(Yicai) Feb. 25 -- Liuzhou, a key automotive manufacturing hub in southwest China with a population of around four million, has reached the nation's highest electric vehicle penetration rate, surpassing 66 percent as of last year, according to car information platform Yiche.

The high share of EV sales in Liuzhou, located in the Guangxi Zhuang Autonomous Region, stems from its strong industrial foundation. The third-tier city hosts SAIC-GM-Wuling, a joint venture between SAIC Motor, General Motors, and Wuling Motors, known for its popular mini EVs. Liuzhou produced its first EV in 2016.

Since 2017, the local government has implemented various measures to promote this emerging industry, including dedicated parking spaces and charging infrastructure. Residents told Yicai that parking is free, subsidies are available for purchases and charging, and operating costs for micro EVs are minimal. Gradually, everyone is turning to EVs, they added.

Throughout 2024, eight to ten of the top-selling models in Liuzhou were EVs, based on monthly license plate data. From 2018 to 2020, the city's EV penetration rates were 19.9 percent, 24.7 percent, and 28.8 percent respectively, ranking first nationally for three consecutive years. In 2021, Shanghai, Shenzhen, and Sanya surpassed Liuzhou, but in 2023, the modest-sized city reported a penetration rate exceeding 50 percent for the first time.

Among the most popular local models are budget mini-cars such as the Wuling Hongguang Mini EV, Wuling Bingo, Baojun Cloud, Baojun KiWi EV, and Wuling Starlight. However, low unit prices and intense market competition have constrained manufacturers' profits.

Consider the flagship Wuling Hongguang Mini EV, launched in 2020 with prices starting at CNY28,800 (USD3,870). After two years of rapid growth, sales of this mini car fell by 57 percent in 2023 compared to 2022, dropping to 237,900 units. A research team from Japan's Nagoya University disassembled a premium Wuling Hongguang Mini EV priced at CNY38,800 and estimated material costs at CNY26,900. After accounting for design, research and development, and marketing expenses, the manufacturer reportedly earns less than CNY100 (USD14) profit per vehicle.

After peaking in 2017, SAIC-GM-Wuling's overall sales declined to 1.3 million units in 2024, casting a shadow over the local automotive industry. From January to November last year, the output value of Liuzhou's automobile manufacturing sector fell to CNY136.3 billion (USD18.8 billion) from CNY253.5 billion in 2017.

The 20-plus-year-old joint venture is now working to introduce more premium models. In October 2023, SAIC-GM-Wuling held its first Technology Day, unveiling two major innovations: the Wuling Lingxi hybrid system and the Shenlian battery. In September last year, it launched the Wuling Starlight S, priced between CNY99,800 and CNY129,800, achieving monthly sales of nearly 5,000 units.

Liuzhou's 2024 government work report also stated that "promoting the transformation of traditional industries toward high-end, intelligent, and green" would become a key priority for 2025.

Editor: Emmi Laine