Emperor
The first Austrian Emperor was the last Holy Roman Emperor Francis II. In the face of aggressions by Napoleon, Francis feared for the future of the Holy Roman Empire. He wished to maintain his and his family's Imperial status in the event that the Holy Roman Empire should be dissolved, as it indeed was in 1806 when an Austrian-led army suffered a humiliating defeat at the Battle of Austerlitz. After which, the victorious Napoleon proceeded to dismantle the old "Reich" by severing a good portion from the empire and turning it into a separate Confederation of the Rhine. With the size of his imperial realm significantly reduced, Francis II, "Holy Roman Emperor" became Francis I, "Emperor of Austria". The new imperial title may have sounded less prestigious than the old one, but Francis' dynasty continued to rule from Austria and a Habsburg monarch was still an emperor ("Kaiser"), and not just merely a king ("König"), in name.
German Question
On August 6, 1806, Habsburg Emperor Francis II had abdicated the throne of the Holy Roman Empire in the course of the Napoleonic Wars with France, thereby ending the loose Empire. Despite its later name affix "of the German Nation", the Holy Roman Empire had never been a nation state. Instead its rulers over the centuries had to cope with a continuous loss of authority to its constituent Imperial States. The disastrous Thirty Years' War proved especially fatal to the Holy Roman Emperor's authority, as the mightiest entities, the Austrian Habsburg Monarchy and Brandenburg-Prussia evolved into rivaling European absolute powers with territory reaching far beyond Imperial borders. The many small city-states splintered, meanwhile. In the 18th century the Holy Roman Empire consisted of over 1800 separate territories governed by distinct authorities.