Kandi Technologies (KNDI) Q4 2020 Earnings Call Transcript

Kandi Technologies (KNDI 3.06%)
Q4 2020 Earnings Call
Mar 30, 2021, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Hello, and welcome to Kandi Technologies' full-year 2020 financial results conference call. [Operator instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Kewa Luo. Please go ahead.

Kewa Luo -- Manager, Investor Relations

Thank you, operator. Hello, everyone. Thank you for joining us on today's conference call to discuss Kandi's results for the full-year 2020. We issued a press release today covering the results.

That press release is available on the company's website at www.kandivehicle.com as well as on Newswire services. On the call with me today are Mr. Hu Xiaoming, our founder, chairman, and chief executive officer; and Mr. Alan Lim, our chief financial officer.

Mr. Hu will deliver prepared remarks in Chinese, which I will then translate. After that, we will have a question-and-answer session. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's annual report on Form 10-K for the fiscal year ended December 31, 2020, and in other public filings with the SEC. We do not assume any obligation to update any forward-looking statements, except as required under applicable law.

As a reminder, this conference call is being recorded. In addition, an audio webcast of this conference will be available on Kandi's Investor Relations website. Please note that unless otherwise stated, all figures mentioned today during the conference call are in US dollars. With that, let me now turn the call over to our CEO, Hu Xiaoming.

Go ahead, Mr. Hu.

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Kewa Luo -- Manager, Investor Relations

Hello. Welcome, everyone, and thank you for joining us on the call today. 2020 was a year full of challenges. COVID-19 unexpectedly impacted every corner of the global economy.

Most countries fought the virus, including the implementation of quarantine enforcement of curfew. Unfortunately, this caused many companies to still haven't been operating in normal hours and bankrupted many small businesses. Kandi quickly responded to the crisis by temporarily closing all facilities, working remotely, and carefully cleaning every day. Although our operations in China restarted by the end of March, many revenue streams were still adversely affected.

There were several production interruptions caused by the many waves of the pandemic.

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Kewa Luo -- Manager, Investor Relations

However, even in the face of such a difficult business environment, we achieved solid sales growth in our offshore vehicles, electric scooters, electric self-balancing scooters, and related parts. You can see more details in our 10-K.

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Kewa Luo -- Manager, Investor Relations

In 2020, we actively sought new market opportunities that could leverage our competitive strength. We decided to pursue product innovation in electric scooters and electric self-balancing scooters, which have a potential global market of tens of millions of units sold each year. We pursued revenue in these opportunities by expanding the production of intelligent transportation products that exploit our advantages in electric motors and battery packs.

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Kewa Luo -- Manager, Investor Relations

Looking back on this challenging year, we still achieved multiple milestones and made progress in our strategic projects. First, we smoothly executed the real estate repurchase agreement with Jinhua Economic and Technological Development Zone, a key element of our Jinhua Economic facility relocation. The development zone agreed to pay us approximately RMB 525 million or USD 80 million in three installments. We have received the first two installments, totaling RMB 363 million or USD 55 million.

The remaining payment is expected to be received in the second quarter of this year.

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Kewa Luo -- Manager, Investor Relations

Our second milestone was the successful trial of our so-called 300,000 government-accredited pure EV within five years ride-share program. The JV platform operator Zhejiang Ruiheng Technology Company plans to take delivery of over 3,000 government-compliant EVs in 2021. Gradual delivery is under way. All those EVs feature our battery swapping technology.

The Chinese government has implemented several policies that favor the manufacturing of EVs with battery swap enabled, such as the new subsidy policy. The battery swapping stations were included for the first time in infrastructure construction in the government work report.

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Kewa Luo -- Manager, Investor Relations

We moved forward in many ways in 2020. For example, we signed an agreement with the Zhejiang State Grid Electric Vehicle Service Company in October 2020 to strategically incorporate battery exchange into pure EVs. We believe the tailwinds of Chinese government policies can help the production and sales of our EV parts and battery swap equipment.

