The “Kandi” Electric Car Lineup

The Chinese Auto Industry
    In yesterday’s ‘The Sunday Report,’ one of the articles was entitled: “Buffet’s Favorite Auto Stock.”  Having just run across that article, I decided to look further–some of what I found:

Buffett Turns to China

  • by: Jim Trippon October 05, 2010
  •     Is the icon of American investing changing his tune? Well, Warren Buffett’s big week in China suggests that’s exactly what’s happening.   Billionaire Buffett became one of the world’s richest men with a cautious investment style. He’s often quoted as saying he won’t invest in a company whose business he doesn’t understand. During the dotcom bubble of 2000-2001, Buffett stayed on the sidelines as his critics mocked him. Yes, he missed the big run-up in tech stocks. But he also missed the disastrous crash of the dot-com bubble. [….]
  •     More recently, Buffet made headlines by purchasing a 9.9 percent stake in BYD (BYDDF.OB), an electric car and battery maker. Buffet invested about $230 million in the company in 2008. His stake is now estimated to be worth more than $1.5 billion.  So far Buffett has been extremely picky [….]

3 Technology Sector Picks for 2011

  • by: Steven Bulwa, December 21, 2010
  •      [….] This is not a new theme but there are a multitude of initiatives under the alternative energy umbrella that offer investment opportunities. The big winner to this point is solar. While solar will continue to be a winning development for the planet, stocks like First Solar (FSLR) look very expensive and the investment potential of this area may be exhausted.
  •     Looking to 2011 I believe the next big investment opportunity in alternative energy is the electric vehicle.  BYD (BYDDY.PK) is a Chinese company that is the market leader in rechargeable batteries for cell phones and a vehicle manufacturer. The company benefits as the industry’s lowest cost operator as a fully integrated producer of its own battery technology and from CEO Wang Chuanfu’s innovative approaches to product development and manufacture. BYD plans to introduce its all electric car, the E6 in the U.S. in 2011. After a year of setbacks and disappointing stock performance, 2011 may well be the start of a [….]

Kandi Technologies: An Intelligent Vehicle Electrification Plan

  • by: John Petersen, December 07, 2010    The last thing regular readers expect from me is an article praising a vehicle electrification plan, but I’ve seen one that overcomes most of the problems I’ve been writing about for the last couple years and is simply too intelligent to ignore. It’s a uniquely Chinese solution to their particular problems, which means it might not work in the U.S. or Europe, but the potential in the target market could be huge.
  •     Kandi Technologies (KNDI) has developed the “KD5010” a two-passenger electric vehicle for city dwellers that looks a lot like a stretched Smart Car. Earlier versions of the KD5010 include a 60-unit plug-in fleet that Kandi delivered to the China Postal Service last summer and the Kandi-Coco, a shorter plug-in “neighborhood electric vehicle” that Kandi’s distributors are offering in the U.S. for [….] (Article includes photos)

Kandi Technologies: Still Charging Ahead

  • by: Arthur Porcari,  October 21, 2010
  •     It has now been a month since and Seeking Alpha editors saw fit to publish my lengthy four part “Examination” of this China-based, potential sleeping giant in the electric car industry, Kandi Technologies (KNDI).
  • What a difference a month makes.
  •     The closing price of the stock the day before the article was published was $3.21. On Wednesday the stock closed at $5.64 up some 76%. The average daily volume for the month prior to the article was 48 thousand shares. Since then, the average daily volume has been 385 thousand shares. There is no question that the power of Seeking Alpha has increased the audience and just in time for a powerful press release on Oct. 5th and an even more powerful 8K on the 12th.  If you have followed my past articles and blogs on KNDI, you will note that I do not have, nor do I care to have access to any non-public information [….]

Buffett’s Sweet Tooth: Should Kandi Technologies Be on His BYD Dessert Menu?

  • by: Arthur Porcari,  September 28, 2010
  •     Ok, call me crazy. While it might not make “sense” to think that Warren Buffett would even consider looking at NASDAQ listed Kandi Technologies (KNDI) with its tiny $80 million market cap, it sure could make “dollars” for Buffett’s China doll, BYD (BYDDF.PK). Let me explain.
  •     Last week I was pleasantly surprised that Seeking Alpha picked up and syndicated a 4 part article I wrote titled “Examining Kandi Technologies: A China-Based EV and Quick Change Battery Company.” From the stock action in this normally quiet virtually unknown stock, it appears the article was well received. Imbedded in that lengthy multi-part article were several points why it could be deemed smart for BYD to consider marrying up with KNDI. For the sake of brevity here, I am going to skip the background on KNDI and suggest that those interested attain it by reading the above linked Seeking Alpha article. In this piece, I am going to highlight just two main logical reasons why a relationship with KNDI would be beneficial to BYD.  (A number of the below links are from China based website which I [….]

Electric Cars: Dream or Nightmare for the Auto Industry?

