Executive Summary / Key Takeaways

• Kandi Technologies is undergoing a significant strategic transformation, pivoting from a conventional off-road vehicle manufacturer to a diversified holding platform centered on intelligent equipment and new energy infrastructure.
• Despite a 39.3% year-over-year revenue decline in H1 2025 to $36.3 million, the company demonstrated operational resilience with a substantial gross margin improvement to 45.2%, driven by refined operations and product mix.
• Strategic partnerships, notably with CATL for heavy truck battery swapping equipment and Deep Robotics for intelligent equipment, are foundational to Kandi's growth incubation strategy in emerging high-potential sectors.
• Kandi maintains an exceptionally strong liquidity position with $257 million in cash and equivalents as of June 30, 2025, providing ample capital for its ambitious 2025-2029 growth plan, which includes U.S. localization for manufacturing.

• The company's stock is perceived by management and some investors as seriously undervalued, trading significantly below its cash and book value, presenting a potential disconnect between fundamental strength and market perception.

Setting the Scene: Kandi's Evolution in a Dynamic Market

Kandi Technologies Group, Inc., founded in 2002, has a rich history as a pioneer in China's electric vehicle sector. The company garnered significant recognition in the mid-2010s, earning "Innovator of the Year in China for EVs in 2014" and seeing its K17 model named "Car of the Year for all of China 2015." By 2015, Kandi achieved a notable milestone, becoming the first Chinese company to produce 25,000 EV units in a single year. This foundational experience in electric mobility laid the groundwork for its current strategic direction.

Today, Kandi operates primarily in the electric off-road vehicle market, offering a diverse portfolio including all-terrain vehicles (ATVs), utility vehicles (UTVs), go-karts, and golf carts for leisure, agricultural, and site transportation applications. The company's overarching strategy is a "dual-engine" approach, balancing stable cash flow from its traditional off-road vehicle operations with growth incubation from emerging intelligent equipment and new energy infrastructure businesses. This strategy marks a transformation from a conventional manufacturer into a holding platform with intelligent equipment manufacturing at its core. Kandi's foundational strengths include over a decade of experience in battery swapping technology and an impressive in-house manufacturing rate exceeding 90% for its products.

The broader industry landscape is characterized by increasing demand for electric and eco-friendly mobility solutions, a fast-growing smart mobility sector in China, and a favorable environment for battery swapping technologies due to gradually dropping battery costs. These trends create both opportunities and competitive pressures. Kandi's competitive positioning is primarily as a cost-focused player in niche EV and off-road segments, contrasting with larger, more technologically advanced rivals in the broader EV market.

Technological Edge and Strategic Innovation

Kandi's strategic pivot is deeply rooted in its technological capabilities and ongoing innovation. The company's core differentiated technology lies in its extensive experience and patents within the battery swapping sector, coupled with its independently developed cloud-edge terminal intelligence computing system.

In the new energy infrastructure sector, battery swapping technology remains a key strategic cornerstone. Kandi has been advancing this technology for over a decade, establishing itself as an industry pioneer. This deep expertise has culminated in a significant partnership: Kandi's subsidiary, China Battery Exchange (Zhejiang) Technology Co., Ltd., has secured its first major order from CATL, a global leader in power batteries, to supply heavy truck battery swapping station equipment. This collaboration supports CATL's ambitious "10,000 stations plan," positioning Kandi to generate substantial revenue and strengthening its technological leadership in a rapidly expanding market.

The company is also making inroads into intelligent equipment through a collaboration with Deep Robotics, a leading Chinese innovator in embodied intelligence. This partnership aims to jointly develop intelligent golf equipment, such as golf caddy robots, and quadruped robots for security inspections. These emerging small devices, leveraging Kandi's cloud-edge terminal intelligence computing system, are designed to meet diverse market needs and unlock substantial growth potential for the intelligent equipment business.

Furthermore, Kandi is investing significantly in lithium battery production and research and development. R&D expenses increased by 48.5% to $2.5 million in H1 2025, primarily due to a new battery product R&D project. The company plans to invest $100 million in the U.S. in 2025 to establish a lithium battery manufacturing and battery pack facility, primarily to supply the North American market. This U.S. localization roadmap, including a partnership with CBAK Energy (CBAT), aims to bring production closer to the end market and leverage clean energy incentives, mitigating trade tensions and enhancing supply chain resilience. Kandi is also in the early R&D stages for starter batteries, a market projected to reach RMB 206 billion by 2030, and is exploring AA/AAA lithium batteries for the U.S. market. These technological advancements and strategic investments are crucial for Kandi to build competitive moats, enhance its market positioning, and drive long-term growth.

