Kandi Technolgies Corp (KNDI) PRC ‘Policy Paper’ Favors Kandi …

19 Апр 2014 | Author: | Комментарии к записи Kandi Technolgies Corp (KNDI) PRC ‘Policy Paper’ Favors Kandi … отключены
BAIC E150 EV Electric Cars

PRC Policy Paper Favors Technologies EV Program For All Of China

For the couple of years, various including myself, have several articles pointing Jinhua-China based, Nasdaq-listed Technologies (KNDI ) as the leader of EV passenger cars in China. of us who have published these have given numerous to translated articles in the China which closely tie KNDI to PRC State Grid as evidence. Grid is China and the World’s electric utility who services a billion residents . Even itself has mentioned this relationship in several press and SEC filings.

However, as exceptional it is to a small company as Kandi to such a tight relationship a utility company more three times larger all the Electric Utilities in the US combined, the Grail shareholders have waiting for was the endorsement for Kandi’s business model from a top direct Executive level entity.

This goal was on Sept. 25 though a Policy (Policy) published by PRC’s influential State Council Research Center Enterprise on China’s electric car business innovation . The Policy, translated Google Translator, is linked and The electric car business model to explore and policies should be to Publish

As most Government are, it is a long read, but it blows away anyone’s that Kandi might not be #1 by the people who matter in EVs in China. For one of the first times, the highest of the PRC not only mentions Kandi as Condi) and its business model, but infers favor to it’s for installation in all of China. So much in that as you can see in the Policy, they the name for this Quick Exchange/Leasing Model and call it Condi lease and for power .

The Policy itself is some 22 when copied and pasted in a doc so I am just going to extract and some highlights here in along with a page or so of the (Remember, this is Google so please don’t blame me for or grammar in the sidebar quotes)

The

The State Council Development Center Enterprise Institute has China’s electric car business innovation, exploration, and the policy be taken (hereinafter referred to as the ), on issues such as the significance of electric car business model, and obstacles analysis and policy

The Summary:

Electric vehicles as a new transport, is China’s strategic industries, support of a series of policy in recent years, research and development and production of vehicles made a lot of progress, but mature technology a certain In the case of current battery is not yet a major technological breakthrough, business model innovation, and the of electric vehicles, large-scale is important.

In the electric car business innovation and choice, in three ways. First, based on the mode of the vehicle (such as a run time, travel route, and idle time distribution), model options; business (such as the power grid battery companies, car companies, based on different leader ; The third is based on regional (such as the business model of the and medium-sized cities. small rural areas, etc.)

Currently the country has explored major electric car business That car electrical separation, leasing, real-time monitoring mode of Putian, this is mainly used in the field of buses; fixed car route for the official car, a large of employees, relative to a single and. charging relatively location segments target directed buying patterns;- mode for urban residents in lease.

As touched on in the above there are three models referred too more specifically in the Policy. They are:

1. Hangzhou Condi lease and for mode

2. Shenzhen Putian leases mode

3. Hefei directional buying patterns

To be as you will see, the second two are in contrast not in preference.

The Hangzhou lease for power mode

Let me clarify that China has two or models. The Plug-in mode is self-explanatory; like the Tesla ), Nissan Leaf (OTCPK:NSANY ) Volt (GM ) etc. and the for power The For Power mode refers to with the capability of a Quick Exchange feature. In China for includes two Kandi models, KD5011 lithium battery and their KD5010 lead powered cars each external side slide feature. Additionally, major gas (ICE ) auto makers, and FAW Haima, have been a combined total of around 200 ICE to EV SUV’s as Hangzhou taxi’s have an antiquated manual capability by locating the battery the rear seat and accessed the rear hatch.

I am explaining now as throughout the Policy you will see references to for power. You now know the Kandi model uses for But in addition, the specific Hangzhou lease for power mode referred to in the Policy, also the battery lease mode as has recently announced is underway in for both its 20,000 EV long leasing program, and its 100,000 EV short term rental with automated self-serve garage.

Throughout the Paper, you see positive comments referencing the model such as this:

the current electric vehicle model as a new type of public modes, more conducive to urban traffic congestion, The resources Kui favor urban protection, and also more to take the lead in achieving industrialization.

Or This:

Because of the use of low electric car leasing electric of this model than a traditional car more competitiveness in the electric vehicle leasing is likely to be realized the industrialization of vehicles is a very important

Or this:

Unlike traditional business model, new business there will may include leasing, battery replacement and emerging elements. These will be electric vehicles the point of view of the business to help overcome the existing problems.

