Assessing for years, and after circulating a draft for public comments in 2022, the Ministry of Industry and Information Technology (“MIIT”), Ministry of Public Security (“MPS”), Ministry of Housing and Urban-Rural Development (“MOHURD”) and the Ministry of Transport (“MOT”) of China jointly issued the Notice on Carrying out Pilot Work of Intelligent and Connected Vehicle Entry-Permit and Road Access (the “Notice”) on November 17, 2023, which marks the formal roll-out of a pilot scheme,for the first time permitting qualified intelligent and connected vehicles (“ICV”) at level 3/L3 (i.e., conditionally automated, which is defined in China’s automated driving standards GB/T 40429-2021 as an automated driving system that continuously implements all dynamic driving tasks under its designed operational conditions) and level 4/L4 (i.e., highly automated, which is defined in GB/T 40429-2021 as an automated driving system that continuously implements all dynamic driving tasks and automatically implements the minimal risk strategy under its designed operational conditions) to go on road in restricted areas of qualified cities. Without surprise, the Notice is considered by the market as a milestone of the ever-changing regulatory scheme for the automotive industries, especially the automated vehicle industry in China.
The Notice sets forth the general requirements and goals of the pilot scheme, how it is to be carried out and how the Chinese Government shall play to support. It also provides in its attachments more detailed guidelines on the procedures and requirements of the pilot scheme. A full Chinese version of the Notice can be found here. L3 and L4 ICV manufacturers (“Manufacturers”) and potential users (“Users”) are advised to review and assess whether the pilot scheme fits, and how they would like to participate in the scheme. Below we also summarize the key provisions of the Notice.
Application for the pilot scheme and deadline
Participants must apply for the pilot trial, and an application must be submitted to the relevant local municipal government of the city where the ICVs are to be operated on road, before December 20, 2023. The application will first be reviewed by local government, then escalated to provincial counterparts of MIIT, MPS, MOHURD and MOT, and lastly to the national level MIIT, MPS, MOHURD and MOT, for a final approval.
Qualified cities
Unlike some other “pilot” schemes the Chinese Government has implemented in the past, the Notice does not designate specific cities where the pilot scheme will be implemented. That said, it requires the User to operate the qualified L3/L4 ICVs in a city, which has necessary infrastructure and safety management capacity. According to the Notice, the local government must also have issued regulations or administrative policies to support the pilot scheme, and must have established implementation measures for the road-testing of ICV. It is therefore expected to be seen that cities like Beijing, Shanghai, Shenzhen, Hangzhou, Tianjin, Chengdu, Wuhan, etc. (where the road-testing measures for ICV have been established) will soon announce their own local regulations on the road access for ICV.
Qualified applicant
Manufacturer and User must jointly apply for the pilot scheme. The Notice provides in detail the qualification requirements for Manufacturer (focusing on its capacities on design, testing, ensuring safety, monitoring, reporting, and user notifications) and the Users (focusing on its capacities on ensuring safety and undertaking liabilities). One thing to note is that the User must be a legal entity registered in China, meaning that the pilot scheme has not opened for individual end-customers yet.
Qualified ICV
In general, L3/L4 automated and autonomous vehicles ready for mass-production are qualified for the pilot scheme. The Notice has also provided a number of specific technical requirements on the vehicle’s dynamic performance, takeover strategy, risk management strategy, human-machine interface, product safety and security, software and data, etc. Qualified ICVs must also pass a series of testing, such as simulations, proving-ground and real-road testing, as well as testing on cybersecurity, data and software upgrade.
Testing and vehicle entry-permit
Once the application of the Manufacturer-User consortium for pilot scheme is approved by national level authorities, the Manufacturers shall first carry out the above-mentioned testing and safety assessment for the designated L3/L4 ICV models. MIIT will then grant a vehicle entry-permit for the ICV model that has passed such testing and assessment, possibly subject to conditions. ICV models that have been granted with such entry-permits are ready for the market and for road.
Road access
L3/L4 ICVs permitted to access to road will be subject to the existing laws applicable to road transportation and safety. The Notice also provides specific limitations or requirements for the permitted ICVs to access to road, such as that automated and autonomous driving can only be activated in certain designated area, and is not allowed to be activated when the vehicle is operating as school bus or transporting dangerous goods, etc. The Notice also requires that the Manufacturers shall be responsible for the consistency of the product quality of the permitted ICVs, and the Manufacturers and Users shall take on their responsibilities for road traffic safety, network security and data security respectively.
Going forward, we expect to see new and updates to existing legislations, building around the Notice, with regard to the manufacturing and testing of ICV, transportation safety, cybersecurity, data security, operations of transportation business, infrastructure, etc. Hogan Lovells has been closely monitoring this exciting development and its implementations around the corner. Please reach out to any of the listed Hogan Lovells contacts should you have any questions or queries.
Authored by Roy Zou, Lu Zhou, Mo Chen, and Carol Shao.