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Kewa Luo -- Manager, Investor Relations

The third achievement was in the US market. We successfully held a virtual launch event to introduce our K23 and K27 EV models into the US in August 2020. We have obtained clearance from the United States Environmental Protection Agency, EPA, for both models. So our focus now is working on some modifications to meet DoT's requirements as well as Federal Motor Vehicle Safety Standards' requirements.

We are also working on feature improvements catering to the US consumers.

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Kewa Luo -- Manager, Investor Relations

In addition to the three milestones, by year end, we signed a strategic cooperation agreement with the Hangzhou Branch of the Agriculture Bank of China. They will provide a line of credit to support our ride-sharing market expansion with capital from the real estate repurchase agreement and the $160 million from the direct placement in November 2020. We are confident that we can fund the R&D necessary to develop new EV models, battery swapping technology, and the ride-sharing program.

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Kewa Luo -- Manager, Investor Relations

Before we move on to the Q&A session, I want to highlight that we recently exited from the Fengsheng affiliation, previously called JV company, by transferring our remaining equity interest. This is important because we will no longer be restricted by the associated non-compete clauses. This means we can pursue the EV market in China more aggressively.

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Kewa Luo -- Manager, Investor Relations

We can now take some questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question today is coming from Shawn Severson from Water Tower Research. Your line is now live.

Shawn Severson -- Water Tower Research -- Analyst

Hello, everyone. My first question is about the battery exchange and ride-share initiative. I'm trying to understand exactly how many machines have been sent to the first site? And then a follow-up to that, I guess, as the second part of that is, what do you plan for selling cars in 2021? And when you look at the rollout of this broader across the Chinese market, is this something that's going to be coming in big chunks, or is this going to be more of an even flow of a rollout or will you have kind of large, lumpy sales, I guess, is what I'm trying to understand? Or will this be something that kind of flows out fairly evenly over the next couple of years?

Kewa Luo -- Manager, Investor Relations

[Foreign language]

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Kewa Luo -- Manager, Investor Relations

[Foreign language]

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Alan Lim -- Chief Financial Officer

Hi, everyone. It's Alan, and I'm answering on behalf -- I'm doing the translation for Mr. Hu. As for the question about the sales of the smart battery devices, so far there are three devices that are leased to the market.

One being sent to the Haikou city and the other two has been sold to Shaoxing. Our assets for the -- our plan for the fiscal-year 2021, there will be 50 devices expected to be distributed during the year. As for our EVs in China, so far we currently have orders of 3,000 EVs that are featuring the smart battery swap. They will be released to the market gradually during the year of 2021.

As for our trend, we are following the plan from our customers that have the so-called 300,000 EV costs in five years program. And of course, we will follow the suite flow and we will adjust as necessary. So far that's plan from our side.

Shawn Severson -- Water Tower Research -- Analyst

Great. Thank you for that. Just a follow-up question. Regarding the entry into the US market, seems to be a little bit of a delay there.

But if I understood you correctly, you said there were some improvements being made for the US market or for US consumers. Could you be a little more specific on what that means? And then also details when the Dallas state's queue will be ready?

Kewa Luo -- Manager, Investor Relations

[Foreign language]

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Alan Lim -- Chief Financial Officer

So as for our plans in the US market, after our launch event in August last year, we have been applying all the paperwork and all the work that -- to be fully eligible to sell EVs in the US market. So far, we obtained approval and certifications for the EPA. And as per the DoT, there are still some safety requirements that we are trying to meet and satisfy, and mostly about the crash test because there will be requirements for multiple crash tests, especially for the safe airbags. The standards for the airbags is different from the US and European market and to the PLC market.

That's why so far, what we are doing in the major refinement is to -- it will be hard to refine our standard for the airbags in order to meet the standard from the DoT. As a matter of fact, there are two pathways that we're working on right now. One is, of course, we are trying to work very hard to meet the safety standards from the DoT ASAP. Meanwhile, we have released the EV, the so-called NEV version with the speed limit.

Of course, there will be less requirements for the safety like airbag. That has been fulfilled in terms of the end-to-end requirements, and we've already sold those NEVs in the US market.

Shawn Severson -- Water Tower Research -- Analyst

Great. Thank you. I'll step back in the queue.

