The Final Results of Government Subsidy Review Related to Kandi’s JV Company Released
12/20/2016
Jinhua, China - (December 20, 2016) - Kandi Technologies Group, Inc. (the "Company" or "Kandi") (NASDAQ GS: KNDI) today announced that the final results of the review of subsidy payments for electric vehicles (“EV”s) manufactured by Kandi Electric Vehicles Group Co., Ltd. (the “JV Company,” a 50/50 joint venture between Kandi and Zhejiang Geely Holding Group)from 2013 to 2014 were released. The results came from the Ministry of Finance of China, the National Development and Reform Commission, the Ministry of Industry and Information Technology of China, and the Ministry of Science and Technology of China (collectively, the “Government”). According to the final results, the Government will re-calculate subsidy payments for EVs that were manufactured during the 2013-2014 period pursuant to the 2016 subsidy eligibility guidelines. This re-calculation is the result of certain complications in the JV Company’s advanced reusable battery exchange model that necessitated further clarification to the Government. As a result of dialogue with the Government, the JV Company has made modifications to its battery exchange model and has obtained Government approval in February of 2016. Based on subsidy guidelines, our EV models were eligible to receive Government subsidies of RMB 50,000.00 (approximately USD 7,195.00) in 2013, RMB 47,500.00 (approximately USD 6,835.00) in 2014, and RMB 45,000.00 (approximately USD 6,475.00) in 2016 on a per car basis. Applying the 2016 subsidy eligibility guidelines for those EVs it manufactured from 2013 to 2014, the JV Company estimates it will need to write off approximately USD 6.6 million of previously recorded account receivables. EVs that were manufactured in 2015 and 2016 remain eligible for the same amount of Government subsidies.
Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, “after discussion with governmental authorities, the confusion surrounding the EVs manufactured and sold by the JV Company during 2013 and 2014 that used the reusable battery exchange model were finallyproperly resolved. Although our partner received a slight penalty from the Government, the JV Company itself incurred roughly USD 6.6 million in lost subsidies which converts into USD 3.3 million losses to Kandi on the equity method of accounting basis. The Government subsidy review did not cause the major losses, but it has had a significantly negative effect on our business this year; however, now that it is over, it may have a strong positive impact on healthy growth of the renewable energy vehicle industry in the future. Going forward, we will be able to focus on our core business expansion and we believe Kandi’s future growth will increase shareholder value.”
Note: All the currency conversions from RMB to USD referred to in this press release is based on the exchange rate of 1RMB = 0.1439 USD, published by www.xe.com on the date before the release of this press release.
Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, “after discussion with governmental authorities, the confusion surrounding the EVs manufactured and sold by the JV Company during 2013 and 2014 that used the reusable battery exchange model were finallyproperly resolved. Although our partner received a slight penalty from the Government, the JV Company itself incurred roughly USD 6.6 million in lost subsidies which converts into USD 3.3 million losses to Kandi on the equity method of accounting basis. The Government subsidy review did not cause the major losses, but it has had a significantly negative effect on our business this year; however, now that it is over, it may have a strong positive impact on healthy growth of the renewable energy vehicle industry in the future. Going forward, we will be able to focus on our core business expansion and we believe Kandi’s future growth will increase shareholder value.”
Note: All the currency conversions from RMB to USD referred to in this press release is based on the exchange rate of 1RMB = 0.1439 USD, published by www.xe.com on the date before the release of this press release.
