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Arthur Porcari is a retired former regional stock brokerage firm President with 39 years stock market experience. His finance background includes, three years a stockbroker and two an investment banker with Merrill Lynch, ten years a Regional brokerage firm President, and OTC Market Maker and... More
  • Is China Based NASDAQ Listed Kandi Technologies (KNDI) Shares Ready To Explode? 5 comments
    Oct 10, 2010 6:15 PM | about stocks: KNDI, TSLA

    October 12 Update:  KNDI put out an 8K this morning showing they now own 30% interest in the recently announced Joint Venture with State Grid of China, and Tianneng Power International, Ltd., China's largest Electric Utility and Dominant battery maker respectfully. 30% is a much larger share then what I was expecting.


    What’s that you say? Over the past couple of weeks it already has? Maybe, but maybe the move has just begun. 

    As many of you know, a few weeks ago, thanks to AltEnergyStocks.com and Seeking Alpha, I was allowed to publish a series of articles on this obscure, but potentially sleeping giant who is creating a paradigm shift in a trillion dollar space in China. Since publication, the stock has seen a move up of over 50% and average volume up six fold. Hopefully, I have made it very clear that I have to date not had, nor have I attempted or cared to gain, any access to non-public information. I wrote those articles based on my following the Company for three years, a lot of internet research of websites both in the US and China, and reading the “tea leaves”.

    This past week on Oct. 5th, the Company published one of its rare press releases. At the time of publication of that release, the majority of information within was not a surprise to me as effectively the same information was published on numerous China websites as early as Sept. 29. While the “majority” was not a surprise, there was one particular part that was not just a surprise, but potentially startling to me. Let me explain.

    Going back to the beginning of the year when the Company first introduced its leadership position in a Joint Venture to develop a total logical solution to rolling out Electric Vehicles in China, one of the partners they named was CNOOC, Ltd. (NYSE-CEO) a division of China National Offshore Company, China’s largest producer of oil and gas. No question, a very prestigious partner. Up until last weeks press release and the Sept 29 China articles, in the Company in its press releases, and the China websites  CNOOC had been continuously mentioned as a partner. Tuesday’s PR made no mention of CNOOC in its body text. Instead surprised by disclosing Jinhua Bada Group, an affiliate of the State Grid Corporation of China (SOCC), China's largest electric power transmission and distribution Company.  While CNOOC is a big company, it is dwarfed by PRC owned SOCC, which is the Worlds largest electric utility and 9th largest Company on the Fortune 500 Global index.

    What happened to CNOOC? I don’t know. But neither did the Company’s Investor Relations contact at least as of Friday. The Company’s IR contact has been with the Company since it began trading three years ago and while always “tight lipped”, seemed to be constantly on top of what is going on with the Company.  Even he admitted that this last minute change in partners was unexpected. Now how is this for an attention getter?

    What If KNDI’s patented “Quick Battery Change” technology becomes standardized in all China EV’s?

    It doesn’t take an investment genius to realize in the off chance this happens; it would be a “game changer” to KNDI’s stock price. (it could maybe reach a market cap 1/10 of TSLA, or 1/7 of A Better Place) Could this happen? Let’s look at the tea leaves.

    Back on July 24, an article was syndicated throughout China titled: 

    Breakthrough electric vehicle industry standard for new energy bottleneck

    The gist of the article has to do with an expected and soon to be announced standardization for batteries and battery charging.  Quotes from the article; 

    “It is understood that long-awaited "energy saving and new energy automotive industry development plan" will be submitted to the State Council in July…” (remember these are direct translations by Google from Chinese with my bold face)

     “With the electric car "escape", a complete set of charging station (piles) and other infrastructure facilities have sprung up bits and pieces appear in major electric vehicle pilot cities. According to incomplete statistics, the domestic ten urban planning, under construction and has built electric vehicle charging station (pile) of the total investment more than 3 million. But it is inconceivable that the central enterprises to the public and local governments look to the charging station (pile), so far, no national standards introduced. Not only the "external environment" so that even the production of electric vehicles because of the different camps are the two major sects of charging pattern formation. Such as FAW , SAIC, Changan automobile companies and other domestic ten jointly established in August 2009 electric vehicle industry alliance to promote plug-in electric vehicle business standards and models.  Condit (Kandi when translated) is with CNOOC, Zhejiang, China Putian, Zhejiang days Battery Co., Ltd. and other energy giants could reach an agreement, set up a "Chinese electric car industry to promote Union", trying to expand the "change battery" mode of influence…”

