and kidnappings. They robbed banks for funding and tended to get into shootouts with the police. To avoid detection, they often used license plates that they modified.
Hence the introduction of FE-Schrift, which is short for Fälschungserschwerende Schrift, which translates to "anti-counterfeiting font." It was created specifically to make forgery difficult.
As an example, with your average sans serif font the letter "P" is easy to change to "R," "B" is easy to change to "3," and "F" is easy to change to "E." So let's say your license plate contains "PBF," and you want to change it to "R3E." If you try that with FE-Schrift, at first glance it seems do-able: