In-depth Analysis of Shouqu Technology's Investment Expansion in Liuzhou Factory

Thank you for your patience. Based on the information obtained, let me provide you with a detailed analysis of Shouqu Technology’s investment expansion in Liuzhou Factory.

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According to 36 Kr and multiple reports, Shouqu Technology’s Liuzhou Factory Project [1][8]:

Indicator	Value
Total Investment	1.521 billion yuan
Floor Area	93,300 square meters (about 140 mu)
Planned Annual Capacity	1.5 million electric drive systems
First-year Capacity Target	500,000 units
Strategic Positioning	South China Headquarters Base
Regional Layout Plan	Multi-base in East China, North China, Southwest China and other regions

The project officially started construction on January 5, 2026, and is a key part of Shouqu Technology’s national capacity layout [8].

As one of

, Liuzhou has unique industrial advantages:

• Host Plant Cluster
  : Home to SAIC-GM-Wuling headquarters, with Dongfeng Liuzhou Motor, FAW Jiefang and other complete vehicle factories gathering
• New Energy Vehicle Foundation
  : Guangxi Yaxin Automobile (“125” Project) builds a complete new energy industry ecosystem [9]
• Industrial Chain Support
  : A complete industrial chain from parts to whole vehicles has been formed
• Policy Support
  : During the “14th Five-Year Plan” period in Guangxi, the output of new energy vehicles increased from 189,000 to more than 800,000 units, and the output value doubled twice [9]

: The Liuzhou base enables Shouqu Technology to serve customers in South China and Southwest China nearby, significantly reducing logistics costs and improving response speed.

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:

• Whole Vehicle Market
  : In the first 11 months of 2025, China’s new energy vehicle sales reached
  14.78 million units
  , a year-on-year increase of 31.2% [2][3][4]
• Penetration Rate Breakthrough
  : The retail penetration rate of new energy vehicles reached
  53.6%
  in January-November 2025, and climbed to
  59.5%
  in November alone, marking that “oil-to-electric transition” has become a foregone conclusion [2][3][4]
• Drive Motor Market
  : It is estimated that the market size of China’s new energy vehicle drive motor will grow by
  32.4% year-on-year
  in 2026, with an average market price of about
  3,833.8 yuan per unit
  [8]
• Global Market
  : The global electric vehicle E-axis market is expected to grow from 50.027 billion US dollars in 2023 to
  152.61 billion US dollars
  in 2030, with a CAGR of
  17.2%
  [8]

:
In the first three quarters of 2025, the total revenue of 14 listed auto companies exceeded 2.07 trillion yuan, but the net profit was only , and the overall net profit margin fell to a historical low of [2][3][4]. has become a common dilemma in the industry, and cost reduction pressure is transmitted upward along the industrial chain to electric drive system suppliers.

The new energy vehicle electric drive system market presents a pattern of

:

Enterprise	Advantages	Market Position
Fudi Power (subsidiary of BYD)	Relying on BYD’s global largest new energy vehicle sales, vertical integration	Leading market share, about 29.7% in 2022 [7]
Tesla	Self-developed and self-produced, leading technology, strong brand premium	Global leader, only for its own models
Inovance Joint Power	Industrial automation technology accumulation, rich product lines	One of the leading third-party independent suppliers

Enterprise	Core Competitiveness	Latest Progress
Jingjin Electric	Professional electric drive system supplier, overseas market expansion	Obvious advantages in the commercial vehicle field
Fangzheng Motor	Years of motor technology accumulation	Supporting multiple host plants
Juyi Power	Powertrain system integration	Rich customer resources
Enpower	Seven-in-one, eight-in-one deeply integrated products [7]	Leading layout of power domain products
Zhenqu Technology	Forward design of power modules + vertical integration of electronic control [10]	Revenue of 1.217 billion yuan in the first 9 months of 2025, cumulative shipments of 2.7 million power modules [5][10]

• Shouqu Technology
  : With the planned capacity of 1.5 million units in Liuzhou Factory, it quickly enters the top camp
• Other emerging enterprises continue to enter

