Periodic/Sector reports
Automobile: Weekly: Mandatory ADAS Content Favours Scale
Highlights
- China recently announced its first mandatory L3/L4 ADAS standard, which takes effect on 1 Jul 27. This markets a regulatory shift from encouraging innovation to demanding verifiable safety evidence.
- The previously published L2 standard will take effect on 1 Jan 27, covering assistance systems already fitted in over 70% of new cars.
- Chery, BYD and Geely were the first OEMs to receive L2 certifications, while the only two approved L3 models so far are Changan’s and BAIC Arcfox’s.
- Primary beneficiaries include Desay SV and Joyson Electronic Hesai, RoboSense, Momenta, Horizon Robotics, and Pony.ai.
- Maintain MARKET WEIGHT. Top BUYs: BYD, Geely, CATL, Hesai, and Desay SV.
Analysis
- China’s first L3/L4 Advanced Driver Assistance System (ADAS) standard marks a fundamental shift from "innovation encouragement" to "safety-first" regulation. The standard was published for public comment from 17-24 Jun 26, with implementation set for 1 Jul 27. It introduces a "Safety Case" mechanism requiring automakers to prove system safety through verifiable evidence rather than marketing claims. L3 systems must demonstrate robust human-machine handover capabilities, while L4 systems must operate without relying on remote assistance. The all-weather perception mandates require L3/L4 systems to handle rain, snow, fog, changing light and tunnels, with quantitative benchmarks: forward detection must reach 130 metres at 120km/h, with lateral detection extending nine metres on each side.
- For OEMs, compliance cost is fixed per platform rather than per vehicle, so it falls hardest on low-volume brands such as XPeng and Li Auto. BYD (1211 HK/BUY/Target: HK$135.00) and Geely (175 HK/BUY/Target: HK$27.00) absorb it most easily, because they develop in-house and spread the same bill across millions of cars a year rather than a few hundred thousand. Chery, BYD and Geely are the first automakers to pass China's mandatory GB 47955-2026 safety management certification for combined driver assistance (L2); BYD and Geely co-drafted the standard, and Geely received the first certificate (No. 001). On L3, no covered OEM yet holds a production licence — the only two approved models are Changan's and Arcfox's, and BYD, Geely and Li Auto are still testing.
Highlights
- China recently announced its first mandatory L3/L4 ADAS standard, which takes effect on 1 Jul 27. This markets a regulatory shift from encouraging innovation to demanding verifiable safety evidence.
- The previously published L2 standard will take effect on 1 Jan 27, covering assistance systems already fitted in over 70% of new cars.
- Chery, BYD and Geely were the first OEMs to receive L2 certifications, while the only two approved L3 models so far are Changan’s and BAIC Arcfox’s.
- Primary beneficiaries include Desay SV and Joyson Electronic Hesai, RoboSense, Momenta, Horizon Robotics, and Pony.ai.
- Maintain MARKET WEIGHT. Top BUYs: BYD, Geely, CATL, Hesai, and Desay SV.
Analysis
- China’s first L3/L4 Advanced Driver Assistance System (ADAS) standard marks a fundamental shift from "innovation encouragement" to "safety-first" regulation. The standard was published for public comment from 17-24 Jun 26, with implementation set for 1 Jul 27. It introduces a "Safety Case" mechanism requiring automakers to prove system safety through verifiable evidence rather than marketing claims. L3 systems must demonstrate robust human-machine handover capabilities, while L4 systems must operate without relying on remote assistance. The all-weather perception mandates require L3/L4 systems to handle rain, snow, fog, changing light and tunnels, with quantitative benchmarks: forward detection must reach 130 metres at 120km/h, with lateral detection extending nine metres on each side.
- For OEMs, compliance cost is fixed per platform rather than per vehicle, so it falls hardest on low-volume brands such as XPeng and Li Auto. BYD (1211 HK/BUY/Target: HK$135.00) and Geely (175 HK/BUY/Target: HK$27.00) absorb it most easily, because they develop in-house and spread the same bill across millions of cars a year rather than a few hundred thousand. Chery, BYD and Geely are the first automakers to pass China's mandatory GB 47955-2026 safety management certification for combined driver assistance (L2); BYD and Geely co-drafted the standard, and Geely received the first certificate (No. 001). On L3, no covered OEM yet holds a production licence — the only two approved models are Changan's and Arcfox's, and BYD, Geely and Li Auto are still testing.
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
Our latest research
Periodic/Sector reports
14 Aug 2026
Automobile: Weekly: A Product Wave Rolls Into The Chengdu Auto Show
Periodic/Sector reports
11 Aug 2026
China Property Beijing Further Eases Home Purchase Restrictions After Underperforming Other Tier 1 Cities
Periodic/Sector reports
4 Aug 2026