China’s automotive sector is facing increased regulatory scrutiny as authorities launch a nationwide campaign to assess the quality and safety of domestically produced vehicles, particularly those equipped with advanced technologies. The move comes amid a shrinking car market and rising concerns over the reliability of new innovations like autonomous driving systems.

At a news conference in Beijing on Wednesday, Vice-Minister of Industry and Information Technology Xin Guobin announced that new vehicle models and technologies would be subject to stricter approval processes before entering the market. Xin cited several incidents involving unproven designs as a key reason for the tougher oversight. “Some reckless innovative designs were installed in vehicles without sufficient testing and verification,” he said, highlighting public safety concerns related to autonomous driving technologies.

The ministry said it would soon begin a year-long campaign focused on reviewing smart driving features, product design, and overall vehicle safety. This step follows a series of accidents and growing consumer complaints that have put pressure on regulators to intervene in the industry.

One such incident occurred in March 2025, when three people died in a crash in Anhui province involving the Xiaomi SU7 electric vehicle. The vehicle’s driver-assistance system was active at the time of the crash, but the preliminary self-driving technology failed to prevent the electric car from crashing into a barrier at high speed. This tragedy prompted officials to tighten oversight of early-stage autonomous driving systems. Additionally, rising complaints about electric vehicle battery quality have been reported across public forums this year.

Xin emphasized the seriousness of these issues and pledged to increase monitoring of carmakers’ design and production processes to protect consumer interests.

Industry analysts noted that while Chinese automakers and suppliers remain leaders in electric vehicle technology and production—benefiting from government support and strong consumer demand for innovation—they now face a challenging market environment. Nearly 100 domestic carmakers have been racing to develop new features such as self-driving systems and digital cockpits to attract buyers in the world’s largest vehicle and electric car market.

However, Paul Gong, head of China car research at UBS, pointed to intense price competition and frequent new model launches as significant obstacles. He characterized this situation as “involution,” describing it as cutthroat rivalry that hampers sustainable growth and profitability.

Data from the China Passenger Car Association highlighted the difficulties faced by the industry: overall car deliveries in July, including both petrol and electric models, declined 20.9% year on year to 1.46 million units. Electric vehicle sales, which constituted 65.1% of that total, dropped 3.9% from the previous year, marking a seventh consecutive month of decline. Analysts attributed this trend to diminishing government incentives and softer consumer demand, signaling ongoing headwinds for China’s automotive market.