Ladies and gentlemen, good day and welcome to the Kandi Technologies’ Full Year 2018 Financial Results Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Kewa Luo, IR Manager. Please go ahead..

Thank you, operator. Hello, everyone, and welcome to Kandi Technologies Group, Inc’s full year 2018 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 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 the 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 statements 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..

[Foreign Language] Hello, ladies and gentlemen and all friends, thank you for joining our full year 2018 earnings conference call. [Foreign Language] Kandi has experienced challenges over the past few years due to the confusion surrounding the reusable battery exchange model.

However, Kandi has been working diligently to overcome the downturn and obstacles to resolve these issues. Early on in 2018, we prepared a three-year plan for 2018 through 2020 based on our company’s and the industry’s situation. 2018 was to be the year of survival, 2019 of revival, and 2020 will be the year of prosperity.

Through our hard work in 2018, we rebuilt and refined our practices, and as a result, we are very pleased with our financial performance. In 2018, our total revenue was up 9.4% to $112 million; while pre-tax income was $2.1 million compared to a loss of $31.6 million in 2017.

In 2019, we plan to continue this upwards momentum, and further refine our business model and execution plan to forge new opportunities moving forward in the following ways. [Foreign Language] First, Kandi management team hopes the JV Company to achieve its projected goals of producing and selling 20,000 EVs in 2019.

Second, the Company is expecting to obtain the approval of its application for a manufacturing license from the Ministry of Industry and Information Technology to become official EV manufacturing enterprise with dual production licenses.

Third, following the US National Highway Traffic Safety Administration’s approval of certain Kandi EV models for importation and registration in the US, Kandi EV models are now eligible for up to $7,500 in federal tax credits in 2019 and 2020.

To capitalize on the opportunity presented by the NHTSA’s approval, we are in the process of preparing a strategic sales plan for the debut of Kandi EV models in the American market later this year.

Fourth, the car share program, or Micro Public Transportation, has been upgraded to an online ride-hailing business model in China, which is expected to open up a broader market for Kandi electric vehicles.

Finally, the Company is evaluating for the optimal time to restructure the JV Company’s equity in order to unlock the shareholder value of the JV Company. We are dedicated in taking full advantage of the milestones we have reached so far, achieving stronger business results in 2019, as well as maximizing our long-term shareholders’ investments.

[Foreign Language] 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..

[Foreign Language] Hello, everyone. My name is Zhu Xiaoying. Now, I will like to provide a brief overview of our financial results for the full year 2018. 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 full year financial results in 2018.

[Foreign Language] Total net revenues in 2018 were 112.4 million, an increase of 9.6 million or 9.4% from 102.8 million in 2017. The increase in revenues was mainly due to a increase in sales of off-road vehicles during 2018.

[Foreign Language] EV parts sales were approximately 99.1 million in 2018, accounting for 88.1% of our total net revenues, a increase of 1.7 million or 1.8% from 97.4 million compared to 2017. [Foreign Language] Revenue from sales of off-road vehicles was 13.3 million in 2018, a increase of 7.9 million or 144.8% compared with 5.4 million in 2017.

The increase in revenue from off-road vehicles was largely due to the additional sales from SC Autosports, which became our wholly-owned subsidiary in the US in July 2018. [Foreign Language] Our cost of goods sold in 2018 was 92.2 million, a increase of 3.7 million or 4.2% from 88.5 million in 2017.

The change was primarily due to the corresponding increase in sales from 2018. [Foreign Language] Gross profit in 2018 was 20.2 million, a increase of 5.9 million or 41.2% from 14.3 million in 2017. Gross margin in 2018 increased to 18% from 14% in 2017.

The increase of gross margin was due to the higher gross margin from off-road vehicle sales of SC Autosports as well as increased gross margin from sales of battery packs. [Foreign Language] Total operating expenses in 2018 were 21.9 million, a decrease of 45.9% from 40.4 million during 2017.

The decrease in total operating expenses was due to the largely decreased research and development expenses in 2018. [Foreign Language] GAAP net loss in 2018 was 5.7 million or $0.11 loss per fully diluted share compared with GAAP net loss of 28.3 million or $0.59 loss per fully diluted share in 2017.

