It might develop in a somewhat similar way as OTL. In OTL, you saw the development of a German Confederation. In this ATL, the Holy Roman Empire survives. Then there is a war between two or probably more parts which results in Austria being squeezed out. The Holy Roman Empire then turns into the German Empire, a small-German solution like in OTL. Alternatively Bavaria and Swabia joins Austria and the rest forms a North German Empire.
Of course, the question is whether nationalism develops as a factor to the same extent. This partly depends on where you put the POD. Assuming the French Revolution still happens (that is a POD around 1800), I assume that nationalism will develop similarly. If it does not happen, it might become a weaker factor, but I assume that it is somewhat linked to industrialization, so it will still be a factor.
Of course, the question is whether nationalism develops as a factor to the same extent. This partly depends on where you put the POD. Assuming the French Revolution still happens (that is a POD around 1800), I assume that nationalism will develop similarly. If it does not happen, it might become a weaker factor, but I assume that it is somewhat linked to industrialization, so it will still be a factor.