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Kandi Technologies Group Inc (KNDI) Q1 2019 Earnings Call Transcript

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Kandi Technologies Group Inc (NASDAQ: KNDI)
Q1 2019 Earnings Call
May. 10, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to Kandi Technologies First Quarter 2019 Financial Results Call. Today's conference is being recorded. And at this time I'd like to turn the conference over to Kewa Luo, IR Manager. Please go ahead.

Kewa Luo -- IR Manager

Thank you, Operator. Hello everyone and welcome to Kandi Technologies Group Inc. First quarter 2019 earnings conference call. The company distributed its earnings press release earlier today and you can find a copy on Kandi's website at www.kandivehicle.com. With us today are Kandi's Founder, Chairman and Chief Executive Officer Mr. Hu Xiaoming and the Interim Chief Financial Officer Ms. Zhu Xiaoying, Mr. Hu and Ms. Zhu will deliver prepared remarks followed by a question and answer session.

Before we get started, I'm going to review the Safe Harbor Statement regarding today's conference call. Please note that our discussions today will contain forward looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward looking statements involve inherent risks and uncertainties. As such the Company's results may differ materially from the views expressed today. Further information regarding these and other risks and uncertainties are included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Any other documents filed with the US Securities and Exchange Commission.

Kandi does not assume any obligation to update any forward looking statement,s except as required under applicable law. As a reminder, this conference call is being recorded. In addition an audio webcast of this conference will be available on Kandi's Investor Relations website. I will now turn the call over to Kandi's Founder, Chairman and CEO Mr. Hu Xiaoming.

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language) Hello ladies and gentlemen, thank you for joining our first quarter 2019 Earnings Conference Call. Total revenues in the first quarter increased 116.8%, which represents a incredible year-over-year growth. However, the Chinese Government's national subsidy policy adjustment during the first quarter, coupled with the JV Company's pending restructuring, which is taking place in the first quarter -- which is taking place in order to maximize the JV Company's ability to grow into a prominent company, has resulted in our modifying the JV Company's business development plan with respect to its integration into Geely, under Geely's management as a primary shareholder.

This transition period has directly impacted production production and sales causing a loss for the JV Company. Despite this transitional period, the JV company has made many meaningful advances in the first quarter. In the beginning of the year, Kandi Jiangsu received an approval notice from Jiangsu Development and Reform Commission with respect to Kandi Jiangsu's application to our annual capacity of 50,000 pure electric vehicle projects, which we have prepared for two years. This approval gives Kandi Jiangsu a license to build a factory for EV manufacturing.

In April a team of EV industry experts from the Ministry of Industry and Information Technology came to conduct a onsite technical review and we are currently anticipating approval. If the approval arrives Kandi JV will qualify for dual production license as they recognize the automobile production and sale enterprise. Additionally, Kandi has taken advantage of every available opportunity to get into the online ride-hailing market by signing cooperative agreements with several major industry players such as Zhejiang Ruibo, Caocao Zhuan Che, China Resources (Zhejiang), and Didi Chuxing to provide government-accredited EVs.

We strongly believe that car-sharing is a promising area with significant room for growth and that the Company's continued efforts in laying the foundations for supplying government accredited EV's to drive sales growth will allow us to regain our position as the leading electric vehicle products manufacturers in the market. Furthermore the JV Company will be able to achieve faster growth with Geely's corporate resources and branding profile.

While the restructuring reduces Kandi's equity stake in the JV company to 22%, we believe that the value of Kandi's 22% equity ownership in the JV company following the restructuring will far exceed Kandi's original 50% percent equity in the future. Now I would like to turn the call to our Chief Financial Officer Ms. Zhu Xiaoying to give you more details on our financial highlights. After that I will take the questions. Thank you.

Kewa Luo -- IR Manager

(Foreign Language) Thank you Mr. Hu.

Zhu Xiaoying -- Interim Chief Financial Officer,

Hello everyone on the call. Now. I would like to provide a brief overview of our financial results for the first quarter 2019. Please note that all numbers I will discuss today are in US dollars, unless otherwise noted. (Foreign Language) First, let me walk you through the first quarter financial results in 2019. Total net revenues for the first quarter of 2019 were $18.1 million, an increase of $9.7 million or 116.8% from $8.3 million in 2018. The increase in revenues was due to an increase in sales of both the EV parts and off-road vehicles during this quarter.

(Foreign Language) EV parts sales were approximately $12.8 million in the first quarter of 2019, accounting for 70% of our total net revenues, a increase of $6.4 million or 100.4% from $6.4 million compared to 2018.

