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Tuesday, August 26, 2014 6:39:56 PM
Investors following electric-vehicle maker Kandi Technologies have likely become accustomed to volatility. In the last month alone shares have jumped between $16 and $20. But the stock's 5% spike today was bigger than usual. Here's the story.
Kandi electric vehicle. Image source: Kandi Technologies.
China wants electric vehicles to succeed
When the stock began trading today, shares were up roughly 10% on a Bloomberg report that China would soon announce as much as $16 billion in government funding for electric-vehicle charging infrastructure and to promote demand for EVs. Bloomberg cited "two people familiar with the matter."
The policy will be announced soon, said the people, who asked not to be named because the discussions are private. The people declined to provide further details of the plan such as how long the program would last or whether the chargers would be compatible with cars made by Tesla Motors Inc .
China has big goals for transitioning to electric vehicles. By 2016, the nation wants 30% of government vehicle purchases to be electric cars. By 2020, China wants 5 million hybrids and EVs on the road. The government is already taking action, providing incentives to push EV sales, and these policies are already making a difference.
According to Bloomberg: "While sales of electric vehicles in China have lagged behind government targets, BYD, the electric automaker partially owned by Warren Buffett's Berkshire Hathaway, earlier this month cited favorable government policies for helping the company's new-energy vehicle sales to jump sixfold during the first half."
New incentives in China for charging infrastructure could help drive sales for Chinese EV manufacturers Kandi and BYD , as well as for Tesla, BMW , and Nissan -- all companies that are betting on electric vehicles as an instrumental area for growth.
Kandi is smaller than its peers, with just 141 million in revenue in the trailing 12 months and a market capitalization below $1 billion. So $16 billion aimed at promoting the EV market in China could move the needle meaningfully for the company.
Why China is key
China is the world's largest vehicle market, and EV manufacturers are looking to the market for growth opportunities. BMW and Tesla recently expressed great interest in the China electric vehicle market. In May, BMW predicted the nation would become the world's largest market for EVs in five years at the latest. Earlier this year, Tesla said China could eventually be its biggest market .
A Tesla Model S in China. Tesla began delivering vehicles to China in April and is ramping up deliveries significantly in the second half of the year. Image source: Tesla Motors.
The early substantial support from China signals the government in this lucrative market is still bullish on electric vehicles. Given the size of the Chinese vehicle market, greater investment in EVs there would be good news for the overall segment. Greater adoption of EVs in China would support further demand for EV infrastructure and innovation. And given the scale of the vehicle market in China, early adoption of EVs could help the nascent industry achieve scale and drive down costs for other markets.
But despite China's interest in boosting its investment in EVs and the nature of the nascent industry, Kandi shouldn't automatically be dubbed a great investment for the long haul. With a small market capitalization and a short history of any meaningful sales, investors are likely better off looking into companies in the industry with a better track record of success.
Warren Buffett's worst auto nightmare (Hint: It's not Tesla)
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to ride this megatrend. Click here to access our exclusive report on this stock.
Recent KNDI News
- Kandi Technologies Expands Distribution through Academy Sports + Outdoors • GlobeNewswire Inc. • 09/10/2024 12:00:00 PM
- Kandi Technologies Reports Second Quarter 2024 Financial Results • GlobeNewswire Inc. • 08/16/2024 11:00:45 AM
- Kandi Technologies to Report Second Quarter 2024 Financial Results and Hold a Conference Call on August 16, 2024 • GlobeNewswire Inc. • 08/12/2024 03:30:00 PM
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- Kandi America Unveils Officially Licensed Limited Edition NFL Golf Carts, Available Exclusively at Lowe’s • Business Wire • 07/29/2024 12:30:00 PM
- Kandi Technologies Announces First Taiwan-Made UTV Shipment to the U.S. • GlobeNewswire Inc. • 07/22/2024 12:00:00 PM
- Kandi's Off-Road Vehicles Will Begin Production in Taiwan • GlobeNewswire Inc. • 07/08/2024 12:05:00 PM
- Kandi Technologies Group Expands UTV Portfolio with Innovator e10K • GlobeNewswire Inc. • 06/27/2024 12:00:00 PM
- Kandi Launches Ultra-High Capacity AA Battery in the U.S. • GlobeNewswire Inc. • 06/20/2024 12:05:00 PM
- Kandi Technologies Group Unveils New Lineup of Electric Go-Karts in the US • GlobeNewswire Inc. • 06/12/2024 12:00:00 PM
- Kandi Debuts Enhanced 10K High-Clearance Electric UTV • GlobeNewswire Inc. • 06/04/2024 12:00:00 PM
- Kandi Shines at Thailand Golf Cart Expo, Expands in Southeast Asia • GlobeNewswire Inc. • 05/28/2024 12:00:00 PM
- Kandi 10K All-Electric UTV Model Achieves EU EEC Certification • GlobeNewswire Inc. • 05/21/2024 12:00:00 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 05/16/2024 11:15:24 AM
- Kandi Technologies Reports First Quarter 2024 Financial Results • GlobeNewswire Inc. • 05/16/2024 11:00:00 AM
- Kandi Technologies to Report First Quarter 2024 Financial Results and Hold a Conference Call on May 16, 2024 • GlobeNewswire Inc. • 05/13/2024 08:05:00 PM
- Kandi Technologies Group, Inc. Completes Redomicile Merger • GlobeNewswire Inc. • 04/16/2024 01:00:00 PM
- Kandi Technologies Reports 2023 Financial Results • GlobeNewswire Inc. • 03/14/2024 08:05:19 PM
- Kandi Technologies to Report FY 2023 Financial Results on March 14, 2024 and Hold a Conference Call on March 15, 2024 • GlobeNewswire Inc. • 03/11/2024 12:00:00 PM
- Kandi to Showcase Innovations and Network at 2024 PGA Show • Business Wire • 01/18/2024 02:15:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 12/29/2023 09:05:23 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 11/27/2023 01:03:11 PM
- Kandi Technologies Announces Share Buyback of Up to $30 Million • GlobeNewswire Inc. • 11/27/2023 01:00:00 PM
- Form DEF 14A - Other definitive proxy statements • Edgar (US Regulatory) • 11/17/2023 09:05:06 PM
- Kandi’s First 500 Fully Electric Mini Golf Carts to Launch in US Market • GlobeNewswire Inc. • 11/15/2023 01:30:00 PM
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