21 April 2025
Following the recent introduction of its “Full Self-Driving” (FSD) package in China, Tesla has encountered significant regulatory hurdles imposed by the Chinese government. In February 2025, Tesla published the FSD software for “Hardware 4.0” (HW4). Initially, the FSD features were primarily available in North America, where the company first trained its systems and navigated regulatory frameworks tailored to its market.
However, shortly after launching in China, Tesla was compelled to pause the rollout in response to updated requirements from the Ministry of Industry and Information Technology (MIIT). The MIIT held a meeting on April 16 with automotive industry stakeholders, where it announced stringent regulations aimed at enhancing safety and oversight in the development and deployment of autonomous driving technologies.
Key Regulatory Changes
The MIIT’s new guidelines reflect a restructured approach to the management of advanced driver assistance systems (ADAS). These regulations stem from rising safety concerns, particularly following a recent accident resulting in multiple fatalities, leading the government to prioritize safety over hastened technological progression.
Prohibition of Beta Testing
One of the most notable changes involves the prohibition of “pioneer user” beta testing programs that are commonly used in the tech industry. Early adopters were able to test and comment on new driving features through these programs. Under the new regulations, any public testing involving users will require official approval, marking a significant shift in how automakers can gather real-world data on their systems.
Marketing Restrictions
Automakers also face strict limitations on the terminology they can use in marketing campaigns. Terms like “automatic driving,” “autonomous driving,” and “intelligent driving” must be replaced with more conservative descriptors like “L(number) assisted driving.” This move aims to align public expectations with the reality of the technology’s capabilities and limitations.
Ban on Supervisory-Free Features
Features like valet parking and one-touch summoning that function without driver supervision have been expressly prohibited by the MIIT. Because they don’t ensure sufficient driver engagement or operational safety, these features have been judged dangerous.
Driver Monitoring and Risk Mitigation
New regulations mandate that driver monitoring systems remain active and must detect when a driver’s hands are removed from the steering wheel. If hands-off detection exceeds 60 seconds, the system must initiate risk mitigation protocols, which may include slowing down, engaging hazard lights, or bringing the vehicle to a complete stop.
Over-the-Air Updates Restrictions
The MIIT has criticized the frequent rollout of over-the-air (OTA) updates, which are common in the industry. The new regulations aim to reduce such updates and require that emergency updates undergo recall procedures, necessitating approval from the State Administration for Market Regulation.
Market Reaction
Industry experts suggest that these new regulations could especially impact companies such as Huawei, Xpeng, Li Auto, and Nio, which have aggressively positioned themselves as leaders in the autonomous driving sector. In contrast, more traditional automakers might find a silver lining, as their cautious approach to adopting autonomous technologies could align better with the new regulatory landscape.
As these developments unfold, the Chinese stock market’s automotive sector has shown a downward trend, with notable declines for companies like BAIC, which fell nearly 7%, and Seres, dropping over 5%.
Conclusion
The regulatory framework established by the MIIT marks a pivotal moment for the automotive industry in China. As automakers navigate these challenging regulations, the emphasis on safety and oversight is likely to shape the trajectory of autonomous driving technology in the country. Tesla’s experience in China serves as a critical case study, revealing the complexities of merging technological innovation with regulatory compliance in a rapidly evolving landscape.