The decrease in net loss was primarily attributable to the increased gross profit, the decrease in R&D expenses and the increased government grant the company received this year. [Foreign Language] Income before income tax in 2018 was 2.1 million, compared to losses before income tax of 31.6 million in 2017.

The increased income tax expense is mainly due to the 6.0 million valuation allowance of facilities deferred tax assets because its three year accumulated loss in its construction period after other income tax adjustments, the income tax expense in 2018 was 7.8 million.

[Foreign Language] Non-GAAP net loss in 2018 was 8.8 million compared with non-GAAP net loss of 23.2 million in 2017. Non-GAAP loss per share was approximately $0.17 per fully diluted share for the full year of 2018 compared with non-GAAP adjusted loss per share of $0.48 per fully diluted share for the full year of 2017.

[Foreign Language] Let me touch on the JV’s financials now. [Foreign Language] For the full year 2018, the JV company’s net sales were 122.5 million, gross loss was 17.7 million and net loss was 36.3 million. [Foreign Language] During 2018, the JV company sold a total of 10,259 units of EV products as compared to a total of 11,437units sold in 2017.

[Foreign Language] Kandi’s investment in the JV company are accounted for under the equity method of accounting, as Kandi has a 50% ownership interest in the JV company as a result, Kandi recorded 50% of the JV company’s loss or 18.2 million for the full year 2018.

After eliminating intra-entity profit and losses, Kandi’s share of the after-tax loss of the JV company was 17.9 million for the full year 2018. [Foreign Language] Next, I will review the company’s cash flow.

[Foreign Language] In 2018, cash provided in operating activities was 13.6 million as compared to cash used in operating activities of 3.2 million in 2017.

The major operating activities that provided cash for 2018 were increase of accounts payable and increase of other payables and accrued liability, the major operating activities at used accounts for 2018 was a increase in receivables from the JV company and a increase of accounts receivable.

[Foreign Language] Cash used in investing activities for 2018 was 0.95 million as compared to cash derived from investing activities of 2.71 million for 2017. During the year of 2018, the major investing activity that used cash was the acquisition of Jinhua An Kao, net of cash received in the amount of 3.56 million.

[Foreign Language] Cash used in financing activities for 2018 was 5.3 million as compared to cash used in financing activities of 9.81 million in 2017. The major financing activity that provided cash for 2018 was proceeds from notes payables of 24.35 [ph] million and proceeds from short-term bank loans of 32.50 million.

The major financing activities that used cash for 2018 was 58.59 million of repayment of notes payable and 33.26 million of repayments of short term bank loans. [Foreign Language].

[Foreign Language] Operator, we’re ready to take some questions..

[Operator Instructions] We will now take our first question from Ted Schwartz..

You added any context for expense of 7.7 million for both the joint venture and Kandi itself showed a loss, I don’t understand where that $7.7 million income tax expense came in, could you explain that?.

I’m sorry, can you just repeat one more time. Your tone is a little skipping..

Pardon me..

Hello. Would you please repeat your question one more time? Your tone is a little skipping..

I don’t understand how could the $7.7 million income tax expense when both the joint venture and Kandi showed a loss?.

[Foreign Language].

[Foreign Language] Okay. This actually is not the income tax that we paid, but had to account it as expense in our financial statement.

The most part is due to the 6 million valuation allowance of high necessary deferred tax asset because the high necessary still accumulated loss in its construction period and the rest of 1.7 million is from other subsidiaries who is profitable altogether 7.7 million was accounted for the income tax expenses..

I’d like to know what levels of cars are they presently in production? Just going through the 27, the EX3 and what about the K23 and Hainan..

[Foreign Language].

[Foreign Language] Okay. Right now, there are K23, K22 and EX3 are presently in production and in March, we have planned of 300 K23s set of EV parts for the production of Hainan facility..

Will you be producing and selling in Hainan in March?.

[Foreign Language].

[Foreign Language] Right now, since we are still relying on manufacturing license, so it’s going to be sales of the EV parts set. [Foreign Language] So if we plan to have these 300 sets of EV parts to produce this month, so the sales probably will happen next month..

All right. Thank you very much. Not sure I understand it, but thank you. Take the next question..

Thank you. Operator, we can take next question..

Thank you. Our next question comes from [indiscernible].

