The Cheapest EV Is Here. But, Who Will Buy It?
By: Salman Hasan
Tags: Innovation, Electric Vehicles, Transportation, Technology, Cars

Electric vehicles (EVs) have gone beyond the exception and are fast becoming the norm. First, it was Tesla, but now every major car manufacturer is jumping the bandwagon. The long-term cost may be lower but upfront gas cars tend to be cheaper than electric. Now one company is going to change that. The Chinese firm Kandi is debuting its sensational low-cost electric car in the US. The cost? As low as $7500 after federal and state subsidies (price in California). Kandi created a lot of buzz in China when it launched its low-cost cars there this summer. Their entire inventory is pre-booked even before the launch. Will it create a similar buzz in the US? Or will it pale in comparison to Tesla and the upcoming avalanche of European EVs?

Who is Kandi?

Kandi Technologies is a Chinese battery and electric car manufacturer, headquartered in Jinhua, China. The company is launching its cars in the US in 2020 with its K23 and K27 models. Both of the models look like a tiny hatchback. They come fitted with all the modern gadgetry — a touchscreen, backup camera, and Bluetooth. It is not clear if advanced features like smart cruise control, rear traffic alert, and lane change monitor are available. The K27 model retails for $17,499 while the larger K23 would retail at $24,499. But, the prices come down heavily when federal ($7,500) and state subsidies ($2,500 in CA and TX) are included. The K27 comes down to $7,499 while the K23 to 14,499. But, even with all the price cuts, will the Kandi sell big in the US?

A comparison of various EVs. Sources — Kandi K23 and K27, Tesla, Nissan

Why Kandi may fail?

Several things run against the Kandi cars. They are tiny, to begin with. Compared to a Tesla Model S (lowest-priced tesla), the larger Kandi, the K23 is shorter and narrower. Then comes the power under the hood. With only a 17.6 kWh battery, the Kandi K27 can barely reach 63 mph top speed, making it a less desirable vehicle for highway driving. The K23 reaches 72 mph with a 41.4 kWh battery. The range is no better. Neither car can go a 150 mile in one charge; the K27’s range is 59 miles while K23’s is 111 miles. And that charge would take 6–7 hours on 240 V supply (level 2 charging). Fast charging is not available on either. So pretty much no highway driving at least for the K27.

Kandi K27. Image from Kandi America.

Forget comparison to Tesla, the Kandi products don’t even compare to the current cheapest EV in the US — Nissan Leaf (see table). Add to this the American love for bigger and powerful automobiles, the Kandi may seem dead on arrival. The smaller K27 resembles a Fiat 500 while the larger K23 looks like Honda Fit. Yet, if you see the company’s stock it's booming! Right after it received approval for state subsidies from Texas and California. Part of it is just the stock sentiment, but others could be the utility of Kandi as an urban car.

The utility of the car

Kandi is tiny, doesn’t drive very fast, and can only last for a 100 mile on a charge! Perfect for office commute and city driving. You can’t go above 40 in most cities. Even with traffic, the mile range should last a few days and the car can happily charge in the garage overnight. Gas cars tend to give poor mileage in city driving. Kandi can come in handy, especially for the nifty price. This can work as a second, city car.

The car can also work well as a cab. For those that do drive sharing, the car can be perfect. It can offset their gas bills which in states like California can still be a lot. Kandi may tie-up with Lyft or Uber for a car purchase program that allows it to sell its car more. It can also tie-up with car-share services like Zipcar to rent their car to urban day renters. The company ran a similar program in China called EV carshare.

Given the low initial price, Kandi should be able to sell their car to the above consumers as long as the subsidies last (only the first 2000 cars in TX). Perhaps that’s what’s guiding the investor sentiment. Even though the subsidies would phase out with time, the company would have sold quite a few of its inventory. If their product is good, perhaps they can expand to more competitive and traditional offerings. If Kandi creates a ripple in the market, more manufacturers would try to enter the low-cost EV segment.

While Kandi’s products may look unappealing at a first glance, it would be worthwhile to recall the humble Japanese brands — Honda and Toyota. Each of them came as a cheap alternative looked rather utilitarian but are consistently rank at the top of their segments, eventually taking over the auto market. The reason reliability, longevity, and performance. Honda Civic is one of the bestselling cars ever.

Maybe Kandi K23 or K27 would become the bestselling tiny EV! For now, Kandi is pre-booking their cars with a refundable $100 deposit. Interested?

Update: Recently Hindenberg Research, a short-seller, accused Kandi of falsifying its sales. After that, both the stock and the reputation of the company has taken a bit of a hit.