China’s smart vehicle market remains fragmented, said Guan, noting that numerous smaller players had been producing smart driving technology to varying standards.
Without broad regulatory oversight, it would be difficult to enforce consistent benchmarks “not only for business performance but also for safety”, he added.
But at the same time, introducing overly stringent rules could jolt an industry unprepared to meet tougher requirements, Guan said.
The shock could destabilise the Chinese market, forcing smaller firms out of business if stricter rules significantly disrupted operations.
“It will result in a strategic reset of sorts,” said Guan.
“Right now, I’d estimate eight out of 10 players would fail to meet higher testing or validation standards.”
Others dismissed concerns that tighter oversight would stifle innovation, noting that China still remained far ahead of its global competitors like the US in rolling out smart driving vehicles and features.
“This isn’t about slowing the industry down relative to competitors,” said Tu.
“It’s about making sure unnecessary deaths and accidents don’t undermine public trust in a technology that’s now in almost every new vehicle.”
THE ROAD AHEAD
According to data released in June by the China Association of Automobile Manufacturers (CAAM), China exported 205,000 NEVs in June 2025, marking a 140 per cent jump from 2024.
Chinese developers and NEV brands like BYD and the state-owned Shanghai Automotive Industry Corporation (SAIC) have also been ramping up exports to international markets like Europe, Latin America and Southeast Asia.
The industry has become one of the key fronts in China’s broader technology war with the US, experts said, and Beijing will remain determined not to let recent setbacks derail its path to becoming a smart driving technology leader.
“China is set to continue its strong lead in the new energy smart car space, and for good reason,” said Zhang.
“Tighter regulations may make the curve harder to climb in the short term (but) once the industry steadies itself under the new guidelines, it will consolidate its lead.”
