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China: Kandi Technologies Bags Largest Single Electric Vehicle Order Ever

The city of Hangzhou just signed a strategic cooperation agreement with Kandi Technologies (NASD:KNDI) and nine other companies to supply 20,000 electric vehicles (EVs) for the city’s “pilot” EV leasing program. Kandi is the only EV supplier to take part; other companies involved will supply the batteries (Air Lithium (Lyoyang) Co. Ltd.) and charging by the local utility. The utility will fund construction of a charging and battery swap station network as well as paying for the batteries.

The batteries will serve a dual use for grid stabilization, or Vehicle to Grid (V2G) technology. The batteries will be financed by charges to electricity customers because of this dual use. So, in addition to this being the largest EV sale ever announced, the project is also effectively the largest scale trial of the use of EV batteries for V2G. V2G is a concept much talked about in academic circles, but so far if has only seen small scale pilot projects in the West. Part of the problem with implementing V2G is typically the split incentives between battery owners and the utility. Battery owners naturally worry about reduced performance of their very expensive battery packs if they are used for V2G. The Hangzhou project neatly avoids this conflict of interest because the utility owns the batteries, and the EVs are only available for lease.

Financial Impact for Kandi

The program will begin in August, and is scheduled to be completed by the end of 2013. We can expect Kandi to sell EVs at a rate of over 1000 per month during implementation. Kandi’s revenues for each vehicle will be around $6800 per EV.


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