New Electric Vehicle (EV) Era in China

Kandi Technologies, Corp. has announced it has formed a strategic alliance with China Potevio/CNOOC New Energy and Power, Ltd. — a joint venture of China National Offshore Oil Corporation (CNOOC) and China Potevio Co. — and Tianneng Power International, Ltd., aimed at speeding up the commercialization and achieving mass adoption of Pure Electronic Vehicles (Pure EVs) in China. Working together with government support, the companies believe they are the first in China with an innovative automotive transportation business model that provides a comprehensive solution to overcome current obstacles to an oil free future.

Within the Alliance, formally named “Alliance for Chinese Electric Vehicle Development and Commercialization,” Kandi — an established China-based leader in the design and manufacture of all terrain recreational vehicles and developer of the “COCO,” a battery powered low-speed vehicle for casual driving — expects to design and manufacture electric cars with patented (and patent pending) technology that permits easy battery removal and replacement, which is central to the new open architecture business model.

Mr. Xiaoming Hu, Chairman and CEO of Kandi, who spearheaded the new Alliance, stated, “We now have a core group of highly competent, like minded companies, with backing from the government who see the future of transportation in China — zero emission vehicles powered by electricity that will decisively improve China’s environment and help free us from dependence on foreign oil. Kandi is privileged to be part of this group which, among other things, we believe will help solidify our leadership in building and marketing electric vehicles.”

Mr. Hu continued, “While auto companies around the world are racing to create and sell EVs, it is widely recognized that the key ‘bottlenecks’ to creating a mass market for battery powered vehicles include their relatively short driving ranges, high costs, long charging times and limited facilities for recharging. These are hurdles our Alliance believes can be overcome with an open architecture strategy which we aim to implement over time with government cooperation on a city by city basis throughout China. Our initial test city will be Jinhua City with a population of nearly five million in one of China’s most economically advanced regions and where Kandi is headquartered. To our knowledge, if we are successful, Jinhua will be the first city in China with a comprehensive model EV transportation system in place.”

The New EV Business Model

The new EV business model of the Alliance focuses on the specific transportation needs of China’s rapidly growing urban centers and an anticipated high degree of government cooperation. Some of the current key elements of the model include:

— Building a comprehensive network of EV “battery stations” throughout
each city for one-stop battery charging, replacement, recycling and rental
— Powering the battery stations with a centralized industrial “battery
charging farm” in each city that can optimize electrical usage and costs
— Selling affordable pure electrical cars without batteries —
equipped, however, with Kandi’s patented (and patent pending) technology
for easy battery removal and replacement
— Making traditional batteries available on a lifetime, maintenance
free rental basis — and replacing, maintaining, and recycling them at the
battery stations
— Obtaining government support not only in the form of subsidies for
car ownership, but also for operational requirements such as permits for
battery station construction and operation
— Reflecting the fact that most commuting in China is intra-city,
covering relatively short distances, the model will be tested initially in
Jinhua City and then in other mid-size cities. Expansion would be via the
existing network of Alliance partners or by duplicating the model with
other new partners.

Removing All Key Obstacles To Success

The advantages of this model to drivers of EVs are clear, starting first and foremost with the purchase price of their cars, which will be much lower without batteries, and with anticipated government subsidies. Further, they will never have to worry about owning, maintaining or disposal of their batteries. Significantly, they also will have no worries about safely driving too far away anywhere within or just outside their city limits. Over time, driving ranges will expand as the model is expanded to neighboring cities and regions.

For Alliance partners, the key revenue stream will be revenues from the battery stations, which will operate in a “green” and efficient mode on energy supplied by the battery charging farm. Scale up in revenues will occur as EV usage and sales expand and more battery stations are built in new cities.

Alliance Members (in addition to Kandi)

Potevio/CNOOC New Energy and Power Ltd. is a joint venture between China Potevio Co. Ltd. Group and China National Offshore Oil Corporation or CNOOC. China Potevio Co. Ltd. is one of the largest state owned enterprises in China which focuses on IT equipment and service. China National Offshore Oil Corporation, is China’s largest producer of offshore crude oil and natural gas and one of the largest independent oil and gas exploration and production companies in the world. The Group mainly engages in oil and natural gas exploration, development, production and sales. The Potevio/CNOOC joint venture strives to develop and to invest in alternative energy technology in China.

Tianneng Power International, Ltd. and its subsidiaries is one of China’s largest battery producers which engages in producing and selling lead-acid motive battery for electric bikes, Ni-MH batteries and lithium battery products. The Group also has entered the fields of solar and wind energy storage batteries as of 2009.

Mr. Hu commented further, “Our new Alliance is committed to the success of its revolutionary business model on a large scale over time. Nevertheless, while many of the key elements for such success are in place, there are still several key issues to be resolved. In the weeks and months ahead, I’m sure each member, including Kandi, will be providing periodic updates and new details on the progress of the Alliance, as we work diligently to bring to fruition what we believe will be one of the most important chapters in the commercialization of electric vehicles in China.”

About the Company

Kandi Technologies, Corp. (NASDAQ: KNDI) ranks as one of the largest manufacturers and exporters of go-karts in China, making it a world leader in the production of this popular recreational vehicle. It also ranks among the leading manufacturers in China of all terrain vehicles (ATVs), and specialized utility vehicles (UTVs), especially for agricultural purposes. Recently, it introduced a second generation high mileage, two seater three-wheeled motorcycle. A major company focus also has been on the manufacture and sales of a highly economical, beautifully designed, all electric super mini car — the COCO — for neighborhood driving and commuting. Kandi believes that battery powered, electric super minis will become the Company’s largest revenue and profit generator. The Company’s products can be viewed at http://www.kandivehicle.com. Its corporate/ir website is http://www.chinakandi.com.