KNDI: Stronger Balance Sheet, Battery & Ride-Share Partnerships Support Optimistic Long-Term Outlook

By M. Marin

NASDAQ:KNDI

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Kandi Technologies, Inc. (NASDAQ:KNDI) is strengthening its position in several areas of the green automotive space, including production of electric vehicles (EVs), battery innovation, battery exchange to facilitate long-distance driving and ride-sharing programs leveraging its EVs. The company has formed several recent partnerships and agreements to advance its goal to remain a key player in these spaces.

KNDI has entered into an agreement with institutional investors for a registered direct equity placement of $60 million. With cash and equivalents of about $24 million at the end of 3Q20, up from $5.5 million plus $11.0 million of restricted cash at year-end 2019, this implies pro forma cash of about $84 million for KNDI to use to advance its growth strategy. WIth warrants, the transaction also implies another roughly $31 million from potential exercise of warrants beginning in six months.

Kandi America held a virtual launch event to introduce the K23 and K27 EV models to potential buyers in August. The K23 and K27 shown below are among the most affordable EVs in the U.S., intended to retail for $22,499 and $12,499, respectively, after federal tax credits.

Last month, Kandi established of a subsidiary focused on operating a ride-sharing service across China. Chinese regulators also look to ride-share as one solution to expand affordable transportation options. China is the world’s largest ride share market. KNDI is focused on this high growth sector, with its ride-share program also designed to leverage its battery swapping technology that enables drivers to swap a charge-depleted battery for a fresh one and eliminate downtime. In the U.S., the absence of common standards across different automotive and EV battery manufacturers has been a challenge to battery swapping, but China’s interest in promoting ride sharing and battery swapping technology implies government support and creation of uniform standards that are expected to facilitate the roll-out of battery swapping technology.

With partners, the ridesharing service could ultimately utilize a fleet of 300,000 EVs, with an initial focus on pilot operating programs in China’s Hainan and Zhejiang provinces that leverage KNDI’s battery technology. If the pilots are successful, as KNDI management anticipates, similar ride-share programs are planned for other cities across China.

Kandi has established a wholly owned subsidiary, China Battery Exchange Technology Company, to focus on R&D for battery technology innovation. In addition, Kandi also formed a strategic agreement with the Zhejiang State Grid Electric Vehicle Service Company, China’s largest state-owned public service entity, to cooperate on the development of batteries for EVs to support expansion of the EV industry and the growth of exchangeable battery technology.

KNDI is also working towards an IPO of its Zhejiang Kandi Smart Battery Swap Technology Co. battery subsidiary on the Shanghai Stock Exchange’s STAR market as a way of both raising capital to support growth initiatives and unleashing value for KNDI shareholders.

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