What happened

Today, shares of Kandi Technologies (KNDI -0.79%) continued to recover from a short-seller report last week, gaining 14%, before giving up most of those gains to remain up just 3% as of 11:45 a.m. EST. Fellow Chinese electric-vehicle (EV) maker Li Auto (LI 1.30%) was up 9% at the same time, having held its early gains. But CIIG Merger (CIIC), an EV-related special purpose acquisition company (SPAC), dropped 12%. Why the difference? 

So what

There has been a dichotomy of recent news for investors related to Chinese EV makers, and the stocks have remained volatile. Chinese November sales results showed continued strong EV popularity, but a subsequent short-seller report put those sales from Kandi Technologies into question. 

white Kandi Technologies K23 being charged in parking garage

Kandi Technologies K23. Image source: Kandi Technologies.

After Hindenburg Research issued accusations of fake sales, the Chinese automaker said last week that it would respond in detail. That response fell short, according to the short-seller. 

Now what

The response came in a letter to shareholders from Kandi's chairman and chief executive officer. Hindenburg responded via Twitter that the company response was woefully inadequate, and "failed to answer our 25 questions." 

Yet Kandi shares have remained about even since the start of December. And Li Auto shares have also remained steady after the strong sales report. In contrast, shares of CIIG Merger, which plans to bring U.K.-based electric-van and bus maker Arrival public in the first quarter of 2021, have soared. 

KNDI Chart

KNDI data by YCharts

Investors are betting on Arrival's potential. It expects to have its first buses produced no earlier than the fourth quarter of 2021, but its $1.2 billion in orders and investments from Hyundai and Kia Motors, as well as United Parcel Service, have given investors confidence. 

Today's reversal in investor sentiment seems to be more of a breather from recent moves. Arrival's potential hasn't changed, but with shares up 61% in just the last week, it's not surprising to see a double-digit drop. 

Hindenburg's suspicions of Kandi's actual sales results likely will have investors questioning other Chinese EV makers, too. Stocks of many of these companies, including Kandi and Li Auto, have doubled since the summer. Investors need to be vigilant with speculative stocks like these. Today shows the volatility can go in different directions, and the businesses themselves need to be constantly monitored along the way.