More automakers are being allowed to test Level 3 vehicles in China, a sign of mass adoption of highly autonomous driving technologies in the world's largest vehicle market.

Mercedes-Benz announced last week it gained the permit to test L3 vehicles on designated highways in Beijing. It was one of the first batch of companies approved by the Beijing government to run such tests.

To adapt the L3 system to China's infrastructure and traffic conditions, the German carmaker's Chinese research team has been involved at the beginning of development.

Mercedes has tested its L3 system in closed areas in China since 2021, making continuous improvements by adapting to local road signs and markings and optimizing algorithms, the automaker said.

Meanwhile, IM Motors, an electric vehicle brand jointly established by Chinese carmaker SAIC Motor and e-commerce giant Alibaba, said last week it was granted permission to test L3 vehicles on highways and expressways in Shanghai.

IM Motors is applying to China's Ministry of Industry and Information Technology for L3 product entry, and its models are expected to be among the first to enter the L3 pilot program, the company said.

Earlier this month, BMW said it acquired a similar license to test L3 vehicles in Shanghai.

Unlike commercial use of robotaxis, the L3 testing by the three automakers is focused on private vehicles. The transition from L2 to L3 marks a significant upgrade, with the automaker assuming responsibility for traffic incidents instead of the driver, signaling a crucial move from assisted to automated driving.

In mid-November, the MIIT announced a pilot program for intelligent connected vehicles. The criteria include mass-production capability and L3 and L4 automated functions, with an emphasis on clarifying responsibilities among relevant parties.

Huaxi Securities expects the pilot program to hasten the development and industrialization of connected and intelligent vehicle technology, predicting faster implementation of L3 and L4 intelligent driving technologies in 2024.

In China, 42.4 percent of new passenger vehicles sold in the first half of this year had driving assistance functions, according to the MIIT data. These functions are mainly categorized as L2.

A report from market research firm Research and Markets predicts that the autonomous driving market in China will reach $98.89 billion by 2030.

The self-driving cars will lead China's automotive industry into the fast lane, the report said.