Okay. I have a question involving carbon credit trading.

I believe that carbon credit trading may be an important source of revenue for the joint venture going forward, can you give us a present status of this program, how is it being looked at and implemented in China or has that not yet been fully decided?.

[Foreign Language].

[Foreign Language] Carbon credit trading policy is still in the planning stages. We don’t know the details of the benefit on to the policy release. We have heard a lot of news regarding this, but we haven’t seen any final policy that being released..

Okay. Very good. Thank you very much. I may have another question later. Please take the next questioner..

Thank you..

We will now take our next question from [indiscernible]..

My question is regarding 2019. The production, so what was the basis to doing for the 2019 production and sales, is this because of the subsidy delay or [indiscernible] resolve this issue, if it is, with the subsidy delay, do you have a timeframe where the subsidiary does not get to be paid. [Foreign Language].

[Foreign Language] Due to the changes in the subsidy policy, also the delay in the payment, sales will definitely be affected.

As for now, the subsidy from 2015 and 2016 are already in the process of clearing and we anticipate we’re going to receive this part of the subsidy payment very soon and we also been told that the subsidy from 2017 and 2018 will be stockholding and start paying very soon as well.

And so the company is seeking breakthroughs in the government of credit online vehicle market and in the US. We have been doing a lot of work and we believe that 2019, we’re going to have a very promising result..

I have another question. This is about the car being produced. So Mr. Hu just mentioned the car being sub produced mostly K22, K27 and EX3, so where are they produced now? [Foreign Language].

[Foreign Language].

Actually, I heard some news cars are being moved to produce, is there any particular region and what should be your plan for the plans in Shanghai. [Foreign Language].

[Foreign Language].

Let me translate what Mr. Hu just said. First of all, the first question is where are K27, K22, EX3, being produced? The answer is all these cars is being produced at [indiscernible]. So the gentleman is asking why we produce all these cars at one location [indiscernible] instead of spread out in different locations, for example in Shanghai.

And the answer is, because we used to rely on Geely’s manufacturing license, however right now, Rugao already have the production license and so Rugao can produce all these vehicles at one location to safe the cost and also to centralize all the production in one place.

In the past, we used to produce K10 at JiHeKang factory and K11 at Shanghai, but since right now, we don’t have a lot of volume, so we centralized everything at Changzhou , Rugao and for some K23 EV parts, we do a separate in Hainan..

I have one more question [Technical Difficulty] So people are still looking for these two steps process with this last manufacturing license approval, currently Kandi has the approval from the IDRC Investment Development Reform Committee, so and at least Hu’s estimation, we are looking for the second expense approval from MIIT, so when do you expect that to happen.

[Foreign Language].

[Foreign Language].

Okay. Sure. So this question is regarding to the dual production license we mentioned earlier and Mr. Hu likes to further clarify what this means to us. And we believe there has been some confusion regarding the approval of this license issued by the Development and Reform Commission and actually the NDRC approved enterprise to build the factory.

So that’s the first license. And the next step is the acceptance of the factory by the Ministry of Industry and Information Technology. As a result, once MIIT approves the company and the company factory will be able to produce the cars and that’s the second license and together, it’s called dual production license that company is applying.

And usually, there is a third step, which is the car has to be included in the factory in order to be registered in China to be able to driven on the road. So basically those are three steps in order for you to sell the car and the car will be finally be available in the market. And this is the same procedure for all the manufacturing in China.

And for Kandi, we have already sent our application for getting the MIIT approval in the beginning of March and we expect to hear from them in the beginning of April..

We will now take our next question from [indiscernible].

My question is in regard to export to the United States of the K22 and EX3.

My understanding from what I gathered from your opening and what I read in the press release is that approval is still pending for sale in California, so if that is correct, are dealerships in place ready to go in California once the approval has been obtained and what ports do you expect to export the automobiles to in California in the US? Excuse me, my understanding also is from your opening that you plan to export these automobiles to the US later this year, is that correct?.

Let me translate first. [Foreign Language].

[Foreign Language] These two models can be sold in the US nationwide. So, it’s not just in California, so there is no – any waiting application to be, not waiting any application in California. Right now, we are in the process of forming a salesforce team and the company anticipates that we are going to import 50 to 100 EVs by the end of May.

