The unidentified 23-year-old suspect, a known right-wing extremist of no fixed address, allegedly incited another man, 42, to build the device, said police and prosecutors.
They did not identify his suspected targets.
Police were also investigating two other suspects, men aged 22 and 24, over the alleged plan and had also raided their homes last week in the southwestern state of Baden-Wuerttemberg.
The arrested man had previously joined a rally of anti-immigrant group Die Rechte (The Right) on August 31 and hurled firecrackers at anti-fascist counter-demonstrators, injuring five.
Police said the 42-year-old man from Emmendingen district had no previous known history of political extremism and that he remained free on bail.
In June, German authorities staged raids after uncovering an alleged Islamist plot to carry out bomb attacks against state targets using model airplanes.
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