120,000 Chinese Electric Vehicles

Tom Konrad

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I asked Art Porcari for a paragraph about what Kandi Technologies' (KNDI) recent press release meant for the company to be included in this article. He managed to keep it to a page, but it was too much for an article about ten stocks. I thought I'd share his thoughts here.

In its Q3, 2011 10Q filing Kandi (KNDI) stated:

“On August 14, 2011, a team is formally formed in Hangzhou by Development Research Center of the State Council, Society of Automotive Engineers of China (SAEC), and Zhejiang University to begin the research of a subject proposed by the Company: the feasibility of building a 100 thousand pure EV renting network in Hangzhou and the related supporting policies required. The objective of this research is in order to resolve the problem of industrialization of pure EV, the traffic jam problem and parking difficulties in current Chinese cities. This research is planned to be finished by the end of 2011, and expected to help stimulate the Company’s development.

The results of this study were reported in Beijing on May 14 to top governmental leaders as noted in a press release by Kandi May 21.

Kandi Advances Plan for Innovative Pure EV Rental System Before Top Government Leaders and Transportation Experts in Beijing

Pure EV Rental Model in Hangzhou Features 100,000 Vehicles in Centrally Managed "Smart" Vertical Parking Facilities to Relieve Traffic Congestion, Scarce Parking and Environmental Pollution

Hangzhou, home base of Kandi’s Executive offices, has established the dominant position as China’s Model City for EV development, this putting Kandi in the prime position to influence EV development throughout all of China. Due to this status, it is likely the announced development of the “State of the Art” multi-story EV Parking/Charging facilities for rental EV’s will be first established in Hangzhou. However; the decision to formally unveil the program in Beijing, seems wise in that no city in the world would seem to need the mass introduction of small environment friendly EV’s more than Beijing; a city that recently has made it virtually impossible for one to acquire a new ICE car license due to oversaturation. As can be seen by recently filed Kandi patents ( 1, 2 ), should this new high tech Zip Car (ZIP) like approach to EV rental be embraced by China, the upside to Kandi could be immeasurable.

This100,000 EV rental trial program is in addition to the rumored Kandi’s long awaited and soon to be implement 20,000 EV Hangzhou leasing program for the City of Hangzhou residents. Under this program the City would purchase the 20,000 EVs then lease them to eligible residents under a turnkey 36 month lease for 800 yuan (US$126) per month including unlimited Quick Battery Exchange. Should this be formally announced with Kandi as the sole or primary beneficiary, Kandi would immediately be vaulted into a lead position in EV’s not just in China, but world-wide. This differentiation can be easily be surmised by this portion of the above PR:

“Mr. Hu further noted Kandi is involved with the Hangzhou government in a cooperative effort with others such as State Grid and Air China Group (the lithium battery business of Air China) in the implementation of an EV "battery swapping model" for the launch of 20,000 EVs in the market. He sees this as an excellent foundation in which sufficient experience will be gained to build a pure EV rental network.”

Disclosure:Both Porcari and I are Long KNDI