  • by: Investment U,  September 27, 2010
  • By Tony D’Altorio
  •     Investors often get excited over new technologies. Sometimes they have a reason to and sometimes not so much.  Take electric cars, a topic Tesla Motors (Nasdaq: TSLA) just reopened with its IPO.  After years of development, road tests and marketing hype, it seems that the vehicles are hitting the showrooms by the end of the year.
  • Some of the companies set to roll are:
  • Japan’s Nissan ADR, which plans to market its Leaf in the U. S. and Japan.
  • France’s PSA Peugeot Citroen ADR, which has two electric cars under each of its brands and a joint venture in China with Dongfeng Motor Group.
  • General Motors and its Chevy Volt.
  • And over the next three years, Toyota ADR (NYSE: TM), Volkswagen ADR, Ford (NYSE: F) and BMW ADR have plans to do the same.  Daimler plans to make electric cars under a new brand in China with local automaker BYD. And it has further ideas for its own brands.  In other words, the hype is definitely on…
  • New Auto Industry Generation
  •     Initially, electric car sales will only claim a tiny share of the world’s car market. But many industry insiders believe it could quickly take over from there.  They see electric motors and batteries increasingly operating engines. Some even think the technology could overshadow the combustion engine altogether.  That would change car designs, production, driving, sales and services. It could push the auto industry into a whole new business model altogether, and even turn the global hierarchy upside down.
  •     So far, Chinese automakers can’t seem to beat American, European and East Asia when it comes to the internal combustion engine. But they do have the skills, manufacturing capacity and domestic market to takeover the electric car and battery markets.  The aforementioned BYD, which designs both, serves as a [….]

The Electric Car Market: These Companies Could Put a “Charge” in Your Portfolio

  • by David Fessler, Energy and Infrastructure Specialist
  • June 4, 2010: Issue #1274
  •     I recently plunked down a deposit for a Nissan LEAF – the world’s first all-electric car, which is destined to hit the United States in big numbers.  I figure since I work from my home office and don’t drive much, I’ll use the Nissan as my everyday car and leave the gas-guzzler for longer trips.
  •     A Nissan engineer will shortly be visiting my home to make sure I have enough power to handle the LEAF’s charging requirements. But as a degreed electrical engineer, that won’t be a problem. When I restored my 200-year-old house, the electrical infrastructure became my pet project! I should have plenty of power.  Jet across to California, however, and anyone willing to drive an electric car will be in for a rude awakening when it comes to charging them…
  • The California Electric Car Market: Land of the Free, Home of the Green
  •      Think of electric vehicles and one of the first places that springs to mind is California. You don’t have to go far before you come across a Toyota Prius or Honda Insight.  In fact, a U.S. Department of Energy survey from 2007 (the latest data available) revealed that there are more than five times as many hybrids registered annually in California than the next six states combined. And 25% of all hybrids sold are purchased in California.  That shouldn’t be surprising. Despite its [….]

     Although “late-to-the-show,”  I intend to invest in one or more of the stocks mentioned in these articles.  I’m not promoting ANY OF THESE ISSUES; the reader MUST perform his own due diligence!!
    Now that we’re off on a rant, talking about China and how things are so great for the investor, let’s have a look at some possible negative aspects:

[#1]  Must See: Nordea’s Chart Of The Week – Collapsing US Import Demand

 by Tyler Durden, 12/17/2010 12:09 -0500

Gross Domestic Productrecovery
    Every massive inventory accumulation…. has an equal and opposite effect on GDP. To all those who snickered at the earlier chart of the BDIY, we recommend you read the following brief blurb from Nordea, whose implications may put everything you have heard about a surge in GDP in Q4 and Q1 (primarily from the Goldman bull brigade) in a just slightly different light.

Cargo stagnation
    We have understood that Chinese cargo ships have been told to proceed at ‘wind speed’, because of a collapse in US import demand – this is partly visible in the activity amongst Long Beaches shoremen – hence, is this the final proof that the inventory rebuild that drove the recovery in the autumn is OVER? Figure 1 (See URL below for chart) shows the average speed amongst bulk carriers! Bulls – Watch Out!
[#2]  Outsourcing To China, Not So Cheap Anymore

Soaring oil prices, rising wages and a stronger currency could spell an end to globalization.
By The (Montreal) Gazette June 27, 2008

    The China Price used to be the global standard for low-cost manufacturing. It shut thousands of factories across North America, put tens of thousands of Canadians out of work and drove down the price of consumer goods around the world.  Now China’s cost advantage is being eroded by soaring oil prices, rising wages and an appreciating currency. Canadian companies that outsource their manufacturing to China are already feeling the pinch and some are even bringing production closer to home.  Could globalization be reversed in an era of high oil? What would that mean for Canadian companies that have come to depend on the China Price?
    Levon Afeyan flew to China this week to find out the answer to these questions for his mid-size Montreal company. He’s the president of Seatply Products Inc., a manufacturer of molded plywood for use in commercial seating.  About half of Seatply’s products originate in China and Malaysia and he’s becoming increasingly uneasy about soaring freight costs that have seen the price of a shipping a standard container from China hit as much as $6,000 from $4,000 a year ago.
    On his trip, Afeyan will try to get price concessions from his Asian suppliers to help cover his rocketing freight costs. But he’s not expecting an easy time because his suppliers have their own problems and want to raise prices.  Inflation has already risen 8 per cent this year in China and the government just lowered subsidies on gasoline, resulting in an increase of roughly 20 per cent at the pump. Meanwhile, the Chinese currency has jumped about 17 per cent against the U.S. dollar, making exports more expensive.  And wages are rising fast. Depending on the industry and skill-level, wages are up by 10 to 25 per cent a year and labour shortages have developed in some regions.
{**}Til Nex’Time….

