Electric Car Maker Takes a Turn

The Shanghai Stock Exchange is receiving a new listing by Kandi Technologies subsidiary, Kandi Smart Battery Swap Technology Company.  Kandi already trades on the Nasdaq Market in the U.S. under the symbol KNDI.  The new listing is a change to raise capital to spin the subsidiary out and scale up the business.  The change out of electric car batteries presents an interesting alternative to recharging.  Many claim the option is easier and quicker than fueling a vehicle with an internal combustion engine.  Taxi fleets represent a particularly lucrative market opportunity.

While not popular in the U.S. or Europe, battery swapping has gained traction in China.  The practice is contingent upon common battery standards that put battery packs of the same size and shape in most electric cars. Tesla and others offered battery swaps in the U.S., but met with little success.  Micro managing by China’s central government has put considerable uniformity in the Red Dragon’s garage.  The battery swap market in China is expected to reach US$2.7 billion by 2025.

Other battery swapping services have already gained traction in the China market.  By mid-2020 Electric car manufacturer Nio, Ltd. (NIO:  NYSE) had over 130 swapping stations around.  Nio has also invested in Aulton New Energy Services, a self-styled provider of vehicle energy services that include battery swap technology.  Aulton’s has built a network of over 200 swapping stations.  Aulton also gets support from the battery swap arm of state-owned BAIC Group, a major electric car producer in China. The BAIC network has reached a more modest 180 stations by mid-2020, but BAIC claims it has the ambitions to put build a network of more than 3,000 sites by the end of 2022.

The Kandi offering in China gives minority investors a bite of the battery swap market.  China has lifted restrictions on foreign investment, making it possible to U.S. investors to buy China A-shares on the Shanghai or Shenzhen Stock Exchanges. 

China exchanges may prove less predictable than the great bourses of Europe or U.S. exchanges.  Just days before a historic initial public offering of Ant Group, a financial technology company founded by Jack Ma, the Shanghai Stock Exchange suspended the listing.  The mobile payments capabilities of Ant Group is Jack Ma’s second verse after the exceptional success of Alibaba Group (BABA:  Nasdaq).  Valued at US$37 billion, it was to be the largest initial public offering in history.  The last minute cancellation of the listing makes clear that the personal views of China politicians are still very much a driving force in China’s stock market.  Both domestic and foreign investors in China must step carefully around the ‘landmines.’

   

 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.