The rapid deployment of Chinese automobile autonomous driving capabilities sparked alarms among Beijing regulators who tapped the brakes on the industry, assessing questions about safety and responsibility.
Despite the unclear legal framework for new assistive driving technologies, nearly one is on sale in five new cars for sale in China. It is currently equipped with a high level of autonomous functionality.
Beijing officials, caught up in their hind legs, are expected to slow down their deployment as China develops a regulatory framework for a new technology suite that is rapidly becoming a world leader.
“The cats have not already come out of the bag. They won’t try to put it back,” said Tou Le Le, founder of Chino Auto Insight Consultant. “But what regulators do is limit foreseeable future use cases until they understand what it means.”
Three people were killed in an accident in March, including a semi-autonomous Xiaomi SU7 electric sedan. This has fueled a fierce online debate on safety and sparked warnings from Beijing about the enthusiastic marketing of unproven autonomous driving technology.
This week, China’s Ministry of Industry and Information Technology proposed to develop new safety requirements for driver assistance systems. According to notifications published online, the new standards aim to reduce research costs for companies while reducing accidents and guiding technological development.
While high levels of policy support for China’s electric vehicle industry remains, the central government has not given a clear signal on the timing or scope of wider national regulations for fully autonomous vehicles that are primarily postponed to local governments to oversee pilot projects.
HSBC analyst Yuqian Ding said Beijing called for “self-discipline” in the industry as new regulations were developed. But in the eyes of Chinese automotive executives, she said there was “no longer” doubt about whether technology is needed in the cutthroat competition. “Everyone agrees: ‘If I don’t do this, I’m not going to survive,'” she said.
China’s insurance and transport regulators have traditionally looked at international best practices and helped shape an approach on key rules of liability, such as those liable for accidents and damages and liability for price insurance.
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However, as China leads unmanned technology and Beijing advocates the need to coincide with strict data security controls, the country could be forced to develop industry-wide regulations ahead of other jurisdictions.
The development of a new legal framework faces further complications from the possibility of a long-standing transition when a fleet of human drivers and robotic vehicles transporting people and goods is mixed.
Samradwan, principal of Enhans International, a consultant firm that advises Chinese insurance companies, predicted that the final insurance scheme for increasingly smart cars could still be five or ten years away.
He said there are fundamental issues in deciding how to allocate risk pricing and liability when the vehicle’s operating system frequently downloads software updates. They potentially changed the vehicle’s capabilities and the level of attention and interaction required by the driver.
But “statistically, unmanned cars don’t crash more than cars people drive, so the premium in the automotive industry is likely to decrease over time,” Radwan said. “But that’s the time when you get there.”
The current rules of responsibility patchwork means that using a Level 3 vehicle that can manage complex scenarios requires drivers to be ready to control system prompts.
At Level 4 – fully automated driving under certain conditions of vehicles such as Robotaxis – accident liability is expected to sit with the fleet operator. However, there are still questions as to whether hardware and software suppliers should be responsible.
In an industry where the US and China compete for hegemony, regulatory questions are also emerging in the US, such as whether the cybercab developed by Elon Musk’s Tesla will be allowed to drive on American roads without pedals or steering wheels.
Lei Jun, founder of Xiaomi, a smart-turned caregiver, is one of those who encouraged the government to adopt a new national safety testing and verification system for self-driving vehicles.
Paul Gong, who heads China’s automotive analysis at UBS, said that China’s lack of clarity may still benefit from this stage of industry development.
“As we saw in Europe and the US, excessive regulation can hinder technology development. It’s more important to encourage engineers to advance things than letting lawyers manage it.”
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The autonomous driving pilot zone is approved in about 20 Chinese cities, including the large Robotaxa in Beijing, Shanghai, Shenzhen, Chongqing and Wuhan.
Goldman Sachs predicts that China’s Robotaxis fleet will pass 500,000 units over the next five years, but China’s Robotaxis market will be worth $47 billion by just $54 million this year, from $203.5 billion.
James Peng, chief executive of Chinese Robotaxi startup Pony.ai, said there appears to be a “clear roadmap” to expand the operational realm of L4 vehicles, but L3 regulations are “gray areas” and “even the definition of products is not yet clear.”
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Ya-Qin Zhang, chairing the Apollo Alliance, an open autonomous driving platform led by search group Baidu, is more optimistic about the regulatory outlook. He believes that the current approach aims to “balance between safety and innovation.”
It said it was “explosive” for the development of true driverless technology in China in 2024 thanks to the combination of mass data collection from the pilot zone and the new powerful AI applications that have helped driverless cars to respond in a more human way.
He hopes by 2030, about 10% of China’s new cars will have the capacity to operate without a driver. And by then, the regulatory framework will be ready.
“You need a car to learn how humans drive,” Zhang said. “The (pilot zone) collects the driving behaviors of many people.”
Additional Reports by Kana Inagaki in London
