Major Chinese automakers like BYD and Geely are leading the charge, while legacy foreign players such as Volkswagen, Toyota, Nissan, and General Motors’ Cadillac brand are striving to hold their ground. The stakes are especially high as China, the world’s largest EV market, becomes increasingly saturated and competitive.
Shift in Focus: Safety Over Smart Hype
What was expected to be a showcase of cutting-edge automated-driving technology has taken a sudden turn due to regulatory intervention. In the wake of a fatal crash involving Xiaomi's SU7 electric sedan — which occurred after a handover from its assisted-driving system — Chinese authorities have imposed a ban on marketing terms such as “smart” or “autonomous” without clear definitions and official approvals.
Automakers have since been forced to pivot. Brands that had intended to highlight their most advanced driver-assistance systems are now dialing back those claims, emphasizing instead the importance of safe and responsible driving. BYD and Zeekr, for instance, are revising their presentations to highlight hybrid technology and battery advancements rather than self-driving capabilities.
This comes amid broader regulatory tightening. In February, Beijing also prohibited over-the-air software updates to driver-assistance systems without government review, forcing companies like Tesla to suspend trials of its "Full Self Driving" (FSD) feature in China and rebrand it with a more cautious label.
BYD Ups the Ante
Despite these constraints, BYD continues to disrupt the market. Known for its aggressive pricing strategies, the EV giant recently announced that its "God’s Eye" driver-assistance system would be included as standard on all models — even on vehicles priced as low as $10,000. This move mirrors BYD’s earlier tactic of undercutting EV prices to capture market share, and it’s already putting pressure on competitors.
Analysts suggest that BYD’s scale allows it to absorb costs and set the pace in both innovation and affordability. “Many automakers criticize BYD for the pricing war,” said Bo Yu of Jato Dynamics. “They're doing the same with God’s Eye — making everyone else uncomfortable.”
Huawei and Others Push for Caution
Tech companies entering the automotive space are also feeling the regulatory heat. Huawei, which has partnered with several carmakers on EV projects, has launched a public campaign urging drivers to treat assisted-driving features as supportive tools rather than replacements for human control. A recent livestream event featured brand ambassador Liu Yifei delivering a safety-first message — a sign of how carefully companies are navigating the new regulatory climate.
Geely's premium EV brand Zeekr had planned to highlight its first Level 3 driver-assistance model — capable of hands-off driving in certain scenarios — but is now redirecting focus to hybrid technology and advanced battery systems.
Regulatory Crackdowns Extend to Batteries
In addition to restricting marketing and software updates, Chinese authorities are also tightening safety standards for EV batteries in response to growing concerns about fire and explosion risks. These new guidelines are expected to reshape both product development and marketing strategies across the board.
Tesla Under Siege in China
Despite the regulatory challenges, China's EV market remains the fastest-growing in the world, with electrified vehicles now accounting for over 50% of new car sales — a milestone Beijing initially targeted for 2030.
Many of the new models debuting in Shanghai this week are electric crossovers designed to go head-to-head with Tesla’s Model Y, offering more features at lower prices. Brands like Xpeng and Zeekr are showcasing models with faster charging, improved assisted-driving systems, and cutting-edge in-car tech, all at more competitive prices.
Tesla, which has lost significant ground in China — dropping from a 15% market share in 2020 to 9% in early 2025 — faces growing pressure. The U.S. EV pioneer has not attended a Chinese auto show since a high-profile protest in 2021 and continues to lag behind Chinese competitors in product refresh cycles.
Compounding the challenges are mounting controversies surrounding Tesla CEO Elon Musk, whose political affiliations have stirred backlash in key Western markets, affecting sales in both the U.S. and Europe.
Even Xiaomi, one of the most closely watched newcomers, has opted for a low-profile presence at this year’s event. Despite expectations of unveiling its YU7 crossover, the company will instead limit its display to its existing SU7 lineup and will not hold a press conference.
An Industry in Transition
As Chinese automakers continue to innovate at breakneck speed, analysts like Lei Xing see a looming threat to Tesla’s dominance. “It’s not going to be just one vehicle that beats the Model Y,” he said. “It’s 12 or 13.”
The Shanghai Auto Show, once a stage for celebrating technological bravado, is now a reflection of an industry in transition — caught between relentless innovation and the need for responsibility in an increasingly regulated and scrutinized environment.