How China's 15th Five-Year Plan puts automotive technology at the center of growth

How China’s automotive technology system is taking shape

China's 15th Five-Year Plan (2026-2030) makes one thing clear: the country's automotive future will be built on technology.

By 2030, China aims to create a comprehensive automotive technology ecosystem spanning New Energy Vehicles (NEVs) connected vehicles, autonomous driving, battery technology, semiconductors, and vehicle-road-cloud infrastructure among the country’s strategic emerging industries.

Rather than viewing vehicles as standalone products, China increasingly sees them as intelligent nodes within a larger connected system that links transportation, communications networks, cloud computing, energy infrastructure, and AI-powered services.

Intelligent connected NEVs combine electric propulsion with onboard software, sensors, and connectivity. These connected vehicles can exchange data with other vehicles, roadside infrastructure, and cloud services, linking each vehicle to the wider transportation system.

At the center of the plan is a clear market objective: achieving approximately 70% NEV penetration in new passenger vehicle sales and 40% penetration in new commercial vehicle sales by 2030.

These targets sit within a broader strategy designed to strengthen China's competitiveness across the automotive value chain while reducing dependence on external technologies. The overarching goal is to strengthen China’s global leadership throughout the entire automotive value chain while building long-term industrial self-sufficiency.

Software-defined vehicles will underpin China’s automotive future

China views software-defined vehicles as a critical foundation for future automotive competitiveness and plans to accelerate development of domestic automotive operating systems, centralized computing platforms, and advanced vehicle software stacks.

Traditional vehicles rely on dozens of independent electronic control units (ECUs) that operate individual vehicle functions. The plan instead promotes centralized computing architectures capable of supporting artificial intelligence applications, over-the-air software updates, intelligent driving functions, and continuously evolving vehicle capabilities.

This approach aligns with trends already pioneered by industry leaders such as Tesla, NIO, XPeng, and Huawei-backed manufacturers. China aims to ensure domestic automakers can compete not only through hardware engineering but also through software innovation, AI integration, and digital services.

China is building a connected vehicle ecosystem

Unlike approaches that concentrate intelligence primarily inside vehicles, China is building a coordinated ecosystem where intelligence is distributed across vehicles, roadside infrastructure, cloud platforms, and communications networks.

The system includes connected vehicles, roadside sensors, intelligent intersections, vehicle-to-everything (V2X) communications, cloud computing platforms, AI training systems, and advanced connectivity technologies such as 5G, 5G-Advanced, satellite communications, and the BeiDou navigation network.

V2X communications allow connected vehicles to exchange real-time data with roadside infrastructure, helping automated driving systems detect hazards, coordinate movement, and respond to changing road conditions. This shared information can improve traffic management, route planning, and safety monitoring while supporting more advanced driving functions. However, infrastructure data complements rather than replaces onboard sensors, computing, and safety systems, which remain essential for vehicles to make reliable driving decisions. Together, these capabilities can support the gradual deployment of connected and automated mobility services.

Automotive AI moves from experimentation to deployment

Through an “AI + Automotive” initiative led by the Ministry of Industry and Information Technology, China aims to accelerate the adoption of automotive AItechnologies into vehicle development, manufacturing, and operations.

The government identifies large AI models, intelligent agents, and advanced machine-learning systems as strategic technologies with broad automotive applications. Future integration is expected with smart homes, wearable devices, robotics platforms, and other connected technologies. As a result, vehicles will function not only as transportation tools but also as mobile computing environments.

The plan additionally emphasizes data as a strategic asset. Authorities aim to establish secure automotive data-sharing platforms, standardized data resources, industry-specific foundation models, and AI-powered industrial agents. Approximately 50 representative AI applications are expected to be deployed across the automotive sector to demonstrate large-scale practical implementation.

China wants autonomous driving at commercial scale by 2030

China’s strategy for autonomous driving extends beyond pilot projects toward widespread commercial deployment. The plan seeks to establish large-scale adoption of automated driving systems by 2030, with highly automated vehicles operating on highways, urban expressways, and selected city roads.

A key objective is to achieve safety performance surpassing human drivers through continuous improvements in sensing, computing, software, and infrastructure integration. The plan supports deployment across a range of use cases including private passenger vehicles, public transportation, freight movement, urban delivery operations, and specialized commercial services.

Mobility Global forecasts strong growth in the adoption of advanced driver-assistance systems in mainland China thanks mainly to a supportive federal policy. Level 2+ automation — which assists the driver but does not replace the need for driver supervision — is projected to become the dominant market segment, with sales rising dramatically by 2030. Level 3 autonomy, which allows a vehicle to manage driving tasks without continuous driver input under defined conditions, is also expected to expand in the second half of the decade. Wider deployment will depend on where these systems can operate, safety validation and regulatory approval; forecasts do not imply approval for all roads or use cases.