And a few more:

Establish a of electric vehicle leasing, an solution to the problem of the high while also effectively the efficiency of the social wealth. the use, so consumers do not bear the cost of purchase as well as do not have a car to bring the funds As a provider of vehicle leasing, its have to use more efficient traditional private owners to use efficiency. A car to meet the needs of people at different times of the car

it is a battery replacement station or electric automobile leasing this emerging business will allow charging problem solved. Daily needs of consumers, the driving of electric vehicles use a battery but when used for power network only need than 3 minutes, it can be a full replacement in place, to obtain a driving range

With the of the new business model of vehicle battery replacement, three problems facing the electric market low performance, high-cost hard are likely to be solved. in the short term, in the case of cannot achieve a breakthrough to the problems encountered in the development of vehicles, business model is particularly important.

And what be most exciting to Kandi

As an attendee at Kandi’s first US Shareholders Day in Atlanta earlier month, I can affirm that the of development that was presented the most enthusiasm by the KNDI Mr. Hu, was Kandi ‘s Licensed and EV Vertical (stereo) Parking CarShare (Time-Share) concept. He all attendees when he confirmed not only was the 100,000 Kandi EV approved by the Hangzhou government, but the start of construction of the first 200 car was imminent. Mr.

Hu expressed strong confidence at the that now that this was approved in Hangzhou, roll out all of China was likely and would to millions of Kandi EV sales in the Here is a link to a 3D animation on how the structure operates.

From the of the below quote from Paper, the top levels of the PRC Government now to give strong credence to his for Kandi’s national expansion in

For brevity sake here, I am not to explain this program but instead refer any interested to both mine and Todd last Seeking Alpha for an explanation of this program. But is the Kandi program outlined in the

(click to enlarge)

Hangzhou to implement another mode model. This mode can be as a new type of public transport rent not buy, sharing The Condi Company is preparing to model the Hangzhou scale The model used in all pure cars and rechargeable stereo car rental stations are located at the airport, railway stations, centers, residential areas, the establishment of the station area, the mode to provide users a rental car operators within the

This model can solve the problem of restricting the promotion of cars. such as charging, and battery recycling. Electric by car leasing operations system of the city pure electric and their energy supply purchase, centralized management, charging, centralized maintenance, and rented by car. Car Rental is the basic unit of operation to provide users with a car and a variety of services, undertake charging, maintenance, battery network system operation and

User Car Rental, independent by car, to reach their may be close to the car to another car rental in different places, needed carry phone Car Rental pick-up service, convenience, fast. This is both a the taxi flexible, private car by the fun of the freedom of movement, but also car rental offset intercity the convenience of the car, it may become a high efficiency, low energy low pollution, low-cost new modes of transport.

The difference between and other markets for EVs.

As you can see the quotes below, the Policy gives an excellent analogy as to why Kandi model is so important to the One can only imagine how many of 120 million Electric bicycle referenced in the Policy who have to out in the elements year round be more than excited to be to trade up from an electric to an enclosed air conditioned electric car for as as $126 US a month as in the case of the announced 20,000 Hangzhou EV This lease price unlimited battery swaps, and insurance for the KNDI lithium KD5011 which now is being available in Hangzhou.

China has a market demand. From the to the short-haul passenger cars, common household cars to cars, China’s auto is showing a multi-level market This feature also in the electric vehicle. Therefore , considering the electric car business innovation, we must take account the different levels of demand.

The total market, so in segments for different levels of will have a larger absolute value.

Scale of many features a small niche market. demand of the Chinese market has a so many in Western countries for market only mass in the Chinese market. The electric is a typical example.

In Germany and Western countries, and would much like to be able to electric bike, but due to various only a small niche electric bicycles. But is different in — As of 2010, China’s bicycle ownership has been as as 120 million. This was originally in the countries is considered only for market products in China has a mass product. Equally by and the United States can only be the of a niche market short-distance electric vehicles in China probably become mass

Therefore, in business model exploring the development of short-distance car niche markets, better research and development of electric mainstream products in the industry creation, nurturing.

Shenzhen finance lease model

As the suggests, this model is designed for electric buses and large commercial vehicles. The batteries needed in electric can cost as much as the bus itself. this model, effectively the bus buy the buses and lease the Battery Putian which is a Shanghai SE subsidiary of State Owned (SOE) China Potevio.

