As the curtain rises on the Shanghai Auto Show this week, more than 70 Chinese and global automakers are unveiling over 100 new or updated electric and hybrid models — all in a high-stakes battle for dominance in the world’s largest EV market. But this year, glitzy car launches are colliding with regulatory headwinds as Beijing tightens its grip on how autonomous driving technology is marketed.
Following a fatal crash involving Xiaomi’s SU7 in March, Chinese regulators have cracked down on automakers’ use of terms like “autonomous” and “smart driving.” The accident, which killed three people, occurred shortly after the driver attempted to override the vehicle’s assisted-driving system. In the wake of the tragedy, companies like BYD and Zeekr are revising their presentations at the auto show, downplaying autonomous claims in favor of safety messaging and hybrid technology showcases.
Automakers had hoped to highlight their next-gen driver-assist systems as key differentiators, but now must balance innovation with caution. BYD, which leads China’s EV-and-hybrid market, had promised to roll out its “God’s Eye” assisted-driving suite as a free standard feature even on $10,000 entry-level models. Analysts say this aggressive approach echoes BYD’s pricing strategy in the EV space, pressuring competitors to follow suit.
Tesla, meanwhile, faces mounting competition from a new wave of Chinese electric crossovers directly targeting its Model Y — often at lower prices and with more advanced features. Brands like Xpeng and Zeekr are unveiling models that boast faster charging, enhanced infotainment, and sophisticated assisted driving. Tesla’s Chinese market share has fallen from 15% in 2020 to just 9% in Q1 2025, and global sales dipped last year for the first time ever.
Adding to Tesla’s troubles are public backlash over CEO Elon Musk’s close ties to President Trump and the company’s limited model refresh cycle. Tesla has skipped China’s major auto expos since a 2021 protest by an unhappy customer.
Xiaomi, whose SU7 has outsold Tesla’s Model 3 monthly since December, was expected to reveal its anticipated YU7 crossover — dubbed a potential “Model Y killer” — but instead opted to quietly display only existing SU7 variants, without explanation.
Despite regulatory turbulence, China’s new energy vehicle (NEV) sector continues its rapid growth. Electrified cars now account for over half of all new vehicle sales — a milestone Beijing had originally targeted for 2030.
Industry veteran Lei Xing summed up the mounting pressure on Tesla: “It’s not going to be just one vehicle that beats the Model Y — it’s 12 or 13. It’s a tsunami.”
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