With regards to which ports will be used for importing vehicles into the US, I think the US sales team is working on it and to choose the most cost efficient one..

We will now take our next question from Mike Pfeffer from Oppenheimer. Mr. Pfeffer, your line is now open. Please go ahead. It appears he may have stepped away from his handset. We will now take our next question from [indiscernible]. Please go ahead..

I understand that the K23 is going to be designed for the wide business, has the Hainan factory started meaningful projection and if not, can you, what we know, when might start and the reason.

And second part, have there been discussions with Hainan about their emulating RMB730 million, low interest loan program as is in place with Jiangsu province..

[Foreign Language].

[Foreign Language] We have already planned 300 K23s set of EV parts for production in March of Hainan factory. And regarding to the question, the government about supply chain financing support programs, there hasn’t been any discretions yet, because in Hainan, we are just producing a part that in Jiangsu, we started producing that EV..

We will now take our next question from Steve Miller..

Thank you. Two related questions.

For 2019, this year, what are you anticipating to be the revenue for the JV and Kandi from the 300,000 EV framework agreement and the 20,000 EV cooperation agreement that was announced earlier this year? And related to that, I understand there is a 20,000 kilometer requirement to be reached by the ecos and the car show program before you can apply for subsidy payment, is that going to negatively affect the JV’s ability to produce these vehicles?.

So first question is about the revenue for JV, right. The second question is whether the 20,000 kilometers mileage will be the requirement for the program..

My first question I guess is, what revenues are you anticipating from both agreements and then the second question is, whatever cars that are sold in connection with those agreements, do you have to comply with the 20,000 kilometer requirement in order to be for you guys to be able to apply for the subsidy payment?.

[Foreign Language].

[Foreign Language] These contracts were signed in order to serve the implementation of the 300,000 government credit on vehicle alliance program. We expect the program to begin in April.

I don’t think there will be any impact from the 20,000 kilometers requirement for the subsidy, because each vehicle that is used for online service usually run 80,000 kilometers per month on average. So in three months, they will be well exceeding the 20,000 kilometer requirement..

We will now take our next question from Mark Kahnau from Swiss Liquid Future..

It seems to me that for the first nine months, JV was effectively breakeven, Kandi growth only up 43,000, by the end of the year, there was an aftertax loss of 17.8 million, that means for me, the joint venture must have written off about 35 million in the fourth quarter, is that correct and if it’s correct for what reason?.

I’m sorry, can you just slowly one more time so I can translate..

Through the first nine months of the year, the joint venture effectively was breakeven. That was on the figures. Kandi growth of 43,000 by the year end, share of loss after tax of the joint venture was USD17.8 million.

But that means to me that the joint venture must have written off 35 million in the fourth quarter, is this correct and if it’s correct for what reason?.

[Foreign Language].

[Foreign Language] This is due to, in Q4, there was RMB160 million in R&D expenses for JV in Q4..

We will now take our next question from Harris Goldman..

It’s been a long time since I talked to Mr. Hu, we made the trip, I organized the trip in 2014 when we were having quite a few detractors, thing that never existed. And of course, we proved that wrong. Anyway, my question is I’m a little confused and need a little clarification regarding the guidance for this year. I see in Mr.

Hu’s statement, we’re projecting 20,000 units. Now, my confusion is, we have a framework agreement for 300,000 over five years and we have the other 20,000 on accredited units, is Mr.

Hu taking a very conservative stance regarding JV production this year or would he provide clarification on why he’s only guiding to 20,000 units?.

Okay. [Foreign Language].

[Foreign Language] Well, as I mentioned earlier, that for 2018, we are glad that we were able to survive and for 2019, we want to look forward to be available. And so in this year, even though we have these contracts laid out for 300,000 EV contracts, we are the primary provider.

So, we don’t want to overpromise the market and underdeliver and for this year, we want to take one thing at one step and laid out the groundwork for more growth going forward. So and additionally, we also want to focus on the quality of our products and be able to deliver better results going forward..

Okay. So if I understand this is the very conservative guidance for this year, because from what I’ve heard and what I’ve read, yes, this will be a revival year, but we can reasonably expect if we received this subsidies, because that’s been our problem it appears to me that we install alone, we have basically been subsidizing the subsidy.