According to market data calculations:

• The planned capacity of 1.5 million units corresponds to an annual output value of about
  5.75 billion yuan
  (calculated at an average price of 3,833.8 yuan per unit) [8]
• The first-year target of 500,000 units corresponds to an annual output value of about
  1.92 billion yuan
• The unit capacity investment is about
  1,014 yuan per unit
  , which is at a reasonable level in the industry

This scale will enable Shouqu Technology to quickly enter the

of the industry and compete with established suppliers such as Inovance and Jingjin. The industry concentration will further increase, and , accelerating industry integration.

With Shouqu Technology’s capacity expansion, the industry has entered the

stage:

• Inovance Joint Power
  : Continuously launches the fourth-generation PD4H mixed-carbon electronic control with power density exceeding 62 kVA/L [7]
• Enpower
  : Layout of seven-in-one, eight-in-one electric drive systems [7]
• Zhenqu Technology
  : Multi-base layout in Liuzhou, Jiaxing, Wuhu, etc., with cumulative shipments exceeding 3.7 million units [10]

: If all planned capacities are released as scheduled, may occur in the electric drive system industry in 2026, price wars are inevitable, and gross profit margins will be further under pressure.

The industry’s technological trend is evolving from a single product to

[6][7]:

• Integration
  : Three-in-one → seven-in-one → eight-in-one electric drive systems, with deep integration of motors, electronic controls, reducers, and thermal management
• Material Innovation
  : SiC power devices replace IGBTs to improve efficiency and reduce losses
• Intelligence
  : AI algorithms are embedded in electronic control systems to realize predictive control, fault prediction, and dynamic efficiency optimization
• High Efficiency
  : Flat wire motors, oil cooling, and 800V high-voltage platforms become standard

While expanding capacity, Shouqu Technology must simultaneously enhance its

, otherwise it will fall into the quagmire of homogeneous price wars.

The construction of the Liuzhou base will change the supply pattern of electric drive systems in South China:

• Break the Existing Pattern
  : South China was originally dominated by local small suppliers; Shouqu Technology’s entry will enhance regional supply capacity
• Radiate the Southwest Market
  : With the location advantage of Liuzhou, it can serve host plants in Southwest China such as Sichuan, Chongqing, and Yunnan
• Benchmark Other Bases
  : Form a linkage network with East China (Shanghai, Jiaxing) and North China (potential layout)

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According to industry data [2][3][8]:

• New energy penetration rate exceeded 50% in 2025, entering the “market-led” stage
• The drive motor market size is expected to grow by 32.4% in 2026
• The global E-axis market has a CAGR of 17.2% from 2023 to 2030
• Policy-side “anti-involution” guides the industry to shift from price wars to value creation [2]

: The industry is still in a period of rapid growth, providing sufficient growth space for leading enterprises.

The first-year capacity target of 500,000 units indicates that the company already has

. Combined with Liuzhou’s industrial location:

• SAIC-GM-Wuling
  : Sales exceeded 1 million units in 2025, a potential major customer
• Dongfeng Liuzhou Motor
  : Accelerated launch of new energy models
• Other Host Plants in South China
  : GAC Aion, Xpeng, etc.

: The Liuzhou base enables Shouqu Technology to serve customers nearby, improving response speed and binding depth.

The jump in capacity from zero to 1.5 million units will bring:

• Reduction in Unit Fixed Costs
  : Amortization of R&D and management costs
• Improvement in Procurement Bargaining Power
  : Enhanced bargaining power over upstream raw materials (silicon steel, rare earth permanent magnets, power semiconductors)
• Improvement in Manufacturing Efficiency
  : Large-scale production reduces unit manufacturing costs

The industry as a whole faces the dilemma of “increasing revenue without increasing profits” [2][3][4]:

• The net profit margin of auto companies fell to 1.76%, and cost reduction pressure is transmitted upward along the industrial chain
• Electric drive system suppliers face continuous price pressure from whole vehicle factories
• High fixed costs during capacity ramp-up, short-term profit pressure

: Zhenqu Technology had revenue of 1.217 billion yuan in the first 9 months of 2025 but lost 257 million yuan [5], indicating that profit pressure is common during the industry’s investment period.