(Foreign Language) Revenue from sales of off-road vehicles were $5.3 million in the first quarter, accounting for approximately 29.3% of our total net revenue, a increase of $3.3 million or 169.8% compared to the same period of 2018. By increasing revenue from off-road vehicles was largely due to additional sales from SC Autosports, which became our wholly owned subsidiary in the US in July 2018.

(Foreign Language)

Our cost of goods sold was $14.9 million during the first quarter, an increase of $7.9 million or 113.6% from $7 million in the same quarter of 2018. The increase was primarily due to the corresponding increase in sales.

(Foreign Language)

Gross profits in the first quarter was $3.1 million, an increase of $1.8 million or 133% from $1.3 million for the same period last year. Gross margin in the first quarter increased to 17.4% from 16.1% in the first quarter of 2018. The increase in gross margin was due to the higher growth margin from SC Autosports off-road vehicle sales.

(Foreign Language)

Total operating expenses in the first quarter was $3.2 million, increased 188.5% compared with $1.1 million in the same quarter of 2018. The increase in total operating expenses was primarily due to the increase to general and administrative, which was $2.4 million in this quarter compared with $0.4 million in the same quarter last year, largely due to increased operation costs such as depreciation of fixed assets after Hainan facility has begun its official production.

(Foreign Language)

GAAP net loss in the first quarter was $4.4 million or $0.09 loss per fully diluted share, compared with GAAP net income of $3.7 million or $0.07 earnings per fully diluted share in the same quarter of 2018. The decrease was primarily attributable to the increase the share of loss of the JV company compared to the same period of last year. The JV Company's first quarter's net loss was $20 million and last year in the same period was net income of $1 million.

Non-GAAP net loss in the first quarter was $4.5 million compared with non-GAAP net loss of $0.6 million in the same quarter of 2018. Non-GAAP loss per share was approximately $0.09 per fully diluted share for the first quarter of 2019 compared with non-GAAP adjusted loss per share of $0.01 per fully diluted share for the same quarter of 2018.

(Foreign Language)

Let me touch on the JV financials now.

(Foreign Language)

For the first quarter of 2019, the JV company's net sales were $1.3 million, gross loss was $$0.02 million, and net loss was $20.2 million.

(Foreign Language)

During the first quarter of 2019, the JV company didn't sell any EV products, due to the transitional period.

(Foreign Language)

Kandi's investments in the JV company are accounted for under the equity method of accounting, since known to equity conversion in the JV company was completed at the end of this quarter and the equity transfer has not been completed as of March 31, 2019. Kandi recorded 50% of the JV company's loss of $10.1 million for this quarter, after eliminating internal activity profits and losses Kandi's share of the JV companies after tax loss was $9.9 million for the first quarter of 2019.

(Foreign Language)

Next I will reveal the company's cash flow.

(Foreign Language)

For the first quarter of 2019, cash used in operating activities was approximately $14.0 million, as compared to cash used in operating activities of approximately $1.1 million for the same period last year. The major operating activity that used the cash for first quarter of 2019 was an increase in other receivables and other assets of approximately $14.3 million and an increase of accounts receivable of $18 million. Meanwhile the major operating activities that provided cash for first quarter of 2019 were an increase of accounts payable of approximately $22.6 million.

(Foreign Language)

For the first quarter of 2019, cash used in investing activities $0.3 million as compared to cash used in investing activities of $3 million, -- $3.9 million for the same period last year. The major investing activities that used cash for first quarter of 2019 was $0.3 million in purchases of company property.

(Foreign Language)

For the first quarter of 2019, cash used in financing activities was zero, as compared to cash used in financing activities of $3.1 million for the same period of last year. The major financing activities that provided cash for the first quarter of 2019 were proceeds from short-term bank loans of approximately $2.8 million. The major financing activities that used to cash for the first quarter of 2019 were approximately $2.8 million of repayments of short term bank loans.

Questions and Answers:

Operator

(Operator Instructions) We will take the first question from Arthur Porcari from Corporate Strategies Incorporated.

Arthur Porcari -- Corporate Strategies Incorporated. -- Analyst

Good morning all. Mr. Hu, a great quarter especially since we had the problems with the car sales shifting over to the -- not a problem -- but shifting over to the the new vehicles. But kind of extended type question, multipart here. But I want to first the kind of lay some groundwork here. On March 25th, Mr. Hu announced in regards to restructuring the JV equity as a fantastic move, shifting control of the 77.9% to Li Shufu's Geely Holdings. As a longtime follower of Kandi, I fully agree with Mr. Hu's excitement from a market point of view though to have China's unquestionable top automaker and second wealthiest member of the government's National People's Congress, representing the Kandi JV from a control position, should have equated as if in the US to a control shift to an Elon Musk type.

