L2.9 and L2.5 dominate the mid- and low-end car markets in China

In recent years, the Chinese automotive market has witnessed significant advancements in autonomous driving technology, particularly with regards to the Navigate on Autopilot (NOA) systems. Since the introduction of Highway NOA by Tesla in 2019, the market has rapidly progressed, with a noteworthy surge in sales and penetration rates of Level 2.5 and Level 2.9 autonomous driving systems. By the end of 2023, the sales volume of domestic Advanced Driver Assistance Systems (ADAS) with L2.5 and above reached approximately 1.484 million units, marking a significant year-on-year growth of 78.3%. The increase in sales was accompanied by a penetration rate of about 7.1%, showcasing growing consumer adoption and acceptance of such technologies. The first half of 2024 further emphasized the trend, with sales of new passenger cars equipped with L2.5 and above ADAS models reaching 1.06 million units, resulting in an increased penetration rate of 11%. Urban NOA models achieved particularly notable sales figures, with around 732,000 units sold, which indicates a penetration rate of 7.6%. This growth highlights a shift not only in consumer preferences towards more advanced autonomous technologies but also an overall evolution in vehicle offerings by various manufacturers in the Chinese market. Notably, the competition among automotive manufacturers has intensified as they seek to introduce their versions of Urban NOA systems. Leading Original Equipment Manufacturers (OEMs) such as Tesla, NIO, Xpeng Motors, Li Auto, and Huawei have been at the forefront, with many entering the urban NOA arena as of 2023. Joint venture OEMs have also started accelerating their Highway NOA developments to keep pace with this market shift. As of the first half of 2024, sales of joint venture OEM Highway NOA models in China reached 54,000 units, while independent OEMs witnessed sales rise to 275,000 units, reinforcing the growing market compelment for these advanced assistive driving systems. In the broader context, two prominent technical development trends have emerged within the industry. The first is a transition from sensor-dependent systems, which traditionally relied on LiDAR and high-definition mapping, to vision-only perception models. This shift represents a new direction, with manufacturers focusing on system adaptability and performance reliability in complex driving scenarios. For instance, Xpeng Motors has introduced its AI Eagle Eye Vision Solution—a high-level intelligent driving solution that allows for enhanced autonomous driving capabilities while adopting a light radar technology approach. As competition evolves, the industry is recalibrating strategies to balance technological advancements with consumer demands, ultimately forging a path toward a more autonomous driving future in China.