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Ever since July, when I wrote about Kandi Technologies' (NASDAQ:KNDI) deal to sell 20,000 mini-electric vehicles (EVs) to a leasing program in the Chinese city of Hangzhou, the company’s detractors have been harping on the fact that this deal was simply a “Letter of Intent” (LOI) and not legally binding. This morning, Kandi put those concerns to rest, with a signed sales contract for 5,000 mini-EVs to be delivered in between now and the end of the year.

This contract is good news in a second way as well. The LOI had only envisioned 4,000 vehicles being delivered by December, so this announcement also shows that the time frame is accelerating. The price for the 5,000 vehicles will be RMB 199,000,000 (approximately US$31,587,301 or $1.06 per share), or 277% of the Kandi’s entire revenue in Q4 2011.

When I first wrote about the Hangzhou deal, KNDI was trading near $3. It has risen fairly rapidly since then as details of the Hangzhou deal come out, and also as a result of a much bigger deal in Shandong province announced in late July, as well as prospects for a 100,000 vehicle EV Hangzhou rental program in addition to the 20,000 vehicle leasing program discussed above. As I write, KNDI is trading at $4.50, and it would have been much higher except for a rambling article last Thursday on Seeking Alpha, which claimed to “connect the dots” on related party transactions within the company, as well as dragging out the usual critique that Kandi does not yet have a viable EV business.

Rational investors like to buy a stock before all the good news comes out, so the critique that Kandi does not have significant past EV business seems irrelevant to the typical forward looking investor. As for the related party transactions, investors who have been following Kandi closely for several years tell me that these transactions have long been disclosed, and while I found the article hard to follow, I did not see anything which made me believe that company insiders were using related party transactions to drain money from the company. The theory that the article was simply an attempt to manipulate the stock lower and allow a short to get out (the author was short) makes the most sense to me.

On the bright side, the scare from Thursday’s article gave me a chance to pick up a trading position at $3.50 and sell it on Friday for $4.40. I would have held on and added those shares to my long term position If I had known about the news which would be coming out this morning.

Disclaimer: Past performance is not a guarantee or a reliable indicator of future results. This article contains the current opinions of the author and such opinions are subject to change without notice. This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

This article was first published on the author's Forbes.com blog, Green Stocks, on October 1st.

Source: Kandi Technologies Says 'Here's The Beef'