Why Kandi Technologies Group Inc Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Kandi Technologies Group Inc  (NASDAQ: KNDI  ) were up as much as 18% after announcing plans to expand its electric car-rental service. 

So what: The Chinese specialized vehicle maker said that its electric car-rental service was profitable, and that it plans to expand it to Beijing and ShanghaiCompany Chairman Hu Xiaoming said he meets almost daily with local officials at headquarters in Hangzhou, and that "they are very interested in our model and keen on promoting the use of electric vehicles in their cities."

Now what: China is the world's second-biggest economy and fastest-growing one based on volume. Pollution is a huge problem for the rapidly modernizing country. An electric-vehicle network like Kandi's seems to make perfect sense. The company not only solves the problem of a regular car-sharing service, such as easing traffic and parking, but also cuts down on pollution at a time when the government is making that a priority. Earlier this month, the central government said it would scrap plans to cut subsidies on electric vehicles and extend the program through 2015, giving Kandi more time to build out its network. The stock has gained more than 300% in the last year as its network has shown more promise, and I'd expect it to keep moving up as the profitable system grows.

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