EV boom masks economic pain for China's auto hubs

Cities dependent on foreign car companies are seeing cuts in capacity

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CHINA - Manufacturing hubs in Chinese cities that rely on foreign carmakers are falling behind those that are home to popular domestic electric vehicle (EV) brands such as BYD.

No city exhibits how quickly the tide can turn better than Guangzhou, where auto manufacturing accounts for about a quarter of economic output. The capital of Guangdong, China's wealthiest province, was the country's biggest car producer for five years running, buoyed by state-owned Guangzhou Automobile Group's (GAC) joint ventures with Toyota and Honda, as well as a Nissan plant.

That all changed in 2024, when production plunged 20 per cent to 2.5 million cars as Chinese drivers eschewed foreign marques. The slump saw Guangzhou lose its No. 1 position to nearby Shenzhen, headquarters of home-grown EV juggernaut BYD. There, output surged more than 65 per cent to 2.9 million vehicles.

The cities' contrasting fortunes have rippled throughout their respective economies. Guangzhou's 2.1 per cent growth in gross domestic product in 2024 was the slowest out of China's largest 19 cities by output, and less than half the pace of Shenzhen.

The companies that partner foreign carmakers are pushing their domestic EV brands abroad. GAC, for example, launched the Aion brand in Singapore in 2024. Changan, which is also state-owned, has Deepal, which debuted in Singapore in January.

WINNERS AND LOSERS

In the EV transition, "some places, and people, will inevitably be left behind", said Mr David Hart, a senior fellow for climate and energy at the Council on Foreign Relations, an American think-tank specialising in US foreign policy.

The shift to cleaner cars - one that will arguably be more comprehensive than other industry pivots - will have winners and losers, not just geographically, but also among companies and occupations, he added.