Financial Performance and Operational Resilience

Kandi's financial performance in the first half of 2025 reflects a period of strategic adjustment amidst global macroeconomic uncertainties. Six-month revenues for H1 2025 totaled $36.3 million, a 39.3% decrease year-over-year, primarily due to lower sales of off-road vehicles and EV products. Revenue from off-road vehicles and associated parts specifically decreased by 37.0% year-over-year to $34.0 million. Despite this revenue contraction, Kandi demonstrated notable operational resilience. The gross profit margin significantly improved to 45.2% in H1 2025, up from 31.7% in the same period of 2024. This improvement was driven by more efficient resource allocation, inventory optimization, a favorable product mix, regional revenue distribution, and increased sales of previously impaired inventory.

Operating expenses decreased by 21.4% in H1 2025, with selling and distribution expenses declining in line with the revenue reduction. General and administrative expenses also saw a decrease, mainly due to reduced depreciation from a one-time asset impairment in late 2024 and lower stock compensation expenses. Net income for H1 2025 was $1.7 million, a decrease of 28.7% compared to $2.4 million in H1 2024, mainly attributable to the decline in net revenue and a loss from long-term investment.

Looking back at 2024, Kandi delivered modest revenue growth, driven by steady demand for its electric off-road vehicles. However, Q3 2024 revenue temporarily declined to $29.9 million from $36.4 million in Q3 2023, influenced by changes in the sales model for fully electric off-road vehicles. For the first nine months of 2024, revenue totaled $89.8 million, a 5.7% decrease year-over-year.

Kandi maintains an exceptionally strong liquidity position, which is critical for funding its strategic transformation. As of June 30, 2025, the company held $257 million in cash, cash equivalents, restricted cash, and certificates of deposit, a substantial increase from $126.3 million at the end of 2024. Working capital stood at $237.8 million. This robust financial standing provides ample liquidity to support both ongoing business expansions and strategic growth initiatives, including planned investments in U.S. manufacturing. Operationally, Kandi has expanded its dealer network to 1,050 retail outlets, improving its dealer-to-retail sales mix from 1:29 to 2:28 as of June 2025, reflecting a more diversified and resilient channel structure.

Outlook and Growth Drivers

Kandi's forward-looking strategy is encapsulated in its "dual engine strategy," balancing stable cash flow businesses with growth incubation businesses. The company's new management team has developed a detailed 2025-2029 growth plan, approved by the Board, which aims for stronger growth and new opportunities across all business segments.

In the core off-road vehicle segment, Kandi anticipates launching several new products by mid-2026, which are expected to provide new growth momentum and enhance market competitiveness. The company projects a conservative average revenue of $6,000 per off-road electric vehicle, reflecting a diverse product mix, with an achievable average gross margin of 30% on global sales. The exclusive partnership with Lowe's (LOW) for NFL-branded golf carts, a three-year plan, is also expected to elevate the Kandi brand and drive sales, with discussions underway to expand beyond online sales to physical stores.

The emerging intelligent equipment and new energy infrastructure segments are poised for significant growth. The CATL partnership for heavy truck battery swapping equipment is expected to generate substantial revenue as China implements its "10,000 stations plan." Kandi's collaboration with Deep Robotics for intelligent golf equipment and security robots also targets substantial growth potential in the embodied intelligence field.

Internationally, Kandi is actively exploring European and Southeast Asian markets, with trial sales already underway in over a dozen countries, and expects a certain sales volume to materialize next year. Domestically in China, the company is targeting the fast-growing smart mobility sector, aiming to become a top supplier and operator in the battery swapping market. This includes a potential acquisition of Hangzhou Honghu, a car-hailing platform with projected annual revenue of $24.37 million in 2025, increasing by 2029.

To support its North American growth and mitigate trade tensions, Kandi plans to invest $30 million in 2025 to establish a U.S. based production line for golf carts and utility vehicles, with a preliminary site selection around Dallas, Texas. This localization effort, alongside the planned $100 million investment in a U.S. lithium battery manufacturing facility, is designed to enable faster deliveries, improved after-sales support, and closer proximity to key markets.