But obviously at least for now it has not. With this transaction Li Shufu has now shown total commitment by tripling his cash investment at JV to over $317 million in just the past year. To put this in perspective excluding only his $1.5 billion to buy Volvo, his Kandi JV investment has now surpassed by over $110 million his total cash investment in London Black Cab company, Lotus, Malaysia's top auto company Proton, Zhidou, Smart Daimler, and even the $3 million he first put up in 1997 to buy Geely Auto. Go ahead and pass that on to Mr. Hu right now and then I've got one more thing and then some questions.

(Foreign Language)

(Foreign Language)

Okay, this is quite a show of confidence in the future of the JV by Li Shufu, while Kandi will receive over a $1.50 share in cash, which should put it in pretty excellent financial condition, though I guess we have not received any of that yet from looks at the 10-Q. But at that time the market didn't agree with Mr. Hu, and had punished the stock severely on the news. So I've got a series of four short -- fairly short questions here. Can Mr Hu tell the shareholders in his own words why he feels this was so strong a deal for Kandi, that two days later he personally increased his open market purchased over 700,000 shares by adding another 137,552, in the open market.

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

Thank you for your question. Regarding your question, I like to share that, as the Renewable Energy Vehicle Industry is gradually developing, and given the nations increasing support, both to transitional car manufacturers and new innovative car manufacturers are all moving into the renewable energy vehicle manufacturing sector. Therefore the competition in this market will be extremely, extremely intense. In the past two years, the renewable energy auto industry has been going through a reshuffling, and manufacturers capabilities and branding must distinguish one another to survive. In order to bring the JV Company back to its position as a leader in the sector, having Geely in charge will be the best option. Geely's capital investment in the JV Company is a strong indicator of Geely's confidence in strengthening and growing the JV Company's business.

It is evident to us that Kandi's 22% equity in the JV revenue will far exceed Kandi's original 50% ownership. Therefore I think this equity restructuring is the biggest achievement so far this year. Additionally, like you said I bought more than 130,000 shares of Kandi in open market to show my support and confidence in the company in view of our stock being seriously undervalued.

Arthur Porcari -- Corporate Strategies Incorporated. -- Analyst

Okay. Is Kandi still going to be the main supplier of batteries and parts to the JV. And can you tell us what parts are included?

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

According to the joint venture agreement, Kandi is definitely a major supplier with per -- already under the same conditions.

Arthur Porcari -- Corporate Strategies Incorporated. -- Analyst

Okay. By the way, how about additional -- I noticed in the last few quarters that the mix has been starting to spread out. Are we finally starting to sell parts to other companies?

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

That will be the case, but going forward we will gradually also sell the parts to other companies.

Unidentified Participant

Okay. This has to do with the bullet number three on the press release, or at least they came out on the restructuring. Why was this transaction with Kandi done at registered capital level and is it a good assumption to say that the two year potential buyback of Kandi has an option to regain the interest from the JV from Li Shufu for Kandi shares, what percent was Kandi may be allowed to buyback? Do we know that yet?

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

(Foreign Language)

Well, you ask two questions. First of all is, I think it is very positive news that Geely is willing to accept JV based on the registered capital valuation. Because relying on JV on developing past, we no longer feel any advantages in such competitive market. Imagine that if we continue this path with the industry reshuffling. Then, the JV company probably will be become less valuable. So, I think actually it's the best option that Geely is willing to accept JV, based on the registered capital level. Secondly, I am taking into account both parties' aligned visions in the collaboration during this equity restructuring.

The two parties agreed to jointly explore the option of purchasing a portion of the JV company equity held by Geely in the form of issuing new shares within two years after the equity transfer, resulting in Geely becoming a significant shareholder of Kandi Technologies. These items was actually agreed upon based on the two parties following discussions and not necessarily will be executed. Whether or not to execute it in within two years will depend on the extent to which such a move will help maximize Kandi Technologies shareholders value at that time. If by then it's not going to be a great deal for Kandi shareholders, then we are not necessarily going to do it.

Arthur Porcari -- Corporate Strategies Incorporated. -- Analyst

Okay. The-- since Mr. Hu mentioned it again over here, reminded us about his buying shares. Is you thinking about buying any more shares or maybe with the extra $76 million dollars coming into the company over the next quarter or so, what's the chance that the company might buy back some shares?

