The Chinese government set a goal in April to build a globally competitive automotive industry within 10 years, with smart and connected cars taking the lead worldwide.
China has also built an industry alliance of such cars, which so far has around 100 members, including both carmakers such as Geely and internet companies including Baidu Inc.
"Smart and connected cars are one of the most important parts in our automotive strategy. They are a strategic project that requires different players to work together," said Miao Wei, the minister of industry and information technology, when the alliance was established in June.
Heim at Continental believes China will lead the development in this aspect.
"First, there are many leading and influential internet companies in China, who are very actively working on the intelligent connected vehicles, and second, Chinese consumers are very open to new technologies."
Baidu has been pushing forward the research and development of autonomous driving technology. In April, it launched Apollo, an open platform on which its technologies can be shared with developers and automakers.
It plans to launch cars in 2019 in cooperation with JAC Motors and BAIC, and aims to mass produce autonomous minibuses that can operate in designated areas by the end of July 2018, in cooperation with bus maker Xiamen King Long United Automotive Industry Co.
Although it will take some time for fully autonomous cars to hit the road, many carmakers are already producing electrified cars.
Strong sales in China have put several carmakers, including BYD and BAIC Motor, among the world's top 10 bestselling brands in 2016.
The demand has continued. A total of 490,000 electric cars and plug-in hybrids were sold in China in the first 10 months of the year, a 45 percent rise year-on-year, according to the China Association of Automobile Manufacturers.
The prospects in China have attracted many to increase their electrified offerings.
Changan Automobile announced in October that it will stop selling conventional gasoline cars by 2025.
By then, it plans to invest 100 billion yuan ($15.1 billion) in new energy cars, including launching 21 electric car models and 12 plug-in hybrids.
Daimler AG's Mercedes-Benz will roll out its electric SUV called EQC in its joint venture plant in Beijing.
"We will make China the first country outside of Germany to build Mercedes-Benz electric vehicles and batteries with Chinese cells," said Hubertus Troska, a board member at Daimler AG, responsible for China operations.
"Electric mobility will be one of the biggest gamechangers in the decades to come. And China clearly intends to lead the way; it is already the world's largest new energy car market."
Globally, Daimler is investing 10 billion euros ($11.9 billion) to expand its electric fleet in coming years. By 2022, it will offer at least one electrified alternative in each Mercedes-Benz model range.
Volkswagen, the world's largest automotive group, released a strategy called Roadmap E at the Frankfurt Auto Show in September.
