Kandi Technologies Group Inc. Gets the Last Laugh

Shares of China's Kandi Technologies Group (NASDAQ: KNDI  ) soared 27% yesterday after announcing strong sales of the electric cars that it's making in a joint venture with Geely. An impressive 4,114 of the venture's Kandi brand electric vehicles were sold during the second quarter, a healthy sequential uptick from the 1,215 all-electric cars that it sold during this year's first quarter.

Some investors call Kandi the Tesla Motors (NASDAQ: TSLA  ) of China, but as I've pointed out before, that's a comparison that isn't really fair to either company. Tesla is starting to make inroads in China, but it's the clear global leader when it comes to premium-priced, plug-in sedans. Its cars can top six figures if dolled up accordingly. Kandi, on the other hand, markets electric vehicles that are small and cheap. Its flagship platform is a Zipcar-like auto-sharing operation that launched in Hangzhou last year that rents out the petite cars for $3 an hour through high-tech multilevel garages that roll out cars as they are ordered. In a region where bicycles and scooters remain the way that all but the wealthy get around, Kandi's arming Hangzhou's middle class with a more convenient way to shop for groceries or visit friends and relatives.  

It's not a matter of investors choosing between Tesla and Kandi. They are entirely different companies, five letter corporate monikers notwithstanding. Tesla is a widely followed company with a $28 billion market cap. Kandi lacks major analyst coverage, and that's a bit of a surprise since the stock nearly tripled last year and is now up 58% so far in 2014 after yesterday's surge. Despite the rally, Kandi packs a modest market cap of $760 million.

Whether investors decide to buy into Tesla, Kandi, both, or neither as a play on China's push to electric vehicles, it's an undeniable trend. Given the drastic air pollution situation in China's largest cities, the country is making it more lucrative to move away from gas-slurping rides. Come September the government will suspend the 10% sales tax it charges on electric cars, plug-in hybrids, and other fuel-cell vehicles. This is part of China's larger goal to have millions of electric vehicles on its roadways by 2020. If Kandi is having success with its auto-sharing platform and group leasing model now, it should be even more popular in the future. 

Kandi isn't alone in cranking out electric vehicles, but it's clearly at the right place at the right time. 

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Read/Post Comments (4) | Recommend This Article (5)

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  • Report this Comment On July 15, 2014, at 12:56 PM, corstrat wrote:

    Finally, an intelligently written article out of Motley Fool. Good Job in differentiating what should be obvious to anyone who spends a few minutes researching the two Companies.

  • Report this Comment On July 15, 2014, at 1:10 PM, Lancedesign wrote:

    Concise and accurate. Very nice article

  • Report this Comment On July 16, 2014, at 1:05 PM, rockettplus wrote:

    Wow...finally a Fool article that seems to put it together intelligently when it comes to KNDI and TSLA.

  • Report this Comment On July 16, 2014, at 7:45 PM, spfmf14 wrote:

    Rick, you have done your research, unlike previous recent Motley Fool contributors, and realize that Kandi and the much more expensive EVs (like TSLA) are adressing different demographic markets in China. The China demographic KNDI EVs will provide transportation for is by far the largest in China. And no other EV manufacturer has done the kind of preparations that Kandi has done in positioning themselves to be ready to supply their very affordable EVs in large numbers for urban use in China. Kandi has a bright future- if the 4000+ EVs for 2nd Qtr 2014 seem like impressive growth, wait until the quarterly results for Kandi EV production in 2015 become a reality. Thanks

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Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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