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

Actually we have already hosted our board meeting and because right now is a quiet period, we cannot do-- announce anything really to buyback. But approximately next Tuesday, we will announce what we're going to be doing regarding to that.

Arthur Porcari -- Corporate Strategies Incorporated. -- Analyst

Very good thank you very much. Great quarter, good year ahead.

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

Thank you.

Operator

The next question comes from Ted Schwartz, Private Investor.

Ted Schwartz -- Private Investor

Yeah, hi Kewa. With that visit from the MIIT people, has the joint venture now completed all of its necessary requirements to get the dual license. And if so, when does Mr. Hu expect he'll be able to announce that they finally got it?

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

First of all, the first license that we received that, we have prepared for three years. And for the second one, we have completed all the application process, but this is going to be approved by the MIIT. And we believe that it's going to be -- pretty soon in the near future that we should hear from them regarding the approval.

(Foreign Language)

Once we received this approval we will announce the news immediately. (Translator-- Mr Hu Added).

Ted Schwartz -- Private Investor

Alright thank you.

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

Thank you.

Operator

The next question comes from Mike Pfeffer from Oppenheimer.

Mike Pfeffer -- Oppenheimer -- Analyst

Good morning. Thanks for taking my call. How does Mr. Hu feel about his 20,000 unit forecast for this year and is 75,000 to 100,000 units, a realistic total goal for this year plus next year? And then I have one more quick question. Thank you.

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

Right now the management team as we find the business plan and our objectives after the JV company restructuring, so until the plans are finalized, I think today I cannot share any detailed information, but however once the restructuring is complete we will have more updated objectives I can share. But in my opinion, with Geely's management, I don't think it's going to be bad, it will be even better than what we used to be.

Mike Pfeffer -- Oppenheimer -- Analyst

Thank you. And there's one more question. In early 2017, it was reported in the 2016 10-K that Kandi had been approached by Jinhua government agency to acquire Kandi's legacy facility for around $160 million. While Mr. Hu said in the last conference call, he was in no hurry to sell it. Has its value increased over the past years past two years, and if so how much? Once again, thank you.

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

First of all, this land is actually right now becoming more and more valuable, it's considered to be the best of zoning by the government. So, I think the more delays, the better it's going to become for us. And, I cannot make the initiation, and do I need to wait for the government officials to come to talk to me and once in a while they do come to speak with me, but it hasn't really officially discussed on this matter. So, I do believe that sooner or later this land needs to be taken back by the government. So this will be a great deal. And on a cash front, we're going to receive money from the JV restructuring. Additionally the subsidy payments go into our balance sheet too, so we shouldn't have any cash flow problem.

Mike Pfeffer -- Oppenheimer -- Analyst

Thanks again.

Kewa Luo -- IR Manager

Thank you.

Operator

Next question comes from Michael Fairnow from Focus Tech Investments.

Michael Fairnow -- Focus Tech Investments -- Analyst

Yes. Hello, thank--according to your current press release, you're clearly focused on the joint ventures, on the ride sharing services and that's further confirmed by the two agreements that had previously been announced. One for 300,000 EV's over five years, which I believe will total about $7 billion in revenues for China's largest ride-hailing service. And the other one for 20,000 vehicles over three years for a Geely wholly owned subsidiary, which I understand is a white-glove ride hailing service. In the last conference call, you talked about the requirement because of the government accreditation that it would -- the cars would be the K-23 and in development K-8B. I've actually got a two part question.

The first part is -- can you expand on the pricing of the K-23 and the K-8B and when will they will likely put into production? And also, any other similar cars that are in production?

(Foreign Language

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

Since the beginning of the year, the JV company has done a great deal of groundwork for entering the online ride-hailing market. The Model K-23 is the model that the online ride-hailing vehicle specifications of the Chinese governments. And the ex-factory a price is around RMB100,000. The Model K-23 will start its trial operation in Hangzhou in the near future. The Model K-8 also meets the requirements for modern ride-hailing as a high end vehicle, and is scheduled to launch in the market at the end of this year, with the ex-factory price of around the RMB140,000 Going forward it is anticipated ideally together with the JV company, we will develop new models, including some some features like autonomous driving to meet the demand of the car share market.

Michael Fairnow -- Focus Tech Investments -- Analyst

Thank you, and kind of additional follow up on the two joint venture agreements that have previously been announced. Can you give us some guidance on how (inaudible) because that totals 300,000 for five years and 20,000 for three years. Can you give us some guidance on how much would deliver this year for those two agreements? And also, could we expect announcements of similar agreements during this calendar year. If not, when would you expect that to happen? Just a final note, when that when you get a final agreement on the restructuring of the joint venture. Could we possibly expect a conference call to further expand on the detail of this major restructuring? Thank you.