    What this Google Translated article appears to be try to say is that back in July, a plan was submitted to the PRC State Council who will at some time in the near future make a decision as to whether to adopt a Condit etc.  “battery change” concept nationwide in addition to the conventional FAW etc. “plug-in” concept. Obviously the Gov today believes that both are viable options since the KNDI led group is building changing stations with government money right now. IMO, what this “standardization” decision is all about is whether ALL China EV makers are to be directed to make their vehicles compatible with quick change technology.

    Now I haven’t forgotten about “A Better Place” and their JV with Chery Automotive. They too have their own “battery change” technology. BUT, herein lays another curious “tea leaf”.  Back in July, Chery put out this press release;

     

    Chery Auto to start selling electric car S18 in 2H

    In this article, Chery said this EV will sell for around $19,200 US and is expected to go on sale this years second half. But this last paragraph is a real “head scratcher” (and maybe a tea leaf);

    “Chery Auto will join hands with U.S. Better Place, an electric vehicle infrastructure provider, in the R&D of electric cars and charging network. The Chery switchable-battery electric car will be launched to the market in 2012.”

    IMO, it makes no sense that Chery would start selling this car now WITHOUT A Better Place’s quick change technology built in if they are confident that A Better Place’s technology will ultimately be Government approved. Even if it takes a couple of years for their changing stations to be operational. If their technology is about to happen, Who would want to spend that much money on a car that they know would be obsolete in less than two years? 

    After seeing the recent news on KNDI’s local approval and imminent implementation of their new battery exchange technology, the unexpected rapid addition of their new world class JV partner, the lack of confidence in A Better Place’s technology by Chery, and the fact that a new Nationwide standardization plan for Battery technology will soon be released, could these “tea leaves” be foretelling a major sea change in KNDI’s fortunes?



    Disclosure: Long KNDI
    Stocks: KNDI, TSLA
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Comments (5)
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  • Lawrence J. Kramer
    , contributor
    Comments (8079) | Send Message
     
    Arthur -

     

    Any reason the gov't wouldn't back both technologies and let them duke it out in the market? I doubt that the duplicative infrastructure would be terribly costly. All rechargeable batteries run on the same "fuel" - electrons - so they could presumably recharge at the same farm and even use the same carriers to get them back to the service stations, which would simply have a Kandi dispenser and a Chery dispenser.
    11 Oct 2010, 11:47 AM Reply Like
  • Arthur Porcari
    , contributor
    Comments (795) | Send Message
     
    Author’s reply » Lawrence- If you are referring to the Better Place model and the KNDI model as "both" technologies, I might think that the Gov would back both. The only point I was trying to make is that I don't believe that Chery is so confident that the BP model will be used, or else they would build it into their cars right now.
    11 Oct 2010, 05:45 PM Reply Like
  • Lawrence J. Kramer
    , contributor
    Comments (8079) | Send Message
     
    Wouldn't it depend on how much retooling it would take for the S18 to run on switchable batteries? Presumably, that car has been in development for some time. One interesting question is how well a plug-in model will sell if the switchables are coming along so soon.
    11 Oct 2010, 06:42 PM Reply Like
  • Arthur Porcari
    , contributor
    Comments (795) | Send Message
     
    Author’s reply » As in the case of KNDI, I am sure that they intend to have the plug-in feature along with the exchange capability. IMO, whatever the cost of retooling, it can't possibly be offset by trying to sell a car that by their own admission might be obsolete in 2012.
    12 Oct 2010, 02:07 PM Reply Like
  • Lawrence J. Kramer
    , contributor
    Comments (8079) | Send Message
     
    Sounds right. Anyway, there is a high correlation between your posting and the stock moves, so keep 'em coming!
    12 Oct 2010, 06:34 PM Reply Like
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