A generation’s legendary national car steps down from the pedestal.

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According to the latest data disclosed by the China Passenger Car Association, the domestic A00-class pure electric passenger car market is undergoing a profound structural adjustment.

This May, wholesale sales of domestic A00-class passenger cars plummeted by 44% year-on-year, with an even steeper decline in April, reaching 55%.

Excluding the overdraft factors caused by the expiration of subsidies at the end of last year, the structural contraction trend in the A00-class market remains very clear. In particular, as micro-sized gasoline cars have exited the market entirely, the domestic A00-class market has essentially achieved 100% electrification. Therefore, the current cliff-like drop in data is not just fluctuations of a single powertrain route, but the accelerated marginalization of the entire micro car segment in the Chinese auto market.

While the new energy market as a whole continues to rise, micro cars are shrinking against the trend. The electrification path that initially relied on cheap small cars to boost volume is now being abandoned by the market.

At the terminal level, micro electric cars, which once benefited greatly from their cost-effectiveness, have collectively fallen into a collapse in demand.

Looking back two or three years, the SAIC-GM-Wuling Hongguang MINIEV once achieved the legend of selling over 50,000 units monthly, becoming a national hit. However, with the shift from an incremental market to a stock market battle, the leading models such as Changan Lumin, Geely Panda mini, and Chery QQ Ice Cream, which were in the first tier, are facing increasingly intense internal competition in a rapidly shrinking market.

In recent years, models focusing on low prices, such as FAW Bestune Pony, have entered the market, pushing the starting price below 30,000 yuan. But under the trend of the market being cut in half continuously, "trading volume for price" can hardly raise the upper limit of the market anymore. The bottom line of the price war keeps being broken, and car manufacturers' already razor-thin profit margins are being pushed to the limits.

The cliff-like decline of micro cars is the result of simultaneous pressure from policy, consumer fundamentals, and competition patterns.

The most direct impact comes from the switch in tax policy.

Starting this year, the purchase tax of new energy vehicles has entered a phase of being charged at half rate. A00-class models are generally priced between 30,000 to 60,000 yuan, with extremely low unit profit margins. Automakers can't absorb the increased taxes internally, so the rise in end-user purchase costs puts extra pressure on price-sensitive buyers in lower-tier markets.

The squeeze from cross-segment models is equally deadly.

In the current fierce price war, A0-class cars, which are only slightly more expensive than A00-class cars but offer more space, are emerging one after another, such as the Geely Starwish, which has long dominated the top spots in passenger car rankings; self-owned A-class plug-in hybrid and pure electric sedan lineups, such as the BYD Qin series, are also lowering starting prices and exerting competitive pressure on micro cars priced between 30,000 to 50,000 yuan.

In sharp contrast to the downturn at the bottom, the market growth is accelerating toward high value-added segments. According to the China Passenger Car Association, B-class and other mid-large pure electric vehicles now command over 30% of the total market, firmly occupying the dominant position.

For automakers deeply tied to the A00-class market, the current situation is quite challenging. The business model that used volume to dilute manufacturing costs and earn new energy credits is facing severe profit compression as scale shrinks rapidly.

This is also forcing enterprises to abandon their previous dependence on low-end volume selling. Judging from recent industry movements, mainstream automakers are accelerating the shift of R&D and marketing resources toward segments with greater premium capacity, such as A and B classes, and are speeding up overseas market layouts to absorb excess domestic production capacity.

From wild growth to structural cooling, the shrinkage of the A00-class pure electric market is an inevitable pain in the maturity of China’s new energy vehicle industry. When inclusive electrification no longer relies solely on cheap micro cars for scale, the entire industry can truly return to the core track of technological upgrades, value creation, and long-term profitability.

Risk Warning and DisclaimerThe market carries risks; investment should be approached cautiously. This article does not constitute personal investment advice, nor does it take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions herein suit their particular circumstances. Invest accordingly at your own risk. ```