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

Ok. First of all, Mr Hu is emphasizing that right now we're doing a process of refining the business plan for the JV company. So I really cannot share much right now, since after the restructuring it's going to be under Geely's control. But once we have the restructuring finished and the finalized version of the business plan we will I share with the market. I don't think it's necessary, where we're going to host a conference call, but certainly I will share the plan with the market and the shareholders.

Michael Fairnow -- Focus Tech Investments -- Analyst

Thank you.

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

Thank you.

Operator

The next question comes from (inaudible).

Unidentified Participant

Good morning and thank you for taking my question. Let me state first that my original interest in Kandi comes from the Joint Venture with China State Grid to install the quick battery exchanges as a nationwide standard for recharging electric vehicles. So I was really interested that you are reviving this with the 300,000 EV program with the government sponsored ride-hailing program. So could you tell us if the new QBX is similar to the old one with robotic arms on each side sliding out the old battery and the new one in? Or is the model different? And then, has the company put out any videos of the QBX working with the new electric vehicle generation? Is there also a mobile version of the QBX as was the case with the old one? And if so will that also be available in the US models? And then I have an additional question.

Kewa Luo -- IR Manager

Okay.

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

Kewa Luo -- IR Manager

Hello?

Unidentified Participant

Yes.

Kewa Luo -- IR Manager

Okay. (Multiple Speakers) Yeah, I think probably he's disconnected, but what he has said so far is Hu Xiaoming and his partner are actually developing a new automatic battery exchanging equipment. It is expected to start its trial operation of this new equipment in the second quarter. After it is officially launched, we believe that a will increase battery power's efficiency and largely reduce the labor cost. And, this equipment will be also sold to the battery exchange companies too.

Unidentified Participant

I see. So I'm assuming Kandi subsidiary Jinhua An Kao is involved in the QBX just what is it that they sell and who do sell it to?

Kewa Luo -- IR Manager

Okay, I think Mr Hu is disconnected. Hey, Operator. (Multiple Speakers) (Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

Okay so right now actually it's An Kao -- Jinhua An Kao to be in charge in developing the new QBX equipment and they are also going to be in charge of selling the equipment to others. For example, the agreement we signed a with China Resources Zhejiang. When they need the equipment that will be sold by Jinhua An Kao.

Unidentified Participant

I see. Thank you. Sir, I have one more question. I'm still, as many others mystified by the joint venture share count and I read in the filing that he posted then that you have a pre arrangement that after some time Kandi can regain its original share in the joint venture for a stock-exchange with Kandi Technology Group shares. So I'm wondering will that exchange happen based on the price -- the share price of Kandi? Or is it a prearranged percentage of Kandi shares that will automatically transfer into -- back into the Geely joint venture? Could you give us some color on that?

Kewa Luo -- IR Manager

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

I have discussed this earlier on the call. But I want to emphasis one more time that this is actually an open auction. It's not necessarily had to be done exactly. And in terms of the term of the buying back the equity we're depending on the situation then. And if it's not for the best interests of the Kandi Technologies shareholders, I wouldn't do it. So by then the two parties still have opportunity to discuss whether it is the best option. So I think it will solely depending on whether it is good for Kandi.

Unidentified Participant

I see. Thank you.

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

Thank you.

Operator

The next question comes from Walter Hill from Carty & Company.

Walter Hill -- Carty & Company -- Analyst

From the last conference call Mr. Hu said. Okay, right now there are K-23, K-22 and EX-3 are presently in production and in March we have plans of 300 K-23 sets of EV parts for the production at the Hainan facility. So we plan to have the 300 sets of EV parts produced this month. So the sales probably will happen next month. My questions are were the 300 new K-23 sets produced in March and sold in April as expected? And who were they sold and since Kandi still owns the Hainan facility, how does that affect Kandi's revenues?

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

Well the original plan was to finish the production of these 300 K-23 sets of EV parts by March and they are actually still selling them to the JV Company gradually, but due to the JV Company restructuring occurring sometime in the second half of March. So, JV company right now is working on redefining expenses business plan and however, like I just said the Hainan factory has already started to ship some sets off EV parts to the JV Company.

(Foreign Language)

Because the Hainan is still 100% owned to Kandi so every sales that occurred, the revenue will be belonging to our Kandi.

Walter Hill -- Carty & Company -- Analyst

Thank you.

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

Thank you.

Operator

The next question comes from Jack Cronin a private investor.

