Shanghai, home to Tesla's China factory and Nio's global headquarters, has seen NEV penetration reach about 50 percent.

To observe China's electric vehicle (EV) transition, Shanghai, home to Tesla's China factory and Nio's global headquarters, is a must-watch city, and something interesting is happening.

In the monthly auction for fuel car license plates, 113,722 people participated in the auction in May, down 6,492 from the previous month, according to the information posted Saturday by the Shanghai government on its official WeChat account.

The number of participants was at a new low since February 2015, or a 99-month low, data compiled by CnEVPost showed.

The number of available license plates in May was 13,214, implying a winning rate of 11.6 percent.

The auction had the lowest winning price of RMB 92,400 ($13,170) and an average price of RMB 92,547, an increase of RMB 135 from RMB 92,412 the previous month.

Shanghai usually holds license plate auctions for fuel cars on the third Saturday morning of each month, with the local government announcing the results in the afternoon.

The event is one of the most watched locally until EVs are accepted by residents, as winning the auction is so difficult that many may have to try for two or three years before they succeed in winning the bid.

In 2022 and before, Shanghai was offering free license plates to consumers who purchase plug-in hybrid vehicles (PHEVs) as well as battery electric vehicles (BEVs) to encourage the growth of the NEV industry.

Starting in January 2023, PHEVs are treated the same as conventional internal combustion engine vehicles (ICEs), and consumers will need to obtain license plates through the bidding process in order to register such vehicles in the city.

Shanghai's license plate auctions date back to the 1990s, and the event is currently organized by the Shanghai International Commodity Auction Co Ltd (SICA).

Those wishing to participate in the auction need to first submit an application to the SICA and only after qualifying are approved can they participate in the monthly auctions.

Data from the SICA obtained by CnEVPost dating back to January 2010 show that the number of participants in this month's Shanghai license plate auction is at a record low since February 2015, when the number was 103,224.

This comes as NEV penetration has continued to rise in Shanghai over the past few years, with about half of the cars registered in the city now being NEVs.

In April, all vehicle sales in Shanghai were 45,897 units, of which NEVs contributed 22,243, or 48.46 percent, according to data released earlier this month by the Shanghai Economic Information Center.

The earliest available data for that sales volume is January 2021, when 74,555 vehicles were sold in Shanghai, of which NEVs contributed 23,000, or 30.85 percent, according to data monitored by CnEVPost.

Shanghai, home to about 25 million people, is the location of Tesla's China factory, which currently has an annual capacity of more than 1 million units, making it the largest factory in the world for the US EV maker.

Tesla Shanghai plant produced 727,000 units in 2022, up 49.7 percent from a year earlier, with an industrial output of RMB 183.9 billion, which represents 23 percent of Shanghai's auto manufacturing output, a local official said earlier this month.

Shanghai is also home to Nio's global headquarters, and the Chinese EV company's delivery center in the city's Jiading Nanxiang is its largest in the world.

In 2021, Nio has the No. 1 market share of 23 percent of all fuel and electric SUVs in Shanghai priced at more than 350,000 yuan, William Li, the company's founder, chairman and CEO, said during a March 25, 2022 earnings call.

($1 = RMB 7.0167)

Data table: Shanghai monthly fuel car license plate auction results