• Capital Expenditure
  : One-time investment of 1.521 billion yuan
• Working Capital
  : Large working capital needed during capacity ramp-up
• R&D Investment
  : Must maintain high R&D investment to maintain technological competitiveness
• Reference Peer
  : Zhenqu Technology has continuous losses (237 million yuan in 2023, 335 million yuan in 2024, 257 million yuan in the first 9 months of 2025) [5]

: If capacity ramp-up is not as expected or market development is blocked, it may face capital chain pressure.

The industry’s technology is evolving rapidly [6][7]:

• From three-in-one to seven-in-one, eight-in-one, integration continues to improve
• SiC power devices and 800V high-voltage platforms become mainstream
• AI algorithms and software-defined cars bring new challenges

: Wrong technology route selection or backward R&D may lead to investment waste and loss of market competitiveness.

• First-mover Enterprise Barriers
  : Inovance, Jingjin and others have established customer barriers and brand awareness
• Vertically Integrated Manufacturers
  : BYD Fudi Power, Tesla and others occupy their own markets, leaving limited space for third parties
• Many New Entrants
  : May lead to price wars and gross profit margin pressure

If over-reliant on a single or a few major customers (such as SAIC-GM-Wuling), it will face:

• Weak Bargaining Power
  : High price pressure from major customers
• Order Fluctuation Risk
  : Customer sales fluctuations directly affect orders
• Replacement Risk
  : Customers may introduce second suppliers to diversify risks

Based on industry data and company project indicators, three scenarios are constructed:

Scenario	2026 Capacity Utilization	Annual Revenue	Profit Status	Key Assumptions
Optimistic	100% (500,000 units)	1.92 billion yuan	Close to break-even	Successfully obtained orders from 2-3 mainstream host plants, high capacity utilization
Neutral	70% (350,000 units)	1.34 billion yuan	Narrowing losses	Obtained regional customer orders, capacity gradually ramps up
Pessimistic	50% (250,000 units)	960 million yuan	Continuous losses	Customer development is not as expected, fierce price wars

:

• If it successfully enters the industry’s first echelon, annual revenue is expected to exceed
  10 billion yuan
• Capacity utilization increases to
  over 80%
  , realizing scale profits
• Market share reaches
  10-15%
  , becoming an important player in the industry

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The 2025 Government Work Report made relevant arrangements for the comprehensive rectification of “involution-style” competition, and the Sixth Meeting of the Central Financial and Economic Commission in July emphasized “governing enterprises’ low-price disorderly competition in accordance with laws and regulations, and guiding enterprises to improve product quality” [2].

:

• The space for pure price wars is narrowing, and must shift to
  technological differentiation
• Quality improvement becomes the focus of competition; product quality and reliability are the lifeline
• Industry integration accelerates, and leading enterprises will benefit from the exit of backward capacity

According to industry research [6][7], the technological trends of electric drive systems:

Dimension	Development Trend	Shouqu Technology’s Response Strategy
Integration	Three-in-one → seven-in-one → eight-in-one	Increase R&D investment and launch deeply integrated products
Intelligence	AI algorithm embedding, predictive control	Build software capabilities, software-defined electric drive
High Efficiency	Flat wire motors, oil cooling, SiC devices	Follow mainstream technology routes and improve power density
High Voltage	Popularization of 800V high-voltage platforms	Develop 800V products to adapt to high-end models
Lightweight	Topology optimization, material innovation	Cooperate with material manufacturers to reduce weight

1. Ensure First-year Target Achievement
   : Fully guarantee the smooth ramp-up of 500,000 units of capacity
2. Bind Core Customers
   : Establish strategic cooperation with Liuzhou and surrounding host plants such as SAIC-GM-Wuling
3. Lean Management
   : Reduce unit costs through intelligent manufacturing and improve gross profit margins
4. Capital Planning
   : Arrange financing rhythm reasonably to ensure capital chain safety