Operator

Thank you. Our next question today is coming from M. Marin from Zacks. Your line is now live.

M. Marin -- Zacks -- Analyst

Thank you. So can you please provide some additional color on the relationship with the Agricultural Bank? Whether you would tend to use that as sort of a model and replicate other relationships to drive growth? And if so, could you give us some sense of timing, how long it took to negotiate that kind of a relationship in terms of how we should think about that going forward?

Kewa Luo -- Manager, Investor Relations

[Foreign language]

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Alan Lim -- Chief Financial Officer

So basically, our strategic cooperation with Agriculture Bank of China, the so-called ABC, is really on the line of credit. That is facilitated by the whole ride-sharing program, especially for our so-called 300,000 EVs in five-year program. So what we looked is once we release the EVs to our customer, the riding platform, Ruibo, the bank will release the credit to Ruibo in order to fund the purchase of our EVs. The first line of credit, the offer is RMB 500 million, which is roughly around USD 76 million.

And with the current production rates that we have the order 3,000 EVs during 2021, this line of credit will be sufficient to meet our needs. And of course, if there is excessive production, we'll be expanding ongoing, ABC is more than happy to hire the line of credit to us because actually, this program is designed for facilitating the whole ride-sharing program. So basically, we are needing more resources that ABC will be offering high line of credit. It depends on production progress.

Meanwhile, we are trying to explore different options from other financial institutions. But I guess, right now, the offer from the ABC is more than enough for us for the moment.

M. Marin -- Zacks -- Analyst

OK. Thank you.

Operator

Thank you. [Operator instructions] Our next question today is coming from Michael Fearnow from Focus Tech Investments. Your line is now live.

Michael Fearnow -- Focus Tech Investments -- Analyst

Yes. Good morning. I'd like a little clarification on the NEV cars in the US The neighborhood cars and the current inventory. Is it expected to be sold as neighborhood cars? And if so, will there be any significant price reduction? And so answer that question initially.

Kewa Luo -- Manager, Investor Relations

Hello? Can you say one more time? Your audio was skipping at the beginning.

Michael Fearnow -- Focus Tech Investments -- Analyst

Say again, Kewa.

Kewa Luo -- Manager, Investor Relations

Can you just repeat one more time? You were a little skipping in the beginning.

Michael Fearnow -- Focus Tech Investments -- Analyst

On the inventory that was delivered into the US starting last year, can you give me a sense of how many cars have been delivered and that those cars will be sold as neighborhood limited range vehicles? And if so, would there be any significant price reduction?

Kewa Luo -- Manager, Investor Relations

[Foreign language]

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Alan Lim -- Chief Financial Officer

OK. So as for the NEVs, we have started just -- basically started to sell NEVs toward the end of last year. So right now the amount is not significant. We have gradually circulated those NEVs to distributors of our network.

So because of the length, the speed, and the range, there is some price drop compared to our regular EV version. For the price reference, you can refer to our Kandi American website for more details, and you can so basically get details for our NEV.

Michael Fearnow -- Focus Tech Investments -- Analyst

And as a follow-up, I would like to get a little more information on your quick battery exchange. Do you -- does your technology lend itself to individual car ownership or is it just strictly on the fleet market? And if it is for individual ownership, can you discuss your ability to compete with manufacturers such as Geely and Li Motors? And finally, do you expect to ever have quick battery exchange for the US market?

Kewa Luo -- Manager, Investor Relations

Are you asking our EV, whether it's going to sell to individual or only fleet market? Right?

Michael Fearnow -- Focus Tech Investments -- Analyst

That is the first part of the question, correct. And if it's for individuals, how do you expect to compete with other technologies such as Geely or the Li Motors? And then the final part, will you expect to go into the US at some time?

Kewa Luo -- Manager, Investor Relations

Was it the ones that have the battery swapping features? Right?

Michael Fearnow -- Focus Tech Investments -- Analyst

Correct. Is that expected ever enter the US market?