And that has curtailed our production and sales, so therefore, from what I’m hearing now from Mr. Hu, I’m much more optimistic about this revival year, than what was said earlier in terms of a 20,000 unit guidance for this year. Okay, that’s it. Thank you..

Thank you. [Foreign Language].

[Foreign Language].

Mr. Hu says thank you, we will work hard to deliver good business result. We can take next question..

We will now take our next question from Mike Pfeffer from Oppenheimer..

The press release titled Kandi pure electric vehicles project received approval was confusing to many in the US, particularly when mentioned along with approval for 50,000 ECs in Rugao. Even a Bloomberg reporter was confused and said you Mr.

Hu said it was approval to build a facility in Rugao, where Kandi JV already one, can you confirm for all that this is the license we awaited several years for, allowing Kandi to now make and sell its own EVs as well as for others and secondly, what is the significance of the 50,000 number in the press release..

[Foreign Language].

[Foreign Language] Thank you for your question. I want to once again clarify which I also discussed earlier on the call. With regarding to this manufacturing license, there are actually three steps in total.

First is the approval from the National Development and Reform Commission that they approved the company to do the factory, which is what we received earlier and what we announced and the next step is the acceptance of a factory by the Ministry of Industry and Information Technology and once we get approval from MIIT, then the factory is entitled to produce cars and as a result, this is so called dual production license and once this thing comes, the company will be able to not just build the factory and factory will be able to produce the vehicles.

And the first step is the MIIT will have to approve the model to be able to register. And we think that in April, we should be able to get all these steps ready and by then, we will make announcement. The next question is, you asked about 50,000 units that we mentioned in the press release.

So when you apply upto the NDRC for the license to build the factory, you have to include your capacity in the factory you’re building, you have to at least achieve 80% of capacity in order to build another location factory.

So for example, we applied 50,000 capacity for this factory, we can go over that number to produce say 100,000 but if we want to build another factory in a different location, we have to at least achieve 80% of 50,000 which is 40,000 so we just, it’s a number that it is -- you give in the application.

So with that, I hope I closed on what you just asked..

We will now take our next question from Arthur Porcari from Corporate Strategies..

Mr. Hu, congratulations and thanks for all shareholders and year over year improvement 2018 to 2019.

And based on public announcements, it sounds like it’s an incredible start for the 2019 forward, a long way to break out witness by amazing stream of announcements just since January 4, taking everything sidenote based on just today’s numbers, so it appears that Kandi itself would have had a pretax profit of almost 20 million for the full year or not so having to consolidate that 17.8 million share of the JV R&D loss in the fourth quarter as prior caller said, the JV was actually a break even to the first three quarters, just an observation which you can address in a moment if you want to? With this said, I would like to address an expanded series of questions, mostly limited to two major areas announced.

More on the five year 300,000 EV for the China Resources ride hailing program, I mean, a five year 300,000 and the 3 year 20,000 EV ride hailing program. And then I want to wrap it up and see how the JV expects to finance the cost to deliver this potential $5 billion to $6 billion worth of EVs over the next five years. I’ll pass it on to Mr.

Hu and I don’t ask the question..

Hi, Arthur. Can you repeat, will you ask in the first part about the JV..

Okay. I was just saying that this is an add-on because of the numbers, I’m saying this, I said this is a side observation, I don’t think we were expecting the $35 million, the $36 million fourth quarter writedown in the JV for that one time R&D expense, which caused Kandi to actually take an additional 17.8 million loss in the fourth quarter.

Without that, it seems like the Kandi’s pretax profit which was already at over 2 million, if added that back in, we would have had almost $20 million for Kandi itself, I realized that that’s – this shows how well Kandi itself is performing independently of the JV? That’s the point I wanted to make. Okay.

And do you want me to repeat the rest of it or do you have the rest of it?.

[Foreign Language] Go ahead with your question..

Okay.

First question is, about 20,000 [indiscernible] it’s an all easy ride-hailing program from what I understand, so it’s good to see that this China unicorn which is a high end white color Uber like show for easy ride hailing program, currently has 300,000 high end easy and Volvo EVs and this was put together by Kandi’s JV partner, Li Shu Fu and Geely Holdings.