So as from the quotes below, has no competition from this

Putian mode is mainly in the field of electric buses. can be as car electric separation, financial real-time monitoring

Therefore, the Putian mode above it fits in really monitoring and segments areas for bulk these areas of city vehicles, urban logistics municipal sanitation trucks

Jianghuai directional buying model


As you can see from the below this model was originated by JAC (Jianghuai) Automotive China’s 9th ICE truck and automaker. It really is not an model except for the fact the JAC Auto itself is also 30,000 rmb ($4,750) to both and Local Subsidies of 55,000 rmb ( which brings the priced of its single EV offering to the price of its ICE car.

The Policy seems to this not as a preferred model, but as an example of how to get the car price down US$10,000, a range that attract some buying

Additionally; the Policy uses as an example of the big price difference an ICE car is modified to EV. The J3 non-electric version sells for 60,000 rmb (US$21,500) But the Policy also goes on to say is a conventional EV that requires a and 6-8 hours of charge time.

The of the directional buying patterns the specific consumer sales of vehicles. Fixed part of the car line, relative to a single if only to and from work, and the location is relatively fixed, vehicle centralized charging, pile set at a fixed location, to meet consumer demand for of the charge. This model to extent solve the problem of the of performance of electric vehicles and difficulties.

The directional buying earnings that significantly consumers use cost, better Future earnings that how to further tap the market segments to consumer-oriented market, and to develop models, and improve quality. official car field, a large of employees market segments are suitable for promotion directional patterns.

Reading between the

To the novice user of Google reading articles and papers out of making total sense out of the 22 page Policy Paper is a But having read thousands of KNDI related media in the five years I have following KNDI, I believe I a pretty good handle on is being said and what is (sometimes a big difference). Of all the media I have read, IMO, have been more or important than this Paper. I say this not just in to Kandi, but to the future of all EVs in China.

Here is why I say this.

For some years now, China has trying to launch a sustainable EV by encouraging Provinces and major by offering billions of dollars of subsidies direct to consumers. the PRC has funded billions of dollars State Grid and South Grid for early infrastructure out. The Grids, which are by the PRC, have been their job.

However, the other than Hangzhou, fallen flat leaving of thousands of new EV charging points China sitting idle. it not for Kandi with its executive located in Hangzhou and its brilliant and CEO taking a leadership position, it is Hangzhou would have floundered with little Seeing what Kandi has with its very easily complete EV solution, is there any why Kandi and its model has been in the new Policy as favored?

From the

Which factors in the business will have a decisive on the choice of the business model? decisive role is the leader of the model

Chery QQ3 EV Electric Cars

What I read in Policy, is a major sea change for the of EVs in China. On reading this several nuances of frustration by the PRC through, but with these the Policy seems to be insinuating the PRC is now going to become much proactive in the launch of EVs in China. the fact that they finally drilled down to a favored EV model in this should be a major eye opener to all Provinces and Automakers.

Final of the Policy Statement

The final really sums up the direction the PRC is now to go. They intend to expand the Model and provide whatever incentives necessary, not just to achieve their expansion As might be expected, though not specifically mentioning it by name, has the only model which for both lease and rental.

So the for KNDI should be clear. this closing statement, continuing position as China EV Child . could not look secure.

From the current vehicle leasing model as a new of public transport modes, conducive to ease urban congestion, parking lack of favor urban environmental and also more likely to the lead in achieving large-scale Government through financial tax breaks and other preferential to encourage and support the electric car companies to expand their and actively nurture and develop the car rental market. Tourist and other local cities to the actual situation of the region, to increase the support of the electric car companies, such as environmental free supply of land, parking, local support

What’s with the KNDI

If one were to believe just of what this Policy to say there is a disconnect between the stock price and Kandi’s position in this potential dollar industry, is beyond

While now somewhat retired to handling my own investments, I have myself a market pro since joining Merrill Lynch, 39 ago. I have watched the Dow go a low of 556 in 1974 to its present level, I was and cognizant of Microsoft (MSFT ), (AAPL ) and other disruptive in their infancy. I was personally the Investment Banker who brought a Norman, OK based garbage with two garbage trucks and a public, USA Waste Services, which is today the World’s public company in its industry, Management Inc. (WM ) on the NYSE. But I never seen a consistently microcap priced company who has so obviously preordained by any country’s let alone one the size of China, to be so disrespected by the Market. (Though I admit, it did take USA Waste which came public at a share with less 3 million outstanding to finally $2)