Kewa Luo -- Manager, Investor Relations

OK. [Foreign language]

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Alan Lim -- Chief Financial Officer

OK. So far our models like K23 featuring the smart battery swaps features have been available from August with the PLC ride-sharing program at the moment. And of course, the company claims to develop other new models that can cater to the needs of different motor markets. As for the US, since the volume of our EVs is not significant and because the density is basically the geographic reason in the US is pretty big along, for us, one EV swap for smart battery device can serve up to 200 EVs per day.

However, if the EVs, they are basically around found to be efficient, ours to circulate such feature in US, it is quite beneficial from an economic standpoint. And because also the battery exchange conditions and network is fairly sufficient in US So far, we don't have plan to enter this market with our smart battery swap system.

Michael Fearnow -- Focus Tech Investments -- Analyst

Thank you. And, Kewa, one last point. Last year, there was an announcement that they had signed an underwriting agreement with the Quick Battery Exchange division. Can they give us any update on that agreement?

Kewa Luo -- Manager, Investor Relations

I'm sorry. Can you say one more time?

Michael Fearnow -- Focus Tech Investments -- Analyst

OK. Last year, there was a public announcement where there was an underwriting agreement to go public on the smart change for the Quick Battery Exchange division. Can the company give us any further updates on that agreement?

Kewa Luo -- Manager, Investor Relations

[Foreign language]

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Alan Lim -- Chief Financial Officer

OK. So as for our IPO for our subsidiary of smart battery swap entity, it's been progressing pretty well. We have commissioned three professional firms who valued IPO, mainly the securities Pan-China Certified Public Accountants and Grandall Law Firm. These all are the highly ranked firms in China.

So far are being -- the work is being done. But as for the general time line in PLC to get listed, we estimate it will roughly take two to three years to complete the whole listing.

Michael Fearnow -- Focus Tech Investments -- Analyst

Thank you.

Operator

Thank you. Our next question today is coming from Mike Pfeffer from Oppenheimer. Your line is now live.

Mike Pfeffer -- Oppenheimer & Co. Inc. -- Analyst

Hi. Thanks for taking the call. Just following up on that last question about the IPO. With the backlog in China for the new STAR exchange, it seems to be taking a much longer time for companies who list in China, you were just saying two to three years.

And since Kandi is, by definition, a US domicile and listed EV company traded in the US and China EV companies trading in the US have much higher valuations than similar China-listed EV companies. If it's not too late to change, would management maybe consider or reconsider spinning off a small portion of the subsidiary by way of a tradable stock rights offering to existing Kandi shareholders with a stock purchase rights offering and maybe a warrant attached. Additionally, the cost to do this in the US would be negligible, not much more than SEC registration costs and NASDAQ filing fees. You can even bring in a US-based investment banker with retail clients to stand by, underwrite the deal for small additional costs, which should also give Kandi research analysts.

And I would think this type of deal could be very positive. It could be similar to a SPAC, much less dilution and much more investor loyalty, but even better because in the structure of shareholders would not only have antidilution protection under their ability to either exercise or sell the rights in the open market but also have priority to buy shares at the IPO price and even get a warm bonus. My question basically is, would Mr. Hu consider doing this in the US?

Kewa Luo -- Manager, Investor Relations

[Foreign language]

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Alan Lim -- Chief Financial Officer

OK. First of all, thank you for your great suggestions. So basically, right now, after the evaluation from our professional firms engaged in PLC, after the evaluation, they believe that the chance to get listed of our -- the smart battery swap unit is very likely in PLC within two to three years. So basically, we also consider that the P/E ratio is just higher for our industry in China compared to US That being said, we also engaged some other professional firms in US to evaluate the outcome, what we can do or can explore in the capital market in the US So definitely, we have been considering about that pathway as well.

At the moment, we may do that, and we'll see.

Mike Pfeffer -- Oppenheimer & Co. Inc. -- Analyst

Thanks.

Operator

Thank you. Next question today is coming from Mark Kahnau from Swiss Liquid Future. Your line is now live.

Mark Kahnau -- Swiss Liquid Future -- Analyst

Yes. Hello, everybody. My question would concern the balance-produced scooters. So in last year's update to shareholders, Mr.

