China's tech companies and automakers have poured billions of dollars into smart-driving technology, a new battleground in the country's cutthroat domestic car market.

But Beijing has moved to tighten safety rules after a Xiaomi SU7 in assisted driving mode crashed and killed three college students this year.

It also raised concerns over the advertising of cars as being capable of autonomous driving.

On Friday, the State Administration for Market Regulation said Xiaomi's highway assisted driving system showed insufficient recognition, warning and handling ability in some extreme driving conditions.

That risked collision if drivers failed to promptly intervene, the regulator said.

Xiaomi will remotely upgrade standard SU7 models manufactured before August 30, 2025, the company said in a Q&A on the X-like social media platform Weibo.

Remote recalls have become standard practice among automakers.

But the announcement reignited online discussion of the fatal SU7 crash.

On Friday, a hashtag related to the recall was viewed more than 70 million times on X-like microblogging platform Weibo.