1. National Base Linkage
   : Form a collaborative network between Liuzhou and bases in East China, North China, and Southwest China
2. Technological Breakthrough
   : Form differentiated advantages in SiC electronic control, multi-in-one integration, AI algorithms, etc.
3. Customer Diversification
   : Reduce reliance on a single customer and expand customers in South China, Southwest China, and East China
4. Profitability Improvement
   : Scale effect emerges, achieving break-even and profitability

1. International Layout
   : Follow Chinese auto companies to go overseas and establish overseas production bases
2. Technical Standard Formulation
   : Participate in industry standard formulation and enhance discourse power
3. Industrial Chain Integration
   : Extend upstream to power semiconductors and downstream to vehicle testing
4. Capital Market Operation
   : Launch IPO at the right time and accelerate development with the help of capital forces

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Shouqu Technology’s 1.521 billion yuan investment in Liuzhou Factory will:

1. Accelerate the Improvement of Industry Concentration
   : The 1.5 million units of capacity enable Shouqu Technology to enter the top camp, promoting the industry’s evolution from dispersed competition to an oligopoly pattern
2. Trigger a New Round of Capacity Race
   : Structural overcapacity may occur in 2026, accelerating survival of the fittest
3. Promote the Upgrade of Technological Competition
   : Evolve from single products to deep integration and intelligence; technological barriers become the key to competition
4. Reconstruct Regional Competitive Pattern
   : Strengthen supply capacity in South China and change the original market pattern

• The industry has strong growth certainty, with the drive motor market size growing by 32.4% in 2026 [8]
• The 1.5 million units of capacity lays the foundation for large-scale development; long-term revenue is expected to exceed 10 billion yuan
• Liuzhou’s location advantage is significant, serving customers in South China and Southwest China nearby

• The industry “increases revenue without increasing profits” with a net profit margin of only 1.76% [2][3][4], leading to great profit pressure
• The 1.521 billion yuan capital expenditure brings financial pressure; reference peer Zhenqu Technology has continuous losses [5]
• Rapid technological iteration requires continuous high R&D investment
• Fierce market competition makes price wars inevitable

Whether Shouqu Technology can succeed depends on:

1. Capacity Utilization
   : Whether it can quickly achieve the first-year target of 500,000 units
2. Customer Quality
   : Whether it can bind mainstream host plants and form long-term cooperative relationships
3. Technical Strength
   : Whether it can maintain competitiveness in the trends of integration, intelligence, etc.
4. Capital Strength
   : Whether it can support until break-even and profitability
5. Cost Control
   : Whether it can reduce unit costs through scale effects

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[1] Jinling API Data - Shouqu Technology Liuzhou Factory Project Information
[2] 36 Kr - “New Energy Vehicles 2025: Fierce Competition, Gradual Profitability” (https://m.36kr.com/p/3624940970968066)
[3] Touzhong.com - “New Energy Vehicles 2025: Fierce Competition, Gradual Profitability” (https://www.chinaventure.com.cn/news/110-20260105-389619.html)
[4] The Paper - “New Energy Vehicles 2025: Fierce Competition, Gradual Profitability” (https://m.thepaper.cn/newsDetail_forward_3231103310021177120)
[5] Jinwu Caixun - “Zhenqu Technology (Shanghai) Co., Ltd. IPO on the Main Board of HKEX” (http://www.jinwucj.com/info/hk)
[6] Yicai - “Top 10 Market and Application Trends in the Electronic Industry in 2026” (https://www.esmchina.com/news/13691.html)
[7] Zuo Si Auto Research - “2025-2026 New Energy Vehicle Electric Drive System and Power Domain Cross-domain Integration Trend Research Report” (Tencent News)
[8] Oriental Fortune Wealth Account - “Analysis of China’s New Energy Vehicle Drive Motor Market in 2026” (https://caifuhao.eastmoney.com/news/20251231103310021177120)
[9] Guangxi