Unidentified Participant

Can Mr. Hu give us an update on the U.S. sales initiative? Basically I have two questions. The first question as stated in the last conference call, are we still on track to have 50 to 100 cars sent to the U.S. by the end of this month, and will the U.S. EX-3 be able to achieve a speed of at least 75 miles per hour with a range of 200 miles and have to say its charge feature? And will that K-23 and K-8 be considered for U.S. sales?

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

Okay, thank you for your question.

(Foreign Language) (Multiple Speakers) Hello? Hello? (Foreign Language)

Yes we do still have the same plan that we are going to say 50 vehicles to the United States in the very near future and the model EX-3 has a driving range of 300 kilometers, which is about 186 miles and the top speed of 120 kilometers per hour, roughly 80 miles per hour. And for the product safety reasons, we are not planning on installing the fast charge feature. And in terms in terms of our K-23 and K-8, we do have plans to ship K-23 prototype to the US. However for K-8, which is specifically developed for the Chinese online ride-hailing market as a high end car. So K-8 is not planning on exporting to the US.

Unidentified Participant

Thank you and my second question is I have heard that the export cars will be made in a Kandi owned Hainan facility due to its immediate proximity to the international shipping port. If this is true, how will Kandi be booking these export sales? As higher value products, or only as parts?

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

Well we're still discussing all the available options, comparing which port options will give us the most cost efficient -- effective way, especially with the trade war going on, there is still a lot of items to think about whether it's better to to to sell as a high value product or only parts. So we are waiting for the final conclusion.

Jack Cronin -- Private Investor

Okay. Thank you very much I appreciate the information.

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

Thank you.

Operator

The next question comes from Frank (inaudible) a private investor.

Unidentified Participant

Yes I know. Good morning to Kewa and a good evening to Mr Hu. If I remember correctly, the introduction of the K-22 was initially delayed about one year due to its being redesigned to meet European standards. My point -- my first question of two -- have subsequent models such as the K-23, K-27, EX-3 and the yet to be released K-8 beendesigned to meet these standards also?

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

Our EV product for -- the K-22 and EX-3, have been redesigned and are in the process of being verified and they are -- once that is done they are going to be shipped to the U.S. and start their trial sales, but other products like K 27 and K-8, since they are not designed to be sold in the US, so these ones are not being redesigned.

Unidentified Participant

Kewa, I was specifically asking about the European standards. Do these particular models meet the European standards?

Kewa Luo -- IR Manager

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

The K-22 are also meeting the standard -- European standards.

Unidentified Participant

Okay. Thank you and my second question in light of the TRC delays and paying the old subsidies. It seems to me that exports should be getting a priority at this time as when we export to other countries, we don't have to subsidize these subsidies and basically sell at a temporary loss. So therefore are export plans in place are being considered for Europe and other Southeast Asia countries at this time?

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

As for now we want to focusing our energy on developing the US market first and the management team will take it into consideration based on how we do in the US.

Unidentified Participant

Thank you very much.

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

Thank you.

Operator

The next question comes from (inaudible), also a private investor.

Unidentified Participant

Good evening Mr. Hu. I have two questions. The first one is fairly simple. It is about the sudden subsidy payment. So the Thailand media reported the MIIT finally approved the subsidy payment for 2015 and '16 in April. So from the list -- from the approved list, the total amount for Kandi JV was around $130 million. Could Mr. Hu confirm this is accurate. If so when would you expect it to be received and announced?

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

I really appreciate that you're following our news closely. The subsidy announced from sales in 2015 and '16 that JV company should receive is about RMB 742.8 million and subsidy pre allocating amounts from sales in 2017 and '18, it's about RMB131.8 million. So, altogether the total amount is about RMB874.6 million. And translating it to U.S. dollars is about $130 million. So, what you said is almost correct if just ignoring the end numbers.

And the payment right now was already sent to (Foreign Language) finance board from the National Finance Department, and now is waiting for the distribution. And if everything goes right it should arrive next week, but I cannot guarantee the timing since this is totally out of our hands, depending on the government's schedule.

Unidentified Participant

So, I would like to reaffirm and so what I said -- the money from that the central government has arrived at the (Foreign Language) local--

Kewa Luo -- IR Manager

(inaudible) On May 5.

Unidentified Participant

Alright, thank you very much. That's great news.

(Foreign Language)

When you receive the money -- So will any of this cash be used to pay down the $70 million in that the JV company owes the Kandi?

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

If the JV company received the money, it will pay most of the outstanding debt owed to Kandi, it should be.

