Frontier town Shenzhen has long aspired to being at the leading edge of all things auto. The sprawling, made-from-scratch city just north of Hong Kong is home to the Warren Buffet-backed car company BYD, a pioneer of electric mobility, and electric taxis and buses plying the streets are a common sight.

Now the city's traffic police is introducing visionary new ways to curb bad driving habits among citizens.

Drivers...