Hu said, in terms of the produced balancing scooters should exceed 500,000 in 2020, and we expect sales to exceed 3 million units in 2021. But you gave no value of either of these surprising new orders. However, in September 2019, before the virus shutdown, Kandi made a similar announcement for a new product line, which read Kandi's wholly owned subsidiary, Zhejiang Kandi Vehicles Co-Limited, Kandi Vehicle and DGL Group regarding an initial batch of order of 300,000 electric scooters and 500,000 self-electric balancing scooters. Total value of the agreement is expected to be about RMB 500 million, approximately USD 70.5 million.

This later order would calculate at around $88 per unit. Since the company did not put any value of this late 2020 orders, as it did in the earlier order, an investor might be left to assume the values of were similar to 500,000 units for 2020, could be as much as $44 million. Based on Kandi's total quarter four sales, $33 million, that assumption would be quite wrong. And two questions to follow-up.

Did Kandi reach its 500,000 estimates for 2020? And if so, what was the difference between the 2019 units at $88 each and what was sold in 2020? And the second question is the 3 million 2021 expectations still viable? And if so, is it still at 3 million units? And if so, what is the value of this order? And can you tell us who the major buyer or buyers is in this location?

Kewa Luo -- Manager, Investor Relations

Thanks for the question. [Foreign language]

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Alan Lim -- Chief Financial Officer

So basically, first of all, there may be some misunderstanding here because Scrou manufacturers the motors for the scooters and balancing scooters, but not really the whole scooters per se. During 2020, Scrou manufactured and sold around 160,000 pieces of motors with a unit price of around RMB 50 to RMB 60 per each motor. And during 2021, of course, Scrou plans to produce themselves more than 300 -- 3 million orders for the balancing vehicles and scooters. And due to the raw material inflation, we intend to raise our unit price by around 15% up to RMB 60 to RMB 70 per each motor.

Currently, we are working with customers, the motor buyers that they are primarily from the region of Zhejiang. All those they get authorized by the Hangzhou Chic Co., which has more than 500 patents in terms of the scooters and balancing scooters design and development. Currently, we're working with four to five manufacturers having that patent and authorizations to work on the scooters to manufacture.

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Alan Lim -- Chief Financial Officer

So as for the transaction from DGL, during last year, we noticed that DGL actually does not get authorized under the patent of Hangzhou Chic Co. That is why during 2020, the only manufacturer around motors for over 100,000-ish of pieces with those authorized products. And in this year, we are working closely with Hangzhou Chic Co. to get all our products authorized under the patent of Hangzhou Chic Co., and we expect there will be more volume in production compared to last year.

Mark Kahnau -- Swiss Liquid Future -- Analyst

OK. Thank you. That's very helpful. Thanks a lot for the answer.

Alan Lim -- Chief Financial Officer

Thank you.

Operator

Our next question today is coming move from Ratna Vajra from [Inaudible] Consulting. Your line is now live.

Unknown speaker -- Unknown Affiliation -- Analyst

Yes. Good morning or good evening, and thank you for taking my question. Maybe it's just my line, but due to the heavy electronic interference of the voice of the CFO, I didn't really catch what he was saying about deployment of the quick battery exchange in China, which is why I would like to reiterate that question and ask how many units are actually deployed and functioning? How many numbers of EVs are being serviced by that? And what do you expect to have as sales for this year? If you could give some color on that?

Kewa Luo -- Manager, Investor Relations

Sure. [Foreign language]

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Alan Lim -- Chief Financial Officer

So during 2021, we expect to release around 50 pieces of the smart battery swap devices in the China market. Meanwhile, we expect to release around 3,000 pieces of EV battery three -- featuring the smart battery swap features in China market as well.

Unknown speaker -- Unknown Affiliation -- Analyst

Yes. And how many of those did you deploy so far?

Kewa Luo -- Manager, Investor Relations

[Foreign language] Are you asking cars? Or --

Unknown speaker -- Unknown Affiliation -- Analyst

Both. Apparently, the EVs are being sold for service companies that use the quick battery exchange, isn't it?

