Shares in Kandi Slip on Low Sales After Subsidies Cut
The stock in Kandi Technologies Group Inc. (Nasdaq: KNDI) slipped 1% to $4.78 per American depositary share on Tuesday after the company reported weak sales for the third quarter.
The Jinhua-based electric vehicle maker said in a statement today that its revenue in the three months through September was $31.7 million, down 17% year-over-year. Net income was $12.1 million, or 23 cents per ADS, in contrast to a net loss $6.5 million, or 13 cents per ADS, a year ago.
Kandi attributed the revenue drop to a decline in sales of EV parts, which fell to $25.8 million, down 19% year-over-year, according to the report.
China, the world's largest market for EVs, has seen its sales of electric and gasoline-electric hybrid cars plunge 46% to 75,000 units in October after the reduction of government subsidies, as reported by U.S. News.
"As EV sales have accelerated dramatically, the government has been scaling back these generous subsidies," Christopher Robinson, a senior analyst at Lux Research, told CapitalWatch in an email on Tuesday.
He added, "Lux observed sales spike briefly in June as many consumers rushed to purchase vehicles before subsidies ran out, while sales have fallen since then as the subsidies are removed."
For the same reason, Robinson said he would not expect EV sales to pick up toward the end of the year.
He also expressed doubt that Kandi's K23 will be successful in the U.S. market. The company has been preparing to launch the model in the United States after passing regulatory requirements.
"It's a small vehicle at a cheap price point with less range and power than others on the market. Most EV buyers in the U.S. are focused on longer-range vehicles in the premium mass-market and luxury segments," Robinson said.
While the Sino-U.S trade war hasn't had much effect on the market for EVs and hybrids, Robinson said longer-term implications could occur.
Earlier, Kandi announced a $70.5 million deal to provide 300,000 e-scooters and 500,000 self-balancing e-scooters to a Walmart supplier, DGL Group Ltd. Kandi's subsidiary, began delivering the first batch of scooters to DGL in October.
Online Pharma Retailer Ecmoho Plummets on Loss, Lawsuits
China's CN Energy Files for $25 Million IPO on Nasdaq
SINA Hits 21 Week High on Buyout Proposal
Chinese Benchmarks Catch Fire
The Bearish Combination of Soaring Silver and Slowing Miners
Wahaha Weighing Hong Kong IPO That Could Raise Over $1 Billion