Risks and Challenges

Despite its strategic initiatives and strong financial position, Kandi faces several notable risks and challenges. The global macroeconomic landscape remains clouded by considerable uncertainty, creating real headwinds for its business, as evidenced by the revenue decline in H1 2025. The company is also mindful of pressures from international trade tensions and the potential for tariffs on Chinese-manufactured vehicles, which could impact profitability and market access. While Kandi is actively mitigating these risks through its Taiwan manufacturing footprint and planned U.S. production, these measures involve significant investment and execution risk.

Kandi's financials have shown volatility and inconsistency, with some external analyses noting concerns about transparency on segment performance and cash movements. The company is entering new, unproven business lines, which, despite their potential, raise questions about strategic focus and capital allocation priorities amidst core revenue declines. Furthermore, the stock price has been significantly undervalued, trading at a 15-year low and substantially below its cash and book value. Management attributes this to market factors, including uncertainties from the U.S. election and a pessimistic "pricing effect" in the capital market, acknowledging that the stock is "seriously totally undervalued." This persistent undervaluation and lack of strong sell-side analyst support present a challenge in attracting broader investor interest.

Competitive Positioning

Kandi operates within a highly competitive landscape, facing both large, diversified EV manufacturers and specialized off-road vehicle producers. Its primary direct competitors in the broader EV and battery space include industry giants like Tesla (TSLA), NIO (NIO), XPeng (XPEV), and BYD (BYDDY). While these companies often boast superior R&D budgets, faster innovation cycles in areas like autonomous driving, and larger market shares, Kandi carves out a niche through its cost-focused approach and specialized product offerings.

Kandi's competitive strengths lie in its manufacturing expertise, with over 90% of its products manufactured in-house across its facilities in Hainan (golf carts, motors), Jinhua (UTVs, ATVs, beach carts), Yongkang (motors, electronic controls), and Jiangxi (delivery batteries, battery packs). This vertical integration and cost leadership allow Kandi to offer competitive pricing, particularly in price-sensitive segments. The company's established presence in the off-road vehicle market, reinforced by key partnerships like the exclusive deal with Lowe's for NFL-branded golf carts, demonstrates its ability to meet rigorous vendor selection processes and deliver value. This partnership, in particular, highlights Kandi's quality and value proposition, enabling it to secure a significant account over more seasoned golf cart makers.

In the battery swapping sector, Kandi's decade-long experience and patent portfolio provide a distinct advantage, positioning it as a pioneer. The strategic partnership with CATL, a global leader in power batteries, for heavy truck battery swap station equipment is a testament to Kandi's technological credibility and market relevance in this specialized area. Similarly, its collaboration with Deep Robotics in embodied intelligence leverages its cloud-edge terminal computing system to develop unique intelligent equipment, differentiating it in an emerging high-tech field.

However, Kandi's smaller scale compared to rivals like BYD (known for its integrated supply chain and mass production) or Tesla (with its global brand and advanced software) means it may lag in overall production efficiency and market share capture in the broader EV market. While Kandi's products in the U.S. lithium battery market are competitive, the rapid pace of technological change and the greater resources of larger companies in R&D pose a continuous challenge. The company's strategic adaptability, evident in its diversified product line and U.S. localization efforts, is crucial for maintaining its competitive edge against these formidable forces.

Conclusion

Kandi Technologies is at a pivotal juncture, executing a transformative "dual engine strategy" to diversify its revenue streams and capitalize on emerging opportunities in intelligent equipment and new energy infrastructure. While the first half of 2025 presented revenue headwinds, the company's significant gross margin expansion and robust liquidity underscore its operational resilience and financial stability. Strategic partnerships with industry leaders like CATL and Deep Robotics, coupled with ambitious U.S. localization plans for manufacturing, position Kandi for long-term growth in high-potential markets.

The investment thesis for Kandi hinges on its ability to successfully execute this strategic pivot, leveraging its deep manufacturing expertise and technological advancements in battery swapping and intelligent systems. Despite a currently undervalued stock price, which management attributes to broader market uncertainties, the company's strong balance sheet and clear growth roadmap provide a compelling narrative for discerning investors. Monitoring the progress of its new ventures, the impact of U.S. manufacturing on mitigating trade risks, and the realization of its 2025-2029 growth plan will be critical indicators of Kandi's potential to unlock significant shareholder value.