China's Kandi May Go Public, Pursue Tesla Turf In EVs
BY DONNA HOWELL, INVESTOR'S BUSINESS DAILY
04/13/2015 07:53 PM ET
Who'll corner China's rising electric car market? Kandi Technologies Group (NASDAQ: KNDI) is making a run for it in a plan to seek capital, and is also showing signs it might grow to be a competitor to Tesla Motors (NASDAQ: TSLA) in the luxury segment there.
Despite Tesla's problems with China sales, it already outstrips Kandi's EV joint venture in electric-car revenue within the country.
With several Chinese domestic automakers competing for sales and brand awareness, and the government backing the industry, Kandi is looking at the possibility of its electric-car joint venture going public in China, it said Monday.
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With its recent approvals for high-end electric carmaking, and monies raised through the public markets, Kandi could prove a rival to California startup Tesla Motors, which has been working to re-ramp sales of its luxury Model S electric sedan in China after its initial efforts fell short of goals.
The Kandi joint venture in question, Kandi Electric Vehicles Group, is half owned by Kandi subsidiary Zhejiang Kandi Vehicles Co., and Shanghai Maple Guorun Automobile Co. (a 99%-owned subsidiary of Chinese carmaker Geely Automobile Holdings). So far it's been into economical vehicles, not the luxury type.
"Accessing the public capital market would allow the JV Company to leverage the growing electric vehicle ('EV') market demand in China and the government's strengthened commitment to EVs in terms of subsidies for EV end-users," Kandi said in its announcement Monday.
Added CEO Hu Xiaoming: "Through the combined efforts of Kandi and Geely Auto, our JV Company has become the leader in pure electric vehicle manufacturing in China, and a growing leader in the production of new energy vehicles. Together, we believe that the prevailing industry fundamentals are such that a public listing will deliver substantial value to our shareholders over the long-term."
Kandi Technologies Group is a Delaware-incorporated company that has traded as KNDI on the Nasdaq since 2008 and is headquartered in Jinhua, in China's Zhejiang Province. It has a market cap of about $572 million, and last year its revenue rose 80% to $170 million and it turned a profit of about $12 million. Its electric-cars joint venture delivered sales of nearly $216 million for the year.
Tesla has not sold vehicles as fast as it had planned in China, but the country was still its top international market in 2014, of those the company breaks out. It took in $477 million in revenue in China, vs. $1.47 billion in U.S. revenue.
Kandi claims to be the leading pure-EV products provider in China, and noted that in an investor presentation at the Bank of America Merrill Lynch 2015 Auto Summit on April 1. In that presentation, it added that in November it got "approvals for the first Mid-tier Luxury Pure Electric Vehicle" and was "granted entry into middle and high end pure vehicle products market."
Kandi launched its pure-EV business in 2008, formed a 50/50 joint venture with Geely Automotive in 2013 and launched a public EV car-share rental business model that has now expanded to nine cities in trial runs. It delivered 14,398 into that program through the end of last year.
The company gave no details on its next step in the process of exploring a public stock exchange listing, but has an annual meeting coming up May 20.
Kandi stock closed Monday at 13.04, off fractionally and down 7% since the start of the year. It holds an IBD Composite Rating of just 47 out of a possible 99, but Tesla is even lower, after a stellar run-up in 2013 and strong gain last year, with a Composite Rating of 21.
BYD Co., which has had backing from Warren Buffett's Berkshire Hathaway (NYSE: BRKA), is another electric car seller in China. And at the Detroit Auto Show this year, Chinese automaker GAC Group showed off a WitStar concept crossover SUV plug-in hybrid that could be a competitor to Tesla's upcoming Model X.
In the U.S. and elsewhere, Tesla faces rising competition in luxury electric and plug-in hybrid vehicles from makers such as BMW and Daimler (OTCPK: DDAIF), and there's speculation that down the road an Apple (NASDAQ: AAPL) car-related project underway could possibly turn into an electric-vehicle manufacturing plan.
Related: Kandi Soars On Sweet Earnings; Musk Tweet Lifts Tesla.
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