China has paused rapid rollout of Level 3 self-driving cars after a March Xiaomi SU7 crash that killed three students. Regulators approved only two of nine Level 3 applications and restricted testing to a few highway stretches in Beijing and Chongqing. The move forces many vehicles to be sold with downgraded Level 2 software, follows a ban on marketing assisted systems as "autonomous," and comes amid state-media safety tests that raised performance concerns.
China Pauses Push for Level 3 Self-Driving Cars After Fatal Xiaomi Crash
A Baidu Apollo Robotaxi passes its customer service counter setup at the Shougang Park in Beijing (AP)
China has slowed plans to widely deploy advanced self-driving cars after a March crash involving a Xiaomi SU7 sedan that killed three university students. Regulators approved only two of nine applications to commercialize so-called Level 3 autonomous systems, and the permissions granted are tightly constrained.
What happened in the crash: Investigators say the Xiaomi SU7 was travelling at about 72 mph with its assisted-driving system engaged when it detected a lane closure for roadworks and issued an audible warning. The human driver began to take control but the car struck a concrete barrier roughly one second later, killing three students inside.
Regulatory response: Last week the Ministry of Industry and Information Technology (MIIT) granted limited Level 3 permissions to two automakers — Beijing Automotive Group and Changan Automobile — but only for additional on-road testing rather than broad commercial service. Each firm may operate robotaxi services on up to three specific highway stretches within their home cities (Beijing and Chongqing). Under MIIT rules, the vehicles cannot change lanes while in autonomous mode, and a human driver must take over once the car leaves the approved highway segments.
Impact on manufacturers and buyers: The narrow approvals represent a setback for Chinese carmakers that had expected regulatory clearance to sell Level 3-capable vehicles by year-end. Several manufacturers reportedly began mass-producing cars with the sensors, cameras and computing hardware needed for Level 3 functionality; those models are now expected to be sold with downgraded Level 2 software instead. Level 2 systems assist with steering and speed but require the driver to remain fully engaged.
Marketing and public confidence: In the crash's aftermath, Chinese authorities banned automakers from using terms such as "smart driving" or "autonomous driving" for vehicles equipped only with assisted-driving systems, aiming to prevent consumer confusion about system capabilities. Public concern was further stoked by state-media tests that suggested some domestic assisted-driving systems underperform in safety scenarios. In one test of 36 Level 2-equipped vehicles, fewer than half avoided collisions when approaching trucks at nighttime construction sites; the two Tesla models included reportedly performed better across those scenarios.
Broader context: China has been one of the most ambitious markets for autonomous driving, backed by strong governmental support for electric vehicles and AI development. Market analysts project the country's passenger-vehicle autonomous-driving market to grow from about $9.85 billion in 2024 to $15.3 billion by 2030. However, regulators’ recent caution signals that commercial rollout of higher-level autonomy will be more gradual and more tightly governed than many companies expected.
Bottom line: The Xiaomi crash triggered stricter oversight and limited approvals for Level 3 systems, forcing automakers to retrench plans for commercial deployment and heightening scrutiny of assisted-driving safety and marketing.