Automotive semiconductors and battery technology remain a strategic priority

While software, AI and autonomous driving often attract the most attention, China's long-term automotive strategy also depends on strengthening the technologies that sit beneath them. China’s five-year plan identifies automotive semiconductors, battery technology and energy integration as critical building blocks for competitiveness, supply-chain resilience and future growth.

How automotive semiconductors reduce supply-chain risk

Semiconductors remain a critical strategic priority because they represent a major supply-chain vulnerability for the automotive sector. The plan therefore includes extensive support for domestic semiconductor development. Priority areas include automotive computing processors, control chips, memory devices, communication chips, power semiconductors, and advanced sensing technologies.

Alongside semiconductor development, the plan supports next-generation electrical and electronic (E/E) architectures. The industry is expected to transition toward zonal architectures that consolidate vehicle functions into fewer powerful computing domains. These architectures reduce wiring complexity, improve software management, and enable more advanced intelligent features. According to Mobility Global data, zonal architectures are expected to achieve significant market penetration across China’s automotive fleet by 2030.

Vehicle-to-grid technology expands the role of EVs and creates a new energy resource

One of the most ambitious elements of China’s five-year plan is the integration of NEVs into the electrical grid through vehicle-to-grid (V2G) technologies. Instead of functioning solely as energy consumers, electric vehicles will increasingly serve as distributed energy-storage assets that can provide electricity back to the grid during periods of peak demand. The government intends to establish national technical standards, pricing mechanisms, battery-management technologies, and AI-enabled energy-optimization systems to support this transition.

China targets approximately 50 GW of aggregated flexible V2G capacity by 2030. State Grid estimates suggest that participation from only a small fraction of the national NEV fleet could generate even larger capacity. Over the long term, policymakers view electric vehicles as a major resource supporting renewable-energy integration and grid stability.

Heavy-duty vehicle electrification

The plan dedicates substantial attention to electrifying trucks and commercial transportation. Heavy-duty vehicles represent a major source of fuel consumption and emissions, making them essential to national decarbonization goals.

Policy measures include development of zero-carbon freight corridors, expansion of high-power charging systems, battery-swapping networks for logistics vehicles, and deployment of autonomous trucking technologies. Hydrogen solutions may also be utilized in applications where economic conditions justify their adoption.

The objective is to establish scalable pathways for reducing emissions across freight transportation while maintaining operational efficiency.

China is investing to extend its battery technology lead

Battery technology remains a priority in China’s automotive strategy because battery performance, cost, and supply all shape the competitiveness of electric vehicles. Higher energy density can extend driving range, while improvements in charging speed and safety can make EVs more practical. Advances in materials and manufacturing can also help control costs and strengthen supply resilience. China’s investment in research and development targets advanced electrode materials, high-performance electrolytes, improved current collectors, and next-generation battery systems. Combined with large-scale production, these efforts support China’s position in the global EV battery market, though emerging technologies are not all commercially mature. The government also aims to improve vehicle energy efficiency, targeting approximately 11.5 kWh per 100 kilometers for battery-electric passenger vehicles by 2030.

Particular emphasis is placed on solid-state batteries, which offer the potential for higher energy density, shorter charging times, and improved safety. China plans to establish standards and support commercialization pathways for solid-state technologies.

At the same time, sodium-ion batteries receive strong policy support as a potential alternative to lithium-based technologies. Sodium-ion systems may reduce dependence on strategic raw materials such as cobalt and nickel while improving supply-chain flexibility.

Battery recycling becomes critical to long-term growth and resource security

While China remains the world leader in battery production, policymakers are increasingly concerned about manufacturing overcapacity. Consequently, the plan introduces capacity-monitoring mechanisms, stricter investment controls, and early-warning systems to improve industry discipline and long-term sustainability.

Battery recycling represents another strategic priority. By 2030, more than one million metric tons of retired electric vehicle batteries are expected to be processed annually. The objective is to recover greater quantities of critical materials, including lithium, nickel, and cobalt, thereby reducing dependence on imported resources.

To support circular-economy objectives, China plans to establish comprehensive battery traceability systems. Every battery pack will receive a digital identity that tracks its entire lifecycle, including manufacturing, installation, maintenance, replacement, second-life deployment, and recycling. This digital battery passport concept aims to improve transparency, environmental performance, material recovery, and regulatory oversight.

What China's five-year plan means for the automotive industry

China's five-year plan signals that future automotive technology leadership will depend on success across connected vehicles, automotive AI, autonomous driving, battery technology and software-defined vehicles.

By integrating these capabilities into a single automotive technology ecosystem, China is seeking to strengthen its position across the global automotive value chain.