Unidentified Participant

Thank you. My second question is related. Actually I've actually addressed the last part of the conference call. I got a point Mr. Hu at one point mentioned that after the JV reorg,(Foreign Language) is going to invest almost to RMB10 million in the JV Company. So but I think at this point it was lost in translation, could Mr. Hu reconfirm that point if I heard that correctly.

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

Kewa Luo -- IR Manager

You like to say that or you want me to translate it?

Unidentified Participant

I think Mr. Hu does mention after the JV reorg, Geely is going to invest RMB10 million in the newly reorged JV Company. A big chunk of that money come from the local government support, but (inaudible) how much a difference from where is -- it depends, so all in all Geely is going to invest a lot of money into the newly formed reorg JV Company. Thank you very much Mr. Hu.

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

Thank you.

Operator

The next question comes from William Northrup, a private investor.

William Northrup -- Private Investor

I don't have anything to ask. Everything's being covered. Thank you.

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

Thank you.

Operator

Okay thank you. Operator, if we don't have any additional question we can close up.

We do have a question from Bob Jackson, a private investor.

Unidentified Participant

Thank you very much, my questions also have been answered.

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

Okay thank you.

Operator

There is one more question in the queue from Mark Synergens Ventures Corp.

Marc Guest -- Synergence Ventures Corporation -- CEO & Chairman

Thank you for taking my call. And it seems that ride-sharing is important to Mr. Hu's vision for the future. And I'd like to confirm that this is shared by Li Shufu. If it is -- I wish Mr. Hu would elaborate a little bit on the potential that he sees in the ride-sharing market in China as well as globally. The value of Kandi stock on the market. Mr. Hu has shared that it has been frustrating to him in the past. And when I take a look at the ride sharing statistics on Didi Chuxing, we're looking at a company, in the United States just to couch it. Uber has 5 million ride-sharing drivers. In China, it's very hard for the U.S. mind to recognize the value of just this individual ride sharing deal. But is it possible that Mr. Hu has not shared with the U.S. investor that there are 31 million drivers that drive for Didi Chuxing, and with his new agreement for the financing is it not very possible -- a look at -- is it not possible that this is a major potential? Well beyond the 300000 cars over five years? That's the first part of my question.

Kewa Luo -- IR Manager

So are you basically saying that --is there anything Mr Hu hasn't shared with you that the contract with Didi Chuxing will be more than 300,000, given the 31 million drivers that they now have they right now have in the China market?

Marc Guest -- Synergence Ventures Corporation -- CEO & Chairman

Yes they have 300,000 drivers. The government is requiring this is the car that's going to be used. The alliance is going to be building their cars primarily with Kandi. It's going to be financed and set up properly there's 31 million drivers already working for Didi Chuxing that we would be placing into these cars. Could we not see a little elaboration from Mr. Hu on where this where he sees this market for ride sharing evolving? (Multiple Speakers) And how will it play in for Kandi?

Kewa Luo -- IR Manager

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

I hear that you're asking two questions from what you just said. First, both the Li Shufu and I have a great confidence and hope in the online ride-hailing market in China. And especially given out the environment and the transportation constraints in China. Nowadays, a lot of people they prefer online ride-hailing services other than driving their own residential cars because simply they don't want to pay more for parking and the traffic is just very frustrating. Therefore there's going to be a market full of potentials going forward. And secondly, even though they are 31 million drivers under Didi Chuxing platform. But I do believe that things need to be taken step by step. You cannot take the whole pie at once, and with the collaboration with the alliance that we are going to provide 300,000 EVs within within five years, I think that's already a great contract for us. If we can achieve that, it's another milestone for us and we think it's better to take time, to do what we can and step by step.

Unidentified Participant

I understand, and appreciate that. Last quarter we found out at the conference call and I appreciate that Kandi really likes to share their color at the conference call. Last quarter we found out that there was a new model and we found it out at the conference call. In this conference call, we've found that you are moving a little stronger into the self driving and that is a vision for your future. I would like to ask Mr. Hu to open up a little bit about any of these issues that he feels that the U.S. investors should be aware of.

Kewa Luo -- IR Manager

You mean self-driving, meaning autonomous driving features?

Marc Guest -- Synergence Ventures Corporation -- CEO & Chairman

I mean we've we've found out things. It's-- for me to hear that we have $130 million coming in from the payments that was owed for 2015 and '16, and then for me to know that there's another $140 million or $150 million, that is owed by the government for 2017 -- '16 and '17, excuse me.

Unidentified Speaker

Well, altogether actually I'm sorry actually it's altogether from '15, 16, 17, 18 altogether as $130 million in total, U.S. dollars.

