BEIJING — China is steering its massive auto sector toward a future defined by precision alignment, targeting intelligent connected vehicles as a primary engine to generate 1 trillion yuan ($142 billion) in consumption by 2027.

Under a new plan to boost domestic demand, China has identified ICVs as one of three priority sectors — each expected to reach the trillion-yuan scale — destined for rapid expansion.

The plan explicitly calls for the enhanced adaptability of supply and demand to unleash consumption potential, urging manufacturers to move beyond sheer volume to products that precisely match evolving consumer needs.

To unlock this potential, the roadmap calls for supply-demand adaptation: creating some 100 signature products and innovative enterprises, rolling out pilot scenarios for new technologies, and expanding new energy vehicle sales to rural markets.

Vice-Minister of Industry and Information Technology Xie Yuansheng framed the pivot as a transition from quantity to quality — a shift from simply producing more to producing better — to ensure a high-quality supply meets diverse consumer needs.

The policy push comes as the market crosses a historic threshold. NEVs accounted for 51.6 percent of all new car sales in China in October, constituting the majority of sales for the first time. This surge tracks with production, which skyrocketed from roughly 1.4 million units in 2020 to over 13 million in 2024.

As the market matures, consumer preferences are becoming increasingly diversified. Families are driving demand for spacious, multipurpose vehicles, while younger buyers now view cars as mobile living spaces defined by voice interaction and smart cockpits. Simultaneously, a booming outdoor segment is fueling sales of electric off-road vehicles, some of which are capable of climbing steep slopes or offering a combined range of 1,000 kilometers.

This diversification is underpinned by a mature supply chain and falling costs. Official data show that over 60 percent of new passenger vehicles sold now feature Level 2 driver assistance systems. Ownership economics have also improved, with battery cell costs dropping by 30 percent and charging speeds more than tripling in recent years.

Domestic manufacturers are already executing this precision strategy.

Leapmotor is targeting the personalized youth market with its Lafa5, a compact electric coupe priced at the 100,000-yuan level. Zeekr is focusing on safety by integrating artificial intelligence algorithms and dozens of sensors into its 9X model, while Nio continues to expand its energy services network with over 8,400 battery-swap and charging stations globally.

To fully unlock the sector's potential, the authorities are looking beyond new car sales. The Ministry of Commerce has pledged efforts to expand the used car market and aftermarket services, including rentals and recreational vehicle camping.

"The path forward relies on deepening the industrial application of intelligent connected technologies," said Fu Bingfeng, executive vice-president and secretary-general of the China Association of Automobile Manufacturers. "Using innovative supply to unlock broader market potential is key."