Before the year 2013, the Company had been mainly engaged in the design, production
and distribution of the off-road vehicle products. Due to various market factors
and the environment with positive government supports, starting from the year
2013, the Company gradually shifted its main focus towards the development on
pure electric vehicles (“EV”) products and manufacturing electric
vechicles parts. Also in the year 2013, the Company set up a Joint Venture with
Geely Automobile Holdings Ltd. (“Geely”) to focus on EV production,
based on the agreement, EV production should be transferred to the Joint Venture.
At the end of 2014, this transfer had been completed. Starting from 2015, the
majority of the Company’s revenue and profit were generated from the sale
of EV parts.
Business Environment and Policy
Research and development of major EV technology projects in China began in
2001. Driven by two central government five-year plans for scientific and technological
research as well as by the Olympics, World Expo and the “1000 cars in
10 cities” demonstration platform, the Chinese electric automobile sector
was officially born, which brings a positive basis for EV business.
With the growing consumer demand for motor vehicles in China, many cities are
experiencing severe problems from environmental pollution. At the same time,
with the lack of the efficient traffic planning, major Chinese cities are crippled
by traffic congestion. Thus, major cities, such as Beijing, Shanghai, Guangzhou,
Guiyang, Shijiazhuang, Tianjin, Hangzhou, Shenzhen, have begun to implement
various policies restricting the purchase and usage of traditional cars. We
expect that more cities will have no choices but to adopt similar policies in
the future.
To improve the environment of the urban areas, the China Central Government,
along with many municipalities, has been introducing numerous supporting policies
that encouraged the usage and adoption of EVs, including subsidies, tax exemptions,
special treatment of tag and license. Among these policies, the most significant
development involved the availability of subsidies from central and local government
for the sale of EVs. The process of receiving government subsidies is as follows:
manufacturers receive central government subsidies through application and sell
the EVs to local dealers at a discounted price, reflecting the deduction of
the central government subsidy from the normal sale price. Local dealers then
establish their retail price based upon the prevailing purchase price from the
manufacturers, and then deduct the local government subsidy from the retail
price before selling the EVs to consumers. Through these steps, consumers receive
both subsidies from the central and local governments when they purchase EVs.
Because the central and local government subsidies are disclosed to the public
and all the subsidies are reviewed and verified by the respective governments,
consumers know what subsidies they will receive along with the price they expect
to pay for EVs. Therefore, even though dealers can sell vehicles at prices established
at their discretion, programs are designed to assure that consumers receive
the entire benefit from both subsidies. This allows full disclosure for consumers
in the costs associated with purchasing EVs, along with the added benefits of
the respective subsidies.
The Company was incorporated under the laws of the State of Delaware on March
31, 2004. The Company changed its name from Stone Mountain Resources, Inc. to
Kandi Technologies, Corp. on August 13, 2007. On December 21, 2012, the Company
changed its name to Kandi Technologies Group, Inc.
Headquartered in the Jinhua city, Zhejiang Province, China, the Company’s
primary business operations are the design, development, manufacturing and commercialization
of electric vehicles, electric vehicle parts and off-road vehicles, which are
distributed in China and global markets. The Company conducts its primary business
operations through its wholly-owned subsidiary, Zhejiang Kandi Vehicles Co.,
Ltd. (“Kandi Vehicles”) and the partial and wholly-owned subsidiaries
of Kandi Vehicles. As part of its strategic objective to become a leader in
EV market in China, the Company focuses on fuel efficient, pure EV parts manufacturing
with a particular emphasis on expanding its market share in China.