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China approves hands-off self-driving cars to support auto market

China has approved the production of L3 self-driving cars, allowing hands-off driving under certain conditions.

The move is expected to support the country’s slowing auto market. Daiwa Securities estimates around 270,000 L3 vehicles could be sold in 2026, about 1% of new car sales

Recent approval was granted to state-owned Changan Automobile and BAIC.

L3 systems allow cars to drive autonomously, but drivers must stay alert and ready to take over.

Most systems in China today are classified as L2 or L2+, which require hands on the wheel. Tesla’s Full Self-Driving is currently approved only as L2 in China.

Analysts expect demand for autonomous driving software and components to rise sharply by 2030.

🔗 Source: South China Morning Post

🧠 Food for thought

Implications, context, and why it matters.

China’s L3 approval scope remains limited to specific road types and speeds

  • Approved Level 3 (L3, conditional automation) vehicles run only on designated highways/expressways, not on general urban roads, with Changan capped at 50 km/h in Chongqing traffic and BAIC at 80 km/h on select Beijing expressways 1.
  • Vehicles need national product approval from China’s Ministry of Industry and Information Technology (MIIT) plus local permits for each city, while drivers must retake control when the system prompts them 2 3.
  • Current L3 use focuses on airport shuttles/park commutes to build experience before wider rollout, and consumers can try the tech only through pilot program operators or taxi services for now 4 5.

Sensor and validation tool makers see near-term sales with Chinese original equipment manufacturers (OEMs)

  • More than ten automakers hold L3 test licenses and await approval, including BYD/NIO/BMW/Mercedes-Benz 6. BYD has logged over 150,000 km with Shenzhen authorities 7.
  • Two approved models use different setups. Changan uses cameras, millimeter-wave radars, and ultrasonic sensors without Light Detection and Ranging (lidar) 4. BAIC fits three lidars with Huawei’s Autonomous Driving System (ADS) 3.3, opening room for suppliers of varied sensor packages and domain controllers (centralized in-vehicle computers that run perception plus planning plus control) 4.
  • MIIT’s review process requires proof of edge-case behavior handling, sensor redundancy, and vehicle-to-infrastructure integration with smart traffic systems 8. Vendors with safety-case tooling and testing solutions can sell to automakers preparing L3 submissions.

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