Kewa Luo -- Manager, Investor Relations

[Foreign language]

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Alan Lim -- Chief Financial Officer

So far, they are three pieces of the smart battery swap devices already circulated to our customers. As for the EVs, there are more than 90 pieces of the K23 featuring the smart battery swap features already deployed to our customers, the motor buyers level.

Unknown speaker -- Unknown Affiliation -- Analyst

That's very helpful. Since you had additional income earlier this year from the disposal of your share in Fengshen back to Geely. You are having a significant cash surplus. Are you going to put that to use to start your own EV fleets or quick battery exchange-based customer services?

Kewa Luo -- Manager, Investor Relations

[Foreign language]

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Alan Lim -- Chief Financial Officer

So at the moment, we don't plan to engage in this field of services our own. But we, of course, will be involved as part of the service provider of the car-riding platform.

Unknown speaker -- Unknown Affiliation -- Analyst

And since you once had a partnership with China State Grid, one of the largest companies on Earth, which was terminated due to political pressures because the QBEX was not opportune at the time. Do you hope to revise this relationship to State Grid anytime and have them deploy your quick battery exchange stations?

Kewa Luo -- Manager, Investor Relations

[Foreign language]

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Alan Lim -- Chief Financial Officer

So actually, we have started our cooperation with the State Grid as early as 2010. But however, due to some policy -- not so supporting policy and atmosphere during that time, operation has not been resumed later on. In October in 2022, our company has entered into a strategic agreement with the Zhejiang State Grid Electric Vehicle Service company, which is a subsidiary of the State Grid in the area of the battery exchange of pure electric vehicles. Now we are in line with the policy from the government.

For example, the work plan from the government during 2020, the battery swap is part of the area they would like to focus on and develop. So we are now in the good timing. Our plan is we'll set up the model in order to have the State Grid to develop further. So that's the plan.

I mean, our role is being like a pioneer to develop the model, set the design and it's up to State Grid to develop it further and circulate in the whole China.

Unknown speaker -- Unknown Affiliation -- Analyst

Thank you. Thank you for adding that color. That's very interesting, and good luck for your IPO in Shanghai or maybe as the SPAC in New York. I'll go back to the queue.

Kewa Luo -- Manager, Investor Relations

Thank you. [Foreign language]

Operator

Thank you. Our last question today is coming from Tim Parker, a private investor. Your line is now live.

Unknown speaker -- Unknown Affiliation -- Analyst

Thank you. Good evening. In your announcement today, you had that R&D funds could be used for development of sports car. Could you elaborate on what you mean by sports car? And is that for the Chinese consumer or the US consumer? Is the K22 an example of a sports car or do you have something else in mind?

Kewa Luo -- Manager, Investor Relations

[Foreign language]

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Unknown speaker -- Unknown Affiliation -- Analyst

OK. So, I mean, sports car, our best edition that entered like the dynamic performance, such as [Technical difficulty] and top speed. And of course, what we are right now trying to develop the sports car to the standards of the general markets, including the US market and European market. And our target is to, at the end, include our sports car models in all markets including the China market, the US market, and even the European market is our plan.

Operator

Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

[Foreign language]

Kewa Luo -- Manager, Investor Relations

Thank you again for attending today's call. Eliminating the non-compete restriction from the functional affiliation enables us to pursue the EV market more aggressively in China as well as expanding applications of our expertise in value swap systems to maximize shareholders' value. With supportive policies from the government and sufficient cash and working capital, we believe the years ahead hold a multitude of opportunities that can deliver strong operating and financial results in the coming quarters. This concludes our call today.

Thanks again. You may now disconnect.

Operator

[Operator signoff]

Duration: 65 minutes

Call participants:

Kewa Luo -- Manager, Investor Relations

Hu Xiaoming -- Founder, Chairman, and Chief Executive Officer

Shawn Severson -- Water Tower Research -- Analyst

Alan Lim -- Chief Financial Officer

M. Marin -- Zacks -- Analyst

Michael Fearnow -- Focus Tech Investments -- Analyst

Mike Pfeffer -- Oppenheimer & Co. Inc. -- Analyst

Mark Kahnau -- Swiss Liquid Future -- Analyst

Unknown speaker -- Unknown Affiliation -- Analyst

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