In the Kandi announcement, it states that the “parties have agreed to collaborate in exploring new and innovative models for an online ride hailing business with their combined resources and market advantages.

Now the question is that this means that Kandi will be developing new EV models over and above what we already have so from right into this high end program or will the EX3 get released, K23 be used and will the quick battery exchange be used with [indiscernible] as well..

[Foreign Language].

[Foreign Language] Mr. Hu is saying that is a lot of questions. So I will just go one by one. First, the 300,000 signed was alliance which is going to be driven for all these online ride hailing platforms, not just on the joint venture platform going to the [indiscernible] or other platforms.

And this is going to be initiated by our company joint venture and… [Foreign Language] Because there is a requirement for the wheel base that required by the ride hailing services, so the EX3’s wheel base is not meeting the requirement and therefore, we are going to launch the K23 and the other developing car, it’s called K8 B class, which is high end car for the ride-hailing platform..

And Kandi is going to be developing that new K8?.

[Foreign Language].

[Foreign Language] Yeah. Together with Geely joint venture..

That’s breaking news. Okay. Let me move on. To the 300,000 EV program, five year announcement.

This was quite a stunning announcement that I think would have no effect on the stock at the time, potential to the Kandi JV for this over the life of it, could exceed $5 billion and as the JV primary parts and battery provider made an additional 2 billion directly to Kandi.

I base this on the assumption that the required quick battery exchange feature addressed in the announcement is the Kandi owned and patented QBX, which requires 4 battery packs instead of 2 as for the consumer plug in version. So I have two questions, short questions that have to do with this.

Based on this quote from the announcement, the JV company will be the primary vehicle supplier in the accredited vehicle alliance, can we assume that all of the 300,000 EVs which have the quick battery exchange feature will have to have a quick battery exchange feature and if true, likely all the EVs will then be Kandi provided? And the second question is, how many current service station locations does China Resources have across the 25 provinces in China and are they still growing? And will this quick battery exchange locations be exclusive for the alliance members or will they also feature be used for any Kandi EV, which has quick battery exchange feature..

[Foreign Language].

[Foreign Language] Okay. Let me try to cover all the information Mr. Hu just provided. First of all, Kandi will surely be the primary EV provider in the alliance in providing the EV and the battery.

And the China Resources, they used to – they have many locations throughout China and at this point, I don’t know – I don’t have a number how many they have, but however, we think that since this location is always providing the gasoline to the vehicle and based on the demand of the electric vehicles, some of them may also go into the available for the battery exchange and giving us strategic partnering with them and they are going to be in charge of the investment in operations of all these credit vehicle alliance.

Now, this vehicle, battery exchange business that specific detailed plan of building the required services will be depending on the demand from the credit vehicle in the alliance program. And I think there is going to be gradually delivered within five years and the quick battery exchange feature will surely be used for all these future Kandi EVs..

Okay. Good. It certainly looked only about $18000 a car, we think 5 billion is probably a conservative number then.

Anyway, let’s press on here, to get into my next section over here, it has to do with financing, just your comment first since it is controlled by a Kandi JV, you’re a 50% partner, China Resources with the government enterprise, a credibility factor towards the buyer following through on these deals would seems to be quite high, but to rapidly address these projects alone, I would think that Kandi would require the JV to have at least $1 billion in cash to get started.

So, so far, our partner to the JV has not raised any outside equity since formation.

So as evidenced on how the hot EV market is in China, I recently discovered that 7 China EV uniform startups, each less than 3 years old and only two to include DL have not sold any EVs to date, has negatively, I’m sorry, to have sold the other 5, as negatively compared to the Kandi JV, none of them have any stage of licenses, not even first stage and only one has a facility yet together, they’ve raised over RMB80 billion or USD11.6 billion from between 1 billion to 3.4 billion each and to give a total perceived value to all these at USD24 billion.

With this as early as 2016, the Kandi JV has publicly announced its intention to go public rightfully in China, this section has again come up with positive company response in recent conference call. [Technical Difficulty].

[Foreign Language] Go ahead, Arthur. I have summarized what you just said..

Okay. Fine.

