China has given the nod for car makers to sell Level 3 self-driving vehicles from as early as next year after it approved two electric sedans from Changan Auto and BAIC Motors.
The Ministry of Industry approved licenses for the cars with the level 3 autonomous driving capabilities, making it a first for the country.
Level 3 systems, known in the industry as “conditional automation”, allow a car to drive itself in limited situations, such as on highways or in heavy traffic, without the driver needing to keep their hands on the wheel.
With regulatory approval now in place, the manufacturers can move beyond pilot projects and finally start selling these cars to the public.
Daiwa Securities, a Japanese investment Bank estimates that close to 270,000 vehicles with Level 3 capability will be sold in China next year.
“Daiwa anticipates that more carmakers with level 3 [L3] autonomous driving capability will receive manufacturing licenses,” bank said in a research note last week.
“The penetration rate for L3 cars in China is expected to hit 1 per cent in 2026.” It added.
In practical terms, the L3 cars are not fully self-driving cars. They look and drive like conventional vehicles, but are fitted with extra sensors, cameras, radar and powerful onboard processors.
Drivers are also expected to remain alert and ready to intervene in potentially dangerous situations.
The self-driving function is expected to work only on approved roads and under specific conditions, meaning drivers will not be able to switch off completely in city streets or bad weather.
China’s car market has been showing signs of slow sales which has contributed to this policy change.
Sales growth has slowed, and consumers have become more price-sensitive, especially among electric vehicle makers and this has eaten into margins.
Automakers are under pressure to find new selling points beyond lower prices and longer driving range.
Self-driving features are increasingly being pitched as that next upgrade. For Chinese brands especially, Level 3 approval plays to their strengths in software development and fast product rollouts, giving them an edge over some foreign competition that face tighter regulatory limits at home.
Even so, the rollout is likely to be careful and measured. Authorities are expected to tightly control where Level 3 systems can be used, and any accidents involving “hands-off” driving will attract intense scrutiny.
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