BEIJING – China has ordered automakers to stop using the terms “smart driving” and “autonomous driving” in advertisements for assisted driving systems. The directive follows a deadly crash involving Xiaomi’s SU7 sedan and marks a broader regulatory clampdown on advanced driver assistance systems (ADAS) and over-the-air technology updates.
The Ministry of Industry and Information Technology (MIIT) issued the directive during a closed-door meeting with nearly 60 automaker representatives on Wednesday, according to a transcript reviewed by Reuters and confirmed by one attendee.
Xiaomi Crash Triggers Regulatory Action
The policy shift comes in the wake of a fatal March accident. Xiaomi’s SU7 sedan crashed into a roadside cement pole at 97 kph (60 mph), moments after the driver switched from ADAS to manual control. The vehicle caught fire, raising public concern about the reliability of intelligent driving systems.
In response, MIIT reminded carmakers that the rules updated in February prohibit unsupervised remote software updates for vehicles already in circulation. Automakers must now obtain regulatory approval and conduct comprehensive reliability tests before releasing any updates to ADAS features.
Crackdown on Misleading Advertising
China’s Public Security Ministry also reinforced advertising restrictions. The ministry’s traffic safety research centre warned that automakers exaggerating or misrepresenting ADAS capabilities in ads could face stiff penalties. Companies may be fined up to 10 times the ad cost or risk losing their business licenses. If deceptive ads lead to fatalities or serious injuries, company executives could face up to two years in prison under criminal law.
Huawei, BYD, and Industry Impacts
Huawei, a key ADAS supplier for several brands including Audi in China, attended the meeting but has not commented. Industry leaders such as BYD, Leapmotor, and Toyota have aggressively promoted affordable EVs with assisted driving features in response to intense price wars.
In February alone, BYD launched 21 models priced below $10,000, all advertised with “smart driving” capabilities. This marketing trend, now deemed problematic by regulators, has been central to competition in China’s vast and fast-evolving auto market.
Implications for Automakers
Analysts say these new restrictions will likely increase compliance costs and slow innovation. However, they may also drive overdue industry consolidation. China’s electric vehicle market has expanded rapidly, with EV and hybrid sales exceeding 50% of total vehicle sales by late 2024—a milestone achieved ahead of government expectations.
Regulators have also turned their attention to EV battery safety, pushing stricter standards to reduce the risk of fires and explosions.
While automakers will need to revise marketing strategies and adjust R&D timelines, experts note that these regulations could help restore consumer trust and set a safer path forward for autonomous technology.
