Shares in Chinese electric vehicle maker Kandi Technologies (KNDI) spiked over 10 percent on Monday. The small-cap manufacturer has a wild day as it gapped down over 3 percent to open trading, then saw shares spike an hour into the day. Gains reach as high as 12 percent before profit-taking prompted gains to retract to around 9 percent by mid-afternoon.
Kandi Sweet to Investors of Late
Kandi Technologies has been on a run since the start of September, up almost 70 percent over that period. It cooled of late, retreating from its 52-week high of $9.20 a share it reached on September 25, but today’s gains bring the stock back to close to $8 a share.
China’s Electric Vehicle Subsidies Driving Growth
The recent spike for Kandi appears to be connected to the announcement of subsidies from the Chinese government for purchasing electric vehicles. The subsidies, which range from 60,000 Yuan (almost $10,000) to 35,000 Yuan (just under $5,750) depending on the range of the vehicle purchased, should make Kandi’s offerings more available to consumers in China. Kandi’s low-speed electric vehicles, in particular, should become more attractive.
Driving to a Better Future?
Kandi’s outlook appears, with deals to provide some 20,000 electric vehicles to the city of Hangzhou’s electric vehicle leasing program, and a joint research and development venture with Shanghai Maple (GELYY) . China’s market for alternative-energy vehicles appears to be on the rise, and the new subsidies would seem to indicate that the central government is committed to seeing a transition to more electric vehicles. And, with the subsidies based on range rather than battery capacity, Kandi should maintain a price advantage over offerings from luxury brand Tesla Motors (TSLA) .
However, Kandi could face headwinds from increasing competition in the segment. The coming years should see a number of auto-makers jump into the Chinese market for electric vehicles, including Daimler AG (DDAIY) and Toyota (TM) .
As a side note, Equities.com has included Kandi in our ongoing Small-Cap Stars Project.