By Mark Schaub Atticus Zhao King & Wood Mallesons’ Corporate group

On 27 February 2018, Shanghai Municipal Economic Information Commission (SMEIC), Shanghai Municipal Public Security Bureau (SMPSB) and Shanghai Municipal Transportation Commission (SMTC) jointly issued the Shanghai Regulations on Intelligent and Connected Vehicles Road Testing (Trial) (“Shanghai Regulations”)[1]

Hot on the heels of Beijing, Shanghai has become the second city in China to issue road testing regulations for self-driving cars. This is another important momentum for the development of autonomous cars in China following Beijing’s road testing regulations (“Beijing Regulations”) issued late last year.

The Shanghai Regulations use the term “intelligent and connected vehicle” (ICV) for self-driving cars. The self-driving cars governed by the Shanghai Regulations cover L3, L4 and L5 vehicles.

Although the Shanghai Regulations are largely similar to the Beijing Regulations there are some notable differences. The key points and requirements of the Shanghai Regulations are as follows:

Who can apply for testing?

The Shanghai Regulations require that an applicant must be an independent legal entity registered in China.

Similar to the requirements under Beijing Regulations, the Shanghai Regulations also require a test applicant to purchase minimum traffic accident insurance of RMB 5 million or provide an equivalent letter of guarantee for each test vehicle.

The slight difference is that the Shanghai Requirements require a test applicant must have the relevant capability in technology R&D, manufacturing or testing of vehicle and components, assessment program for closed area and road testing, and remote data monitoring platform for test vehicles. The Beijing Regulations only required test applicants to provide a statement and introduction regarding the test vehicles and self-driving system and to install  data recording devices.

Who is the regulator?

Under the Shanghai Regulations, a new self-driving car testing regulatory body (“Regulatory Body”) will be jointly established by SMEIC, SMPSB and SMTC. This Regulatory Body will be in charge of implementing road tests in Shanghai, including issuing ICV road test notice letters and temporary car plates for test vehicles.

In addition, the Shanghai Manufacturing Innovation Center will be recognized as a third party institute (“Authorized Third Party Institute”) to examine test applications, collect and analyze relevant testing data and transfer data to the Regulatory Body’s data platform.

What are the requirements for test driver?

The Shanghai Regulations still require the self-driving cars to have … drivers. Test drivers must be individuals authorized by the applicant to take emergency as required.

A test driver must hold a valid driving license with at least 3-years unblemished driving experience and a good technical understanding of the self-driving testing program and operation methods, and have more than 50 hours self-driving operation experience (of which at least 40 hours needs to be experience in the relevant test program).

Test drivers must sit in the driver seat and obey all traffic laws during testing.

Requirements on test vehicles

Under the Shanghai Regulations, test vehicles include passenger and commercial cars but not low-speed vehicles or motor cycles.

Test vehicles are not registered with the authority but must satisfy all statutory testing requirements except for endurance. If any statutory testing requirement is not met due to the self-driving function then the applicant must prove that safety has not been jeopardized.

Test vehicles are also required to be able to switch between self-driving and conventional modes of driving so as to ensure the test driver can quickly take over in case of a malfunction.

Test vehicles must be able to monitor the status of the test vehicle online and transfer in real time information relating to (i) the control model of the test vehicle, (ii) vehicle location and (iii) vehicle speed and acceleration speed.

Test vehicles must also be able to automatically record and store specified information for the period at least 90 seconds prior to an accident or malfunction and have warning devices installed to allow for test drivers to take over a vehicle in case of malfunction.

As with the Beijing Regulations a test applicant can generally apply for five vehicles for testing in any one time application.

How is test process regulated?

Test applicants can only conduct tests on designated roads. There is currently a 5.6 km test road in Shanghai Jiading District which can be used for first phase testing.

The Regulatory Body will issue an ICV test notice letter to qualified test applicants which specifies details such as the test vehicle, test period, test road and test drivers. The test period will generally be for no longer than 6 months with the possibility of a 6 months extension.

Test vehicles will be issued with temporary car plates. These plates are to be returned to the Authorized Third Party Institute upon expiration of the test period.

In case there is any change on the self-driving system, components, safety function, vehicle appearance or test driver then the applicant must cease testing and submit an information change form to the Authorized Third Party Institute for assessment. Testing can only continue after approval.

In order to ensure safe tests the test drivers are required to take a half hour break every 2 hours and aggregate testing time per driver cannot exceed 8 hours per day.

Test applicants are required to submit monthly reports to the Authorized Third Party Institute in respect of any disengagement by the test vehicles from self-driving mode. The Authorized Third Party Institute has the right to collect and review data recorded by the data recorder 30 seconds before such disengagement.

How to deal with traffic accidents?

Under the Shanghai Regulations, test drivers and test applicants are liable for any violation of traffic laws and will be liable for any traffic accidents caused.

In case of an accident, the test driver must cease testing immediately and the test applicant is required to submit to the Authorized Third Party Institute a report regarding the accident within 24 hours. After liability has been determined by the traffic authority the applicant can apply to resume testing.

Failing to observe requirements under the Shanghai Regulations may result in cancellation of qualifications of the test applicant and being barred from submitting a new application for a period of one year.

What is next?

The release of the Shanghai Regulations is another concrete step in China’s regulating of road testing for self-driving cars. Their release also shows local authorities are seeking to provide sound policy environment to allow for self-driving cars to develop in China. National rules for self-driving car road testing are expected to be released in the near future.

Unlike the Beijing Regulations, the Shanghai Regulations are valid for 22 months i.e. until 31 December 2019. From this time frame it appears the Shanghai government intends to regulate the self-driving car road testing in a dynamic fashion.

The Auto industry is a key pillar of Shanghai’s economy. In 2017, the gross industrial output of Shanghai auto industry was RMB 677.4 billion with a year-on-year growth rate of 19.1%. If local governments will support the development of self-driving cars then it can be expected that Shanghai will lead the way.

On 1 March 2018, SAIC Motor and Nio were the first two carmakers to obtain temporary car plates for test vehicles under the Shanghai Regulations. We expect more carmakers and technology companies will join them on Shanghai’s roads.