(click to enlarge)

The Arguments for the price Disconnect :

1. It’s a based company that put out much in press releases and media publicity is almost

R. Yes, it is a China company and be If it were not, I would not be its investment or any EV stock at this In the past, I might have the PRs were lacking, but this problem has improved considerably year. However, IMO, importantly, there has been a trove of thousands of articles in the media about KNDI for any investors journalists or analyst to while doing Due Diligence.

back; When considering an in a rapidly developing Company business in a foreign land, you rather see the home media public praises, or a lot of Company Press Releases?

Another point to consider. In just short years, KNDI from out of nowhere in the China sector. This could only happened thanks to its Mr. Hu knowing how to humbly respect the levels of the China Government.

You no friends by publicly putting own self interests ahead of politicians.

2. As a China based all I read and hear from the US and short sellers is to stay from all China stocks you can’t trust any China filings .

R. KNDI has been in the US for over five years. that time it has filed than a hundred filings the SEC to include five registration The registration statements have all cleared by the SEC with apparently no published worthy of investor As far as short sellers are concerned, KNDI does have a short of 700,000 shares as of the 24 report; though this is down considerably from its of 1.2 million in mid-2011.

However; one ingredient of all successful public disruptors is a continuously high interest. It is the large short that keeps a high PE on stocks.

But in Kandi’s case, the average daily volume to around 80,000 shares a the 700,000 share current position is likely to soon be to it holder. IMO, Kandi to be looked at similar to a bio-tech on the verge of a major breakthrough. As can be by the myriad of China articles in the last dozen or so articles either on Seeking Alpha or showing how respected and government Kandi has now become, at any moment such as this Policy will inevitably be picked up by the US

When that happens, the float could cause the to gap to such an extent that the seller could have a problem.

3. If what is said is true, KNDI will have to do a dilutive equity to keep up with its business

R. Totally wrong. In spite of eight pure EVs from to PRC approval over the past years, KNDI has only slightly over a half dollars in PRC grants and to date no guarantees. Yet it ended last with its strongest balance ever carrying over $40 in cash and available credit

When asked this at the Shareholders day meeting earlier month, the CEO was very clear in as the largest shareholder he has sees no for financing that would any shareholder.

4. If KNDI has such a high in China, whey aren’t the buying the stock?

R. Good Mainly because they Short of setting up frowned offshore accounts, China allow its Nationals to buy stocks listed on the Hong Kong or China based exchange. If was also traded on the Hong or Shanghai SE, it is likely the stock be trading much higher.

in point; its partner in the 20,000 EV lease program trades a 48 PE on the Shanghai SE and it is just one of hundreds of makers with no disruptive At the shareholders meeting, the CEO was asked if the would consider duel KNDI on the Hong Kong, now it is so recognized in China. He answered it was something he could now favorably

5. KNDI has only around 1% or Funds holdings reported and no Why?

R. Correct. And up until this has been a good KNDI has never had an institution or following; even a few years ago China stocks were all Street darlings with having over 50% research IMO, this for several

Since neither Mr. Hu or the Company’s CFO a word of English, conference have been avoided. the company has had a successful and profitable business exporting Off Road vehicles, Mr. Hu knew three ago that the future of KNDI was to be in EVs, so trying to give on future sales, another of analysts and funds, was a waste of And lastly, since the Company has attempted to do any large US financings’, no banking relationship, which bring research, has been

However, based on discussions in while no financing is in the cards, recent English speaking positions added, conference and guidance may be added after a few quarters.

However I look at past lack of Wall following as a positive. While current shareholders, myself feel the stock price vs. reward potential is absurdly low at levels, compared to the vast of other China stocks, has held up well (likely the for the still large short I attribute this to its very base of smart retail and the Peter Lynch view intelligent individual shareholders who are to put in the time and effort should outperform Funds . But the word is to get out on KNDI. In the past few months, In to several new Seeking Alpha KNDI has shown been in a number of Forbes articles and in much respected EV World as a Feature Article).

IMO, than most believe, sharp Wall Street will find the story too to continue to ignore, and after the the herd will follow.

I am long KNDI. I wrote article myself, and it expresses my own I am not receiving compensation for it (other from Seeking Alpha). I no business relationship with any whose stock is mentioned in article. (More. )

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