Just six months ago, little known NASDAQ traded China based Kandi Technologies announced the formation and leadership of a Joint Venture with several, billion dollar China partners to develop an innovative solution to the single biggest roadblock to commercialization of Electric Vehicles in China. That of “what do you do when the battery charge runs low and you don’t have access to a plug, or time to wait for a charge?”. But not just this problem, their solution also covers four additional major problems associated with electric vehicles, namely, high price, low driving mileage, and inadequate charging equipment and battery recycling. At that time the speculative discussion was projecting inception of this concept one to two years out.
Innovative Open Architecture Business Model for Mass Adoption of EVs Reduces EV Purchase Costs, Eliminates Battery Maintenance Concerns and Substantially Increases Driving Ranges
Now you would think that such an announcement would have had a serious positive reaction in the Market, and boy did it ever. On Jan. 4, the day this announcement came out the stock soared. From a $4.40 prior close, the stock gapped some 15% pre-market, made an intra-day top of $6.17 and closed at $5.72 on it’s all time heaviest volume day of 1,850,000 shares. And this was no “one day wonder”. Five days later the stock topped out at $6.75. What truly made this move amazing was at that time, the discussion of a solid Electric Vehicle (EV) commitment by the Government in China was rumored, but nothing solid about how strong a commitment had been publicly announced. Two weeks later on Jan. 13th, the PRC Government made it official by announcing a firm commitment to EV technology which included over US$41 Billion in Grants and Subsidies just for “Green Car Technology” alone over the following five years.
Now here we have KNDI who already was in an enviable position to benefit from these subsidies in that KNDI already had “credentials” in developing manufacturing and sales of EV’s. In 2009 KNDI was already one of China’s largest exporters of such vehicles with 2100 sold in the US. If KNDI ONLY ends up getting 1/10 of 1% of these Grants and Subsidies, it would be a whopping $41 million. Is this an unrealistic amount? Not, IMO. With KNDI’s Jan 4 announcement, they advanced well beyond just that of an EV Manufacturer which alone should get more than the $41 million. They were now additionally involved in all three aspects of EV Technology; the car, the charging/changing stations and the battery itself and they were in there heading up a JV with some of China’s largest companies. So what did the stock do after this phenomenal news was announced by the PRC? You guessed it. It started plummeting beginning a trend that has continued until the last month or so with the price stabilizing in the current low $3 area.
Why has the stock acted so poorly during the past six months? Well during these six months it surely doesn’t have anything to do with Company fundamentals. Historic non-China business was reported up over 100% year over year in the first quarter. The Company announced the PRC approval for sale of their first three China EV’s. The Company has landed, announced and began sales of the first Postal Cars in China. Additionally they announced Government subsidized consumer sales commitments for at least 3000 EV’s in just Jinhua City alone. And now with Friday’s PR, they have now received Government validation of the Jan. 4th blockbuster announcement with the groundbreaking of the first “Battery Changing” central battery charging farm, which, BTW, is being built by “The State Grid Corporation of China” (SGCC), China's largest electric power transmission and distribution company at no cost to KNDI. yet KNDI will share in the revenues collected from each use of the Changing Stations. An additional revenue source that is almost too hard to fathom at this time should the concept take hold throughout the Country.
While the PR stated this plant would be completed by years end, some forensic scouring of China based websites finds an article dated yesterday July 18 stating the actual completion expected in late October. And not just for the central charging farm which has now been announced, but apparently also for the initial six satellite changing stations yet to be announced by the Company.
Here is a translated link to the above mentioned China news article.
Urban electric vehicle charging station completed by the end of October
The public is expected before the end of easy driving electric cars
Here is a link to Friday’s PR.Kandi Announces Construction Has Begun on the First Battery Charging Station in Jinhua With Funding From the State Grid Corporation of China
Now one would think that the stock would have soared on Friday’s PR. Well it started out strong, but by days end the stock actually closed down a penny. And most amazingly, still down more than half of the price it hit in January when today’s reality was just a concept announced.
But from the looks of this Chart, a change may soon happen:
What A Difference Six Months And A Market Makes.
Disclosure: Long KNDI