Electric Cars Back in the Pole Position? Investing Daily

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Kandi COCO EV Electric Cars

Electric Cars: Back in the Pole Position?

By Chad Fraser on April 4, 2013

“Indeed, sales of plug-in EVs will grow at a compound annual growth rate of nearly 40% over the remainder of the decade, while the overall auto market will expand by only 2% a year.”

Dave Hurst , senior research analyst, Pike Research

Auto sales continued to rebound in March, with 1.45 million vehicles driving off North American dealer lots during the month, up 3.4% from March 2012. Pickup truck sales led the way, with General Motors (NYSE: GM ), Ford Motor Co. (NYSE: F ) and Chrysler seeing truck sales jump 8%, 16% and 25%, respectively.

However, the numbers also contained fresh evidence of rising demand and competition in the electric vehicle segment.

Two electric car makers saw particularly strong results: Nissan Motor Co. (OTC: NSANY ) sold 2,236 of its Nissan Leaf fully electric compact car during the month, up 286% from March 2012. That’s partly because Nissan, which had built the Leaf in Japan, had difficulty stocking dealerships in the U.S. last year. Now, however, it is building the cars at a plant in Tennessee, which is helping it better maintain dealer inventories.

The company has also lowered its prices, with the U.S.-made model checking in at $28,800, down $6,400.

At the higher end of the market, Tesla Motors (NasdaqGS: TSLA ) said that it has sold 4,750 of its Model S all-electric sports sedan in the first three months of the year, ahead of the company’s forecast of 4,500. That also gave the Model S the top spot so far in 2013, ahead of the Chevy Volt, with 4,244 sales, the Nissan Leaf (3,539) and Toyota Motor Corp. ’s (NYSE: TM ) Prius plug-in hybrid (2,353).

More Plugging In, Less Filling Up?

These numbers are small next to the total number of cars and trucks sold during the month, and certainly the development of the electric car market has hit potholes along the way: Nissan, for example, fell far short of its goal of selling 20,000 Leafs last year. GM, too, missed its target of selling 45,000 electric cars in the U.S. in 2012. The Volt has also faced political criticism. as opponents of the Obama administration held up the car’s unsteady sales as evidence that government support of EVs has been a failure.

Despite these roadblocks, recent sales trends look encouraging: In 2012, U.S. drivers snapped up roughly 53,000 electric cars, or about triple the 17,500 they purchased in 2011. Moreover, according to a January forecast from Pike Research, 1.8 million plug-in electrics will be sold in America’s 102 largest cities between 2012 and 2020. Some factors helping boost sales include high gas prices, increased availability of charging infrastructure, government incentives, lower prices for electric cars as the market matures and an increase in the number of models to choose from.

Globally, Pike puts total EV sales at 3.8 million by 2020.

A Tesla in Every Driveway

Tesla may be taking lower prices to an extreme with its new financing plan, which it is offering by partnering with Wells Fargo Co. (NYSE: WFC ) and U.S. Bancorp (NYSE: USB ). Under this scheme, which the company unveiled on Tuesday, the two banks will provide 10% down financing, which will be partially or totally offset by state and federal tax credits ranging from $7,500 to $15,000, depending on the state in which you live.

Using the company’s online calculator. an owner’s “effective monthly cost” for the 85 kWh Tesla Model S. which lists for $72,400, would be just $711 per month, based on a 63-month term loan, excluding sales tax and registration. You would actually pay $1,252 a month, but Tesla includes a number of other factors to push the “effective” cost down to $711, such as the lower cost of operating on electricity versus gasoline, which the calculator sets at $284 a month as a default. The calculator also assumes you’ll be using the Model S for business and by default assigns $227 per month in related tax deductions.

Tesla also lets users include some highly subjective figures to lower their effective monthly cost even more. For example, the company figures that you would normally make four gas station stops a month at 15 minutes each. If your time is worth $100 per hour, according to the calculator, not having to make regular gas station visits would effectively lower your cost of ownership by $100 a month.

Kandi COCO EV Electric Cars

The company also allows for a similar calculation for shortening your commute (thanks to EVs being allowed to use carpool lanes in most states).

Similar to a lease, Tesla’s plan gives owners the option to sell the car back to the company after three years and is guaranteeing that the car will have a resale value of no less than the Mercedes S Class premium sedan at that time. The online calculator values this guarantee at $47 a month for the 85 kWh Model S.

Tesla shares soared 16% on April 1 on news that the company expects to report its first-ever profit in the recently ended first quarter.

Kandi Aims to Electrify China’s Vehicle Fleet

A lesser-known (at least in North America) and arguably even more speculative stock in the electric vehicle space is China’s Kandi Technologies Corp. (NasdaqGS: KNDI ). The company designs, develops, makes and markets all-terrain vehicles, go-karts and “specialized automobiles,” such as electric vehicles. Kandi got 86% of its revenue from China in 2012, followed by North America (11%) and Europe (3%).

Kandi’s electric cars. which it refers to as “super-mini cars” in its 10-K filing. accounted for 30% of its 2012 revenue. These vehicles, mostly meant for short-range commuting, have top speeds of 25 to 45 miles per hour and can travel about 50 miles on a single charge. The company also makes small commercial electric trucks that are capable of hitting speeds of 45 miles per hour and have ranges of over 62 miles.

In 2012, Kandi’s revenue rose 60.6%, to $64.5 million from $40.2 million in 2011. The company earned $6.0 million, or $0.20 a share, down from $9.1 million, or $0.32. Excluding certain items, such as a change in the fair value of financial derivatives and the effects of option-related expenses, earnings rose 3.2%, to $4.2 million from $4.0 million.

Kandi recently entered into a joint venture with China-based Geely Automobile Holdings (OTC: GELYF ) to develop, make and sell affordable electric vehicles. The partners will each contribute half of the $160 million initial investment, and each will hold a 50% stake. The joint venture will acquire the necessary assets from both Geely and Kandi, with its initial project being the development of electric vehicles and related services for a public transit system in the city of Hangzhou.

The company’s sales are heavily supported by the Chinese government, and Kandi’s top five customers accounted for 83% of its sales in 2012. Both of these are risks of investing in Kandi. The stock has risen 14.6% in the past year and currently trades around $3.92.

Kandi COCO EV Electric Cars
Kandi COCO EV Electric Cars
Kandi COCO EV Electric Cars
Kandi COCO EV Electric Cars
Kandi COCO EV Electric Cars
Kandi COCO EV Electric Cars
Kandi COCO EV Electric Cars

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