“People are taking a second look at everything because the costs are becoming prohibitive,” said Afeyan, whose company’s efforts to cut costs through lean manufacturing techniques were featured in The Gazette in 2006. “It goes right to the bottom line.”

    CIBC World Markets economists, who predict oil is heading to $200 U.S. a barrel, believe the cost of maintaining a supply chain that reaches to the other side of the world is outstripping the benefits for many North American sectors.
    Rubin and Tal note there remains a huge differential between Chinese and North American wage rates but have found evidence that companies are already looking for production closer to home in capital-intensive manufacturing such as steel where there’s a high ratio of freight costs to final selling prices. {**}

“In a world of triple-digit oil prices, distance costs money,” CIBC economists Jeff Rubin and Benjamin Tal wrote in a report at the end of May. “Soaring transport costs suggest trade should be both dampened and diverted as markets seek shorter, and hence, less costly supply lines.”

  {*}The CIBC economists expect Mexico with its maquiladora plants along the U.S. border to be a prime beneficiary of the high freight phenomenon as companies seek low-wage centres closer to home.

“Furniture, apparel, footwear, metal manufacturing and industrial machinery — all typical Chinese exports, incur relatively high transport costs.”


[#3]  Outlook 2011: Is the Smart Money Right About China?

by: Dian L. Chu, December 25, 2010

    China has been ranked as the top growing country among the G20 since 2001, and is expected to retain that title for at least another five years (See Growth Chart). However, the news coming out of China for the past three months has not been good. It is looking more and more that it is not a question of if China is a bubble and going to burst, but when.  The country has major infrastructure issues, troubling population dynamics, poorly aligned employment outcomes, inflation problems, a real estate bubble, an opaque and potentially insolvent banking system (had mark-to-market accounting been applied), geo-political problems with North Korea and Taiwan, and an underperforming stock market in 2010 (see stock comparison chart).
Smart Money Rushing Out
    While the hot money is flooding into China, the smart local money is doing everything they can to get their money outside of China, which partly explains why Shanghai SE Composite has underperformed other markets for the past year or so (see Comparison Chart).  The many issues of China could conspire to become the biggest train wreck waiting to happen, and potentially dwarf any little budget problems in Europe by a factor of ten.
Big Trouble In Big China
    China has a population related societal structural problem. The nation has tried to utilize the vast manpower to its advantage over the last two decades building a powerhouse manufacturing economy through the availability of low cost workers, which supplied the world with lower cost goods.  Nevertheless, the harsh reality is that the nation’s infrastructure, quality jobs, food, and overall resources are too scarce to support such mass population, while achieving the government’s goal of a smooth transition to a developed middle class to sustain an internal demand model going forward.  If you think having riots in Greece over the pension retirement age being raised is bad, just wait till riots break out in Beijing and other cities over a 90 cent bowl of noodle soup now costing four dollars due to food shortages, and a runaway inflation problem.
Loose Lending = Non-performing Projects
    This is only reinforced by some of the news events taking place over the last three months. Let’s start with the raising of banks’ reserve requirements by the central bank, which is the sixth such increase in 2010.  These measures are meant to curb the excess lending which has fueled much of the overbuilding and real estate speculation occurred over the past two years as China`s central bank initially wanted to avert a recession by artificially creating demand for workers and construction projects to replace lagging demand from the developed economies.  The problem is that too much lending has occurred, and bad lending at that. Because of the cheap available credit, now you have cement companies and manufacturing firms getting bank loans to invest in endeavors such as real estate, which is outside of their core expertise and competency.
Real Estate Misery Loves Company – China & Spain
    The result is a bunch of excess inventory and poorly thought-out construction projects which have no means of recouping the initial investment needed to repay the bank loans.  This practice is similar to Spain’s situation now, where they have entire uninhabited building complexes that have yet to be marked to market, and will probably ultimately be demolished. But at least in Spain, even though it was a construction boom, it was engineered by developers in Spain, and not by some manufacturing outfits like those in China.  So, multiply the bad business project factor by ten and you get an understanding of the magnitude of bad loans on the books of Chinese banks. The problem is being further exacerbated by the practice similar to Spain’s– of banks making additional loans to the businesses just so that they can then turnaround and pay back the interest owed on the original loans.  The only way this would work out is if these projects magically develop revenue streams. Unfortunately, in the case of Spain, a 20% unemployment rate, coupled with a still [….]