The Shanghai Auto Show, kicking off this week from April 23 to May 2, is set to be a battleground for over 70 Chinese and international automotive brands showcasing more than 100 new or refreshed models. As the world’s premier market for electric vehicles (EVs) and hybrids, China’s auto industry is under intense scrutiny, with a government crackdown on autonomous driving technology claims stealing the spotlight. The clampdown follows a fatal crash involving Xiaomi’s SU7 sedan in March, prompting regulators to ban terms like “smart” and “autonomous” in marketing and tighten rules on driver-assistance systems.
The Xiaomi SU7 incident, where the electric sports sedan struck a cement pole and caught fire, killing three people, has cast a long shadow over the industry. The crash occurred shortly after the driver attempted to take control of the car’s assisted-driving system, raising concerns about the safety and reliability of such technologies. Since its debut before last year’s Beijing Auto Show, the SU7 has sold over 215,000 units, surpassing Tesla’s Model 3 monthly sales since December. However, the tragedy has led to heightened regulatory oversight, forcing automakers like BYD, Zeekr, and Tesla to revise their marketing strategies. Instead of touting advanced autonomous features, companies are now emphasizing driver caution and responsibility.
China’s Ministry of Industry and Information Technology (MIIT) has introduced stringent regulations, including a ban on public beta testing of autonomous systems and restrictions on over-the-air software updates without government approval. These rules, announced in February, have already impacted Tesla, which halted a free trial of its “Full Self-Driving” (FSD) software in China and rebranded it as “intelligent assisted driving” to comply with the new mandates. Similarly, Huawei, a key automotive software supplier, launched a campaign urging caution with its assisted-driving systems. Automakers are also grappling with tightened EV battery standards to reduce fire and explosion risks, adding further complexity to their operations.
Despite these challenges, China’s “new energy vehicle” (NEV) sector continues its remarkable growth, with electrified vehicles now accounting for over half of all new car sales—a milestone targeted initially for 2030. The Shanghai Auto Show will feature a dozen new electric crossovers priced to compete directly with Tesla’s Model Y, intensifying the price war that has eroded profit margins. BYD, a dominant player, is leveraging its scale to lower costs for its “God’s Eye” driver-assistance system, pressuring rivals. Analyst Bo Yu from Jato Dynamics noted, “BYD is making everyone else uncomfortable,” mirroring its aggressive pricing strategy in the EV market.
As top Chinese brands like BYD and Geely take center stage, foreign automakers such as Volkswagen, Nissan, Toyota, and Cadillac are vying for attention. However, the regulatory hurdles and ongoing price war underscore the fierce competition in China’s auto market. With autonomous technology under scrutiny, the Shanghai Auto Show will highlight a pivot toward hybrid models and battery innovations, signaling a cautious yet dynamic future for the industry.
