Kandi K17 electric vehicle. Image source: Kandi Technologies Group.

Kandi Technologies Group (NASDAQ:KNDI) reported fourth-quarter results on March 14. The auto-parts manufacturer is enjoying surging demand for its products as the nascent -- yet potentially massive -- electric vehicle market in China expands rapidly.

The raw numbers


Q4 2015

Q4 2014

Growth (YOY)


$58.8 million

$52.9 million


Gross profit

$28.4 million

$23.4 million






Data source: Kandi Technologies Q4 2015 earnings press release.

What happened with Kandi Technologies this quarter?

  • Total revenues grew 11.2% to $58.8 million, boosted by a 51.6% jump in electric vehicle (EV) parts sales to $57.5 million.
  • Kandi Electric Vehicles Group Co. -- a joint venture in which Kandi Technologies Group has a 50% stake -- sold 12,100 EV products in the fourth quarter, a 231% increase compared to the year-ago period.
  • Gross margin improved to 14.4% from 11% in Q4 2014, mainly due to lower costs in Kandi's battery-packing production.
  • Operating margin, however, declined to negative 9.2% from 5.4% in the fourth quarter of 2014, as total operating expenses ballooned 367.4% to $13.9 million, with most of the increase coming from higher stock compensation expense. Excluding stock compensation, adjusted operating expenses were $4 million, compared with $1 million in the year-ago quarter, primarily due to higher research and development costs for new EV product models and battery packs.
  • All told, non-GAAP adjusted net income, which excludes stock award expenses and other special items, surged 250.9% to $13.9 million.

What did management have to say?
In Kandi's fourth-quarter press release, Chairman and CEO Xiaoming Hu highlighted the strong performance of the Kandi Electric Vehicles Group joint venture:

Our outstanding results in 2015 include exceeding revenue and EV sales targets with the JV Company by selling 24,220 EV products, a 121.5% increase year over year. As the JV Company became China's top seller for pure EV products in 2015, its EV products received extremely positive market recognition, highlighted by model K17 named as China 2015 Pure Electric Passenger Vehicle of the Year at the 6th Global New Energy Vehicle Conference.

Additionally, Hu praised the early success of Kandi's new direct sales program and suggested that this segment will continue to fuel the company's growth in the years ahead:

The direct sales program was launched in the second quarter and achieved 9,273 in EV products sales in 2015 through the distribution channel under this program, accounting for 38.3% of total EV products sold during the year. We are confident in being able to increase the contribution of direct sales as a percentage of total sales in 2016.

Importantly, Hu noted that government incentives should also continue to bolster Kandi's growth:

China's government has continued to strongly support the growth of the EV industry. Most recently through an industrywide subsidy investigation, the government is committed to maintaining the healthy development of the EV industry, which will benefit scaled EV products manufacturers like the JV Company. Meanwhile, the central government has extended its continuous support and confidence in developing the new energy vehicle (NEV) industry by enacting additional policies, including reducing traffic controls and purchase quotas on NEVs, encouraging government purchases and promoting EV car-share programs.

Looking forward
Kandi expects first-quarter revenue to be between $46 million and $48 million, with gross margin in the range of 13.5% to 14.5%.

For the full year, the company anticipates 2016 net revenues in the range of $270 million to $300 million. In addition, management projects that Kandi Electric Vehicles Group will deliver at least 35,000 EV products during the year.

"By focusing on our unique growth engines, which are the rapid expansion of the Micro Public Transportation program and the direct sales program through the distribution channel, we look forward to leading the growth of China's EV industry in 2016," added Hu.

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