Kandi Technologies: When is an electric car not an electric car?

Last year, Sharesleuth.com published a story questioning whether Kandi Technologies Corp. (NASDAQ: KNDI) had truly sold more than 3,700 of its electric cars, as it reported in Securities and Exchange Commission filings.

Among other things, we wondered how Kandi managed to sell 1,618 of those vehicles in 2010, given that the United States was its main market, and that the federal government and some state governments had significantly reduced tax credits for buyers.

Kandi, a Chinese company that also makes go karts and all-terrain vehicles, said in a letter to shareholders after our story appeared that it stood by its sales numbers.

But the company’s latest annual filing with the SEC raises further questions. In a footnote to a chart detailing unit sales by product, Kandi said that 960 of the 1,618 mini-cars it reported selling in 2010 were, in fact, gas-powered rather than electric.

The distinction is notable because Kandi says its electric cars are one of the main drivers of its growth, and the breakdown in its latest annual report shows that sales of those vehicles actually plunged in 2010.

The company reported selling 1,892 electric vehicles in 2009, including nearly 1,000 in the final quarter of that year.

Kandi did not mention in its 2010 earning releases or quarterly SEC filings that the majority of the vehicles it was selling that year were conventional gas-powered models.

In announcing Kandi’s earnings for the first three months of 2010, Chairman Xiaoming Hu said that sales in the quarter had risen for its “COCO EV,’’ a clear reference to the company’s electric vehicles.

Kinda reported selling 372 Cocos in that quarter, up from 169 a year earlier. The Coco is a golf-cart like vehicle, approved for street use, with a top speed of around 35 miles an hour.

The release for the second quarter of 2010 said this: “The company reported that the top contributor to the revenue gains in the period was its all electric COCO LSV, with sales of 1,005 units, primarily in the U.S., generating $4,131,674 in revenues.’’

Kandi said in the release that it sold 1,377 mini cars in the first half of 2010, compared with 474 a year earlier. It said that revenue for the period was up 80 percent, and that profits were up 435 percent.

Given that Kandi reported selling just 241 mini cars in the second half of 2010, it is clear that most of the gas-powered units would have been sold in the first half of that year — at the time that the company was reporting higher electric vehicle sales.

And given that the company said in its latest annual filing that it sold only 658 electric mini-cars for all of 2010, it would have been impossible for the company to have sold 1,005 in the second quarter, as the earnings release for that period asserted.

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