The three year old with much less infrastructure and hard assets and the five year old Kandi JV recently came public in the US with the 7 billion market cap after raising 2.4 billion in private equity in China, would it be reasonable to assume that the Kandi JV could quickly raise maybe 200 million private equity in China at about $2 billion cap and then follow-up with maybe another $0.5 billion raised as a pre-build cap [indiscernible].

[Foreign Language].

[Foreign Language] I think I want to answer in two parts. First, you mentioned a lot of developments. I want to say that’s new business, we really don’t need to compare new with Kandi and for now, it’s not timely for Kandi to discuss JV company’s evaluation.

Secondly, for JV company, we do have point like I mentioned earlier in my remarks that the JV company’s management is working on evaluating for the optimal time to restructure the JV company’s equity in order to unlock the shareholder value of the JV company. Once we have significant progress, we will update the market at the right time..

Okay. And I will get down to my last question here, it would seem to me though, if I even hit the question, with Kandi’s $380 million market cap, market is saying Kandi is worth 0 and the JV is only worth around 700 million. I would think that Mr. Hu would argue with that and that’s why he’s talking about unlocking the value of the JV.

So when you divide it by 2 or whatever, you can get a real value for Kandi should be treating that, but with that said, the last question has to do with the IPO venue.

In the past, and I assume that IPO is you might want to go, in the past, the announced intention was to bring the JV public in China, however, China Asia listings require three consecutive years of positive earnings, it’s recently been announced with much excitement that a new Shanghai tech board, similar to Nasdaq will start trading little later this year without the earnings requirement, could the JV consider this new listing for an actual IPO or would the company consider bringing the JV public even in the United States?.

[Foreign Language].

[Foreign Language] I think whether it’s Shanghai or in the US, I think this all can be possible and right now still too early to discuss, but once we have made a decision, we will report to the market..

Excellent. I really appreciate Mr. Hu’s patience with my long series of questions. But considering that Kandi has less than a $400 million market cap and 50% partner and without a doubt, the largest EV agreement in the 300,000 car agreement, announced in China by any EV maker needed some expanded discussion. And again, thank you Mr.

Hu very much and look forward to once again beating his forecast by at least 35% to 40% as he did a few years back when he used to give forecast. Thank you..

[Foreign Language].

[Foreign Language].

Thank you..

We now have a follow-up question from [indiscernible]..

Well, thank you. I have three extremely short questions.

First question, does this factory need a separate approval from both the NDRC and MIIT or only the MIIT?.

[Foreign Language].

[Foreign Language].

Yes. We are just waiting for the approval from MIIT and a matter of fact, they are already working on approving our application, it’s all right in the process..

Yes.

Will that approval cover all the factories, so there are 8 factories require separate MIIT approval?.

Are you asking whether the approval going to cover all factories in different locations?.

Yes. That is correct..

[Foreign Language].

[Foreign Language].

This only approved in Changzhou, Rugao factory, but when Changzhou, Rugao factory has it, that means the joint venture has a manufacturing license..

Okay.

Now, second question, will the K8 be equipped with a quick battery exchange feature?.

I’m sorry, will the Kandi exchange, what feature?.

Will the K8 be equipped with a quick battery exchange?.

Okay. [Foreign Language].

[Foreign Language].

Yes. They all do have the quick battery exchange feature..

Okay.

Third very quick question, is the joint venture now in the recognized company in the eyes of the CRC since we have the NDRC license? Is it now in a company in the eyes of the CRC?.

What do you mean, that joint venture?.

Yes.

The joint venture is recognized with a license by the NDRC, does this make the joint venture an official company in the viewpoint of the People’s Republic of China government?.

[Foreign Language].

[Foreign Language] We just have to wait for the dual production license to be received, then will be considered as official EV company with production capability..

This concludes today’s question and answer session. I would now like to turn the call back to our host for any additional or closing remarks..

[Foreign Language].

[Foreign Language].

Thank you, ladies and gentlemen for attending today’s meeting. On behalf of board of directors and management team at Kandi Technologies Group, Inc, I would like to reaffirm our commitment.

We will continue to work diligently to maximize shareholder value by focusing on growing our EV business strategically, while delivering strong operational results. Thank you very much for your understanding and support. We look forward to talking with you again next meeting.

If you have any additional questions, please don’t hesitate to contact our Investor Relations person. Good bye..

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