By Charlotte Yang

(Bloomberg) -- BYD Co.’s shares recorded their best week since late 2020, as investor enthusiasm built ahead of the Chinese electric-vehicle maker’s keenly awaited update on its smart-driving technology.

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The company’s Hong Kong-listed stock gained 21% over five sessions, boosted by expectations that it will showcase progress on its autopilot system and introduce more intelligence features to its low-priced cars at an event scheduled on Monday.

Win photo / Pexels

Any significant breakthrough in BYD’s smart-driving technologies will likely further intensify competition in China’s EV car market, already the world’s largest and where the Shenzhen-based firm is a leader. It may also help BYD’s efforts to crack into new markets at a time when hefty tariffs on Chinese EVs imposed by the European Union and the US are hurting its outlook.

“BYD’s acceleration of autopilot progress will have meaningful impact on the market given its position as industry leader, and other players, especially mass market brands, will follow,” Goldman Sachs Group Inc. analysts including Tina Hou wrote in a note, adding that the bank expects BYD to share the recent road-test experience of its “God’s Eye” autopilot system and new model pipelines.

The race to develop and deploy assisted driving technologies is heating up in China, with EVs emerging as a key battleground. Car manufacturers, in particular EV firms including Tesla Inc. and XPeng Inc., have invested heavily and attempted to convince consumers to choose their products which could be safer and more convenient.

The features have become a major selling point to some customers and a key differentiator for some of the car brands. While fully autonomous vehicles are not yet widely available, Chinese companies are pushing the boundaries. Many have deployed the assisted driving functions not only on highways but also on more complicated urban roads.

Startups including Nio Inc. and XPeng are focusing on developing their own proprietary chips and software stacks, allowing for greater control and optimization of the systems. Furthermore, the integration of smart cabin technologies, including advanced AI assistants and interactive displays, are expected to enhance the overall driving experience.

Options bets on Chinese EV makers have been on fire this week. On Thursday, they reached the highest level since March for BYD, with more than 22,000 contracts traded. Volume was more than triple the 20-day average on Friday.

For Li Auto Inc., more than 35,000 options traded on Friday, the most since May, while on Geely Automobile Holdings Ltd. the volume reached almost 9,000 contracts, the highest in more than four months. Trading of bullish calls spiked for both Great Wall Motor Co. and Dongfeng Motor Group Co. to more than four times the average.

Shares related to the Chinese EV supply chain also staged a strong rally this week, with BYD Electronic International Co. adding 27% and IMotion Automotive Technology Suzhou Co. surging 49%. Options volume on BYD Electronic reached a record high Thursday and remained elevated Friday.

BYD is targeting sales of between five and six million EVs and hybrid cars in 2025, up from 4.27 million delivered last year. The Shenzhen-based car maker finished 2024 as the world’s eighth-biggest car group by sales.

--With assistance from Chunying Zhang, Danny Lee and Cecile Vannucci.

(Updates to add options trading)

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