China has moved to slow the commercial rollout of more advanced self-driving vehicles, signalling a more cautious regulatory approach following a fatal accident earlier this year that raised fresh concerns about safety.
Regulators have reportedly approved only two out of nine applications from carmakers seeking permission to sell vehicles with higher levels of automated driving. The limited approvals suggest authorities are easing off their previous momentum toward large-scale commercialisation of self-driving technology.
Industry analysts link the shift to a crash in March involving Xiaomi’s SU7 electric sedan, which killed three university students. At the time of the accident, the vehicle was travelling at about 72 miles per hour with an assisted-driving system activated. After detecting a lane closure caused by roadworks, the system issued a warning and the driver attempted to take control, but the car hit a concrete barrier roughly one second later.
Last week, the Ministry of Industry and Information Technology granted restricted approvals to Beijing Automotive Group and Changan Automobile to operate Level 3 self-driving vehicles. These systems can manage driving tasks under specific conditions without hands on the wheel, but still require the driver to remain alert and ready to intervene.
However, the permissions are tightly constrained. According to Chinese media, the companies may only run robotaxi services on three designated highway sections each in Beijing and Chongqing. The authorisation is limited to additional testing rather than full commercial use, and the vehicles are prohibited from changing lanes while under automated control. Human drivers must take over once the cars exit the approved routes.
The narrow scope of the decision is a setback for domestic automakers, many of which had expected broader approval for Level 3 systems by the end of the year. China currently permits only Level 2 driver-assistance technologies, which support steering and speed but require constant driver engagement. Fully autonomous Level 5 vehicles remain unapproved anywhere in the world.
Several manufacturers had already begun producing vehicles equipped with hardware designed for Level 3 capabilities, anticipating regulatory clearance. Those models are now expected to be sold with downgraded Level 2 software instead, according to reports.
Following the March crash, authorities also barred carmakers from using promotional terms such as “autonomous driving” or “smart driving” for vehicles that rely solely on assisted-driving features, citing concerns that consumers could overestimate the technology’s abilities.
Public scrutiny has intensified amid state-media reports suggesting that some domestic systems underperform in safety tests. In trials involving 36 vehicles equipped with Level 2 technology, fewer than half reportedly avoided collisions with trucks at nighttime construction sites. By contrast, Tesla vehicles included in the same tests were said to perform strongly across multiple scenarios.
China remains one of the world’s most ambitious markets for autonomous driving, backed by strong government support for electric vehicles and artificial intelligence. Despite the regulatory pause, the country’s passenger-vehicle autonomous-driving market is still projected to expand from about $9.85 billion in 2024 to more than $15 billion by 2030.