Companies Like Tesla And Nio Face Tougher Guidelines For Their Vehicles Under Proposed Guidelines In China

New energy vehicle makers in China would be required to implement new safety measures to mitigate drivers' concerns, Bloomberg News reported on Tuesday, citing proposed guidelines by the country's Ministry of Industry and Information Technology.

What Happened: The new guidelines aim to address concerns ranging from battery fires to brake failures and would require automakers to set up a 24-hour emergency response system for major accidents. 

Automakers may face penalties including cancelation of government subsidies or production suspensions if they fail to meet the proposed guidelines.

The proposed measures aim to improve quality defects, from vehicle design and testing to upstream supply chains, as per the report.

See Also: Tesla Works On Getting Customers In China Access To Vehicle Data Amid Regulatory Scrutiny

Why It Matters: Safety issues such as battery fires and faulty parts have become a serious concern for customers looking to buy greener vehicles. Earlier this year, Elon Musk-led Tesla Inc (NASDAQ: TSLA) became a media and regulatory target after a customer at the Shanghai auto show protested an alleged malfunctioning of brakes, the videos of which became viral.

Local electric vehicle startup Nio Inc. (NYSE: NIO) failed similar heat in coming months over the death of a Chinese entrepreneur in an accident.

Price Action: Nio shares closed 1.06% higher at $40.03 a share on Tuesday.

Click here to check out Benzinga's EV Hub for the latest electric vehicles news.