Nio is enveloped in a public relations nightmare after Chinese traffic authorities last month disclosed the first known fatality involving one of the company’s vehicles using its partially automated driving system. 

Called Nio Pilot, the advanced driver assistance system (ADAS) has been a major selling point for the maker of luxury electric vehicles (EVs). Now it stands accused of overselling the capabilities of the technology. There could be more consequences to come as Nio is in advanced plans to enter the competitive mass auto market.

The Aug.12 crash of the Nio ES8, resulting in the death of the 31-year-old driver, has also had repercussions throughout the autonomous vehicle industry, with many fearing the prospect of tougher regulation and the loss of public confidence. Xpeng Motors and Li Auto last month quickly dropped the terms “autonomous” and “advanced” in describing their ADAS systems, respectively. 

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The fatal crash: The accident occurred on a highway in Putian city in eastern Fujian province. The driver, Lin Wenqin, had placed his 2020 ES8 into Nio’s Navigate on Pilot mode, which basically takes control of the car during highway driving. The sports utility vehicle struck a highway maintenance vehicle stopped in the same lane, according to a statement (in Chinese) posted by local police on Chinese microblogging platform Weibo on Aug.18. The cause of the crash remains under investigation by Putian city police.

Shortcomings of ADAS: Pending results of the police investigation, whether the incident was triggered by a software glitch or human error remains an open question. It appears, though, that either Lin or the in-car system failed to recognize the stationary highway car in front of the ES8 and to move to another lane in response. 

  • Similar to Tesla’s Autopilot system, Nio’s ADAS technology can keep a car advancing in its lane, maintain a safe distance behind traffic ahead, and can even change lanes automatically in some cases. However, currently these systems have difficulty detecting parked vehicles and braking for them.
  • Nio’s ADAS system uses cameras, powered by computer vision algorithms, and radar sensors to detect and avoid obstacles, but there is room for errors when a vehicle encounters new situations which its AI algorithms had not detected during training.
  • The radars of partially autonomous systems are not very good at distinguishing types of stationary obstacles, Raj Rajkumar, a professor at Carnegie Mellon University, told Wired in an interview about Tesla’s similar ADAS technology; the radars, therefore, are designed to ignore such obstacles in order to avoid false braking events.
  • Similar incidents have occurred with Tesla drivers. The first Tesla fatality in the US happened in 2016 when a Model S with Autopilot active crashed into a white semi-trailer crossing the highway. A dozen more Tesla vehicles have since been reported for ramming into static obstacles including fire trucks and police cars; US regulators last month finally launched a broad investigation into the company’s technology, reported the New York Times.
  • So far, autopiloting technology has been a regulatory blind spot in China and no higher authorities are known to have launched a broader probe into the Nio case in addition to local police.

Nio’s image in tatters: The deadly incident comes at a crucial time for Nio. Having struggled to gain a foothold in the luxury EV segment, the seven-year-old automaker is pushing to roll out its first mass-market car, eyeing a segment of the market where competition is fierce and margins are thin. Now its hard-won reputation as a high-quality premium brand is under threat.

  • Nio has built up and benefited from an enthusiastic customer base similar to that of Tesla’s. However, the once incredibly loyal user community is becoming fragmented, as indicated by the response to a group letter (in Chinese) from 500 Nio owners, published online on Aug.18, in defense of the company. 
  • More than 10,000 users joined in an online debate with the hashtag “objection to the joint statement” (our translation) in the chat room of Nio’s mobile app, disputing the group letter’s contention that there was “no misleading information” in Nio’s advertising of its ADAS technology. In the chat room, some Nio owners criticized the company’s service staff for overstating the capability of Nio Pilot before their purchases, while some blamed the company for providing little information about the ADAS functions and its limitations, according to a South China Morning Post report.
  • In the latest development to hit Tesla’s challenger, Lin’s family contacted the Putian city police, alleging that Nio employees tampered with data from the crashed vehicle; Nio denies the charge.

Far-reaching consequences: Nio’s user manual warns that the ADAS system cannot detect stationary objects, including “roadblocks,” nor can it brake for them. Drivers are required to take control of their cars immediately when these situations arise. This means the liability for such accidents will probably lie with drivers themselves.

  • Meanwhile, the auto industry is expecting strengthened regulation in automotive software to ensure safe operation and to tackle security issues for intelligent and connected cars. The central government earlier this month proposed new data security rules for autos, a move that Nio’s local competitor, Li Auto, last week said could result in more efforts to develop an assisted driving function in compliance.
  • The publicity nightmare has also cast a shadow upon Nio’s business, highlighting the challenge for the company to maintain strong connections with a rapidly expanding user community, Chinese media reported, citing Zhou Zhanggui, a brand management consultant.
  • Having gone through a liquidity crisis and aiming for an all-round expansion, Nio is at a critical juncture and must take steps to restore its image. The luxury carmaker is accelerating the pace to launch its first mass-market model under a new brand, reportedly scheduled for early next year, with plans to almost double its store count to 366 in the domestic market by the end of this year. “We want to provide better products and service at prices lower than Tesla’s,” said Nio’s CEO William Li last month.

Also in the news:

Xpeng plans foray into the premium market: As Nio moves to the mainstream market, Xpeng Motors is doing the opposite. The Alibaba-backed EV maker, which has maintained a price range between RMB 150,000 ($23,225) and RMB 300,000, is looking to expand in the domestic market by entering the premium-market segment with a high-end model scheduled for release in 2023.

  • The new model will be sold for at least RMB 400,000, equipped with the company’s technology that could set it apart from its competitors, CEO He Xiapeng said during an earnings call on Aug. 26.
  • He added the company is on track to roll out the Xpilot 3.5, the company’s ADAS technology, early next year and a 4.0 version in 2023, enabling the vehicle to automatically steer on city streets, not just on highways.

Internet giants doubling down on self-driving tech: Although the arrival of a truly self-driving car remains delayed indefinitely, Chinese tech giants are still betting heavily on self-driving startups with the intention to own a large share of the driverless driving future. Their investments come at a time when the Chinese government is establishing a looser framework with an expanded scope for testing self-driving vehicles, the South China Morning Post reported.

  • Qcraft, a robobus startup formed by a group of former Waymo engineers, recently raised $100 million in a funding round from investors including YF Capital, a private equity firm founded by Jack Ma, and Longzhu Capital, the investment arm of life-service app Meituan.
  • Xiaomi is acquiring Deepmotion, a Beijing-based startup working on high-definition maps for autonomous cars, as the Chinese smartphone maker ramps up its efforts to develop driverless car technology and mass produce its first EV in the next three years.

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: or Twitter: @yushan_shen