Marc Guest -- Synergence Ventures Corporation -- CEO & Chairman

Isn't this just for the first two years repayment?

Kewa Luo -- IR Manager

No, no no. For the first two, let me just we emphasize for the '15, '16 the total subsidy payment JV shall receive is RMB742 million. And the pre allocating amount that JV is going to receive for '17 and '18. Is, let me see -- is RMB131.8 million. So, together it is the RMB874.6 million. So approximately, $130 million U.S. dollars. This is full from '15 to '18.

Marc Guest -- Synergence Ventures Corporation -- CEO & Chairman

I see Kewa. Well, the question I'm asking at this point -- is there any other vision that Mr. Hu would like to share of things that he feels makes-- are we going -- look Mr. Hu has been regarded in the past as the father of the electric car in publications. The company does not tout its strengths. The company owns four factories with substantive value, it's quite conceivable that Mr. Hu would feel that the value of the company is vastly understated but when we've given a substantive amount of the JV to Geely, it would be helpful for us to have more color from Mr. Hu on these conference calls for why he feels that's such a strong play? We feel we're in the launch seat of a rocket and I just want to have a little more color from Mr. Hu of what we should look forward to as investors under this new restructuring.

Kewa Luo -- IR Manager

Okay. (Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

Well I do think that after the JV restructuring, I will be less involved in JV's daily operation. It will be taking over by Geely, which will be definitely a very positive thing and especially with the sufficient cash flow and for me Hainan is still going to be under Kandi. So what I'm going to focus on is, and to really focus on the R&D, to focus on our car-share market and also spend more energy on the technology side of the EV, for example the autonomous driving, the flying car and I do hope that Kandi technology in the future will become a high tech EV company and that's my vision.

Marc Guest -- Synergence Ventures Corporation -- CEO & Chairman

I very much appreciate Mr. Hu's sharing of that and his history in this industry. I would love to suggest that it become a little bit more prominent in your publication that he spent many years in this industry and I just wanted to express my respect. Thank you very much.

Kewa Luo -- IR Manager

Thank you. (Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

Okay. (Foreign Language) Operator, are we done with all questions?

Operator

We have a follow up question from Frank (inaudible), a private investor.

Frank -- Private Investor -- Analyst

Yes, thank you for taking my question. When is (inaudible) credits expected to start and will these credits be sold on the open market docket for use by Geely to offset its ICE business requirements.

Kewa Luo -- IR Manager

I'm sorry, Frank, can you repeat one more time? Repeat one more time. You were skipping a little bit.

Frank -- Private Investor -- Analyst

Okay. When is carbon credit trading expected to start? And will these credits be sold on the open market or used by Geely to offset its ICE business requirements.

(Foreign Language)

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

Well, this again still under discussion. We haven't seen any final decision coming out from the governments. So, I cannot comment any more. But if this finalized I do believe that is going to be for JV it's not going to have anything to do with Geely and their business.

Frank -- Private Investor -- Analyst

Okay. Thank you very much.

Kewa Luo -- IR Manager

Thank you Frank.

Operator

There are no further questions. I turn it back to our speakers for additional or closing remarks.

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

(Foreign Language)

Kewa Luo -- IR Manager

Thank you. Ladies and gentlemen, for attending today's meeting on behalf of the board directors and the management team at Kandi technology group. I would like to reaffirm our commitment. We continue to work diligently to maximize shareholder value by focusing on growing our either business strategically and our car-share business, while delivering strong operational results. And thank you again for your understanding and support. We look forward to talking with you in the next meeting. If you have any additional questions please don't hesitate to contact our Investor Relations department. Thank you. Goodbye.

Operator

Ladies and gentlemen this concludes today's call. Thank you for your participation you may now disconnect.

Duration: 108 minutes

Call participants:

Kewa Luo -- IR Manager

Hu Xiaoming -- Founder, Chairman and Chief Executive Officer

Zhu Xiaoying -- Interim Chief Financial Officer,

Unidentified Speaker

Arthur Porcari -- Corporate Strategies Incorporated. -- Analyst

Unidentified Participant

Ted Schwartz -- Private Investor

Mike Pfeffer -- Oppenheimer -- Analyst

Michael Fairnow -- Focus Tech Investments -- Analyst

Walter Hill -- Carty & Company -- Analyst

Jack Cronin -- Private Investor

William Northrup -- Private Investor

Marc Guest -- Synergence Ventures Corporation -- CEO & Chairman

Frank -- Private Investor -- Analyst


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