KNDI 康迪车业

Operator

Good day and welcome to the Kandi Technologies’ Third Quarter 2018 Financial Results Conference 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.

Kewa Luo

Thank you, operator. Hello, everyone, and welcome to Kandi Technologies Group Inc’s third quarter 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 the Chief Executive Officer, Mr. Hu Xiaoming; and Chief Financial Officer, Mr. Bing Mei, both 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 U.S. Private Security 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, 2017 any other documents filed with the U.S. 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 call 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

[Foreign Language] Ladies and gentleman, welcome for joining our third quarter 2018 earnings conference call. In the third quarter of 2018, EV sales were impacted due to the JV Company’s new EV models awaiting the Ministry of Industry and Information Technology of China’s approval to be included in the Directory of Recommended Models for Energy Saving and New Energy Vehicle Demonstration and Promotion, as well as approval of purchase tax exemption. Additionally, a large increase in the research and development expense caused a decline in net profits in the third quarter. However, we are happy to announce that the JV Company’s new EV models obtained all required approvals from MIIT for both Directory of Recommended Models for New Energy Vehicles and the Tax Exemption on September 19, 2018, and are now available for sale on the market. With the launch of these new EV models, the Company’s operations are forecasted to improve. The management team remains confident in enhancing Kandi’s brand name and competitive edge through its consumer favored EV products. Now, I would like to turn the call to our Chief Financial Officer, Mr. Mei Bing to give you more details on our financial highlights.

Bing Mei

Thank you, Mr. Hu, and hello to everyone on the call. Now, I would like to provide a brief overview of our financial results for the third quarter of 2018. Please note all numbers I will discuss today are in the U.S. dollars unless otherwise noted. First let me walk you through the third quarter financial results. Total net revenue for the third quarter was $38 million, an increase of 34% from $28.4 million for the same period of 2017. The increase in revenue was largely due to the increase in EV parts and off-road vehicle sales during this quarter. Of which our newly acquired SC Autosports contributed $4.4 million of off road vehicle revenue for this quarter. EV part sales were approximately $31.1 million for the third quarter of 2018, or 84.4% of our total net revenue, an increase of $5.1 million, or 18.7% as compared with $27 million for the same quarter of 2017. The increase was largely due to the increased order from the JV Company. Our cost of goods sold was $31.8 million during the third quarter, an increase of 35% from $23.5 million in the same quarter of 2017. The increase was primarily due to the corresponding increase in sales. Gross profit for the third quarter was $6.2 million, an increase of 29.2% from $4.8 million for the same quarter of 2017. Gross margin decreased to 16.4% in the third quarter from 17% in the same quarter of 2017, which was mainly due to the vast majority of gross profit came from less profitable EV parts business as the selling price decreased on average in the third quarter of 2018. Total operating expenses in the third quarter were $8.7 million, compared with $3.1 million in the same quarter of 2017. The increase in total operating expense was mainly due to the significant increase in R&D expenses in this quarter, which [indiscernible] development of our new EV model K23 at Hainan facility in the third quarter of 2018. Currently, the most of development of EV model K23 has been completed. Net loss was $6.5 million in the third quarter, a decrease of $8.4 million as compared to net income of $1.9 million in the same quarter of 2017. The increase of loss was primarily due to the loss from the JV companies and the increase of R&D expenses in this period as compared to the same period of last year. Non-GAAP net loss in the third quarter was approximately $5 million, a decrease of $7.9 million from $3.9 million of non-GAAP net income in the same quarter of 2017. The increase in non-GAAP net was mainly due to the loss from the JV companies and the increase to R&D expenses in this period as compared to the same period of last year. Let me touch on the JV companies’ financials now. For the third quarter of 2018, the JV companies net sales were $19.9 million, compared to $86.2 million in the same quarter of 2017. The decrease was largely due to the JV companies’ new EV model awaiting the government approval to be included in the Directory of Recommended Models as well as approval of purchase tax exemption. There were 1,502 EV products sol during this quarter. In September 2018, our new EV model received all required approval from the Chinese government, which laid a solid foundation for EV’s revenue growth going forward. Net loss was $5.9 million in this quarter as compared to net loss of $0.5 million in the same quarter of 2017. We are accountable of our investments in the JV Company under the equity method of accounting as we have 50% ownership interest in the JV Company. As a result, we recorded 50% of JV Company’s loss of $2.9 million for the third quarter of 2018. After eliminating intra-entity profits and losses, our share of the after-tax loss of the JV Company was $3.2 million for this quarter. Next, I will review the Company’s cash flow. For the first three quarters of 2018, cash used in operating activities was $0.8 million as compared to $0.7 million in the same period of 2017. For the first three quarter of 2018, cash used in investing activity was $0.7 million, as compared to cash provided by investing activity of $2.6 million for the same period of last year. For the first three quarter of 2018, cash used in financing activity was $3.6 million as compared to cash used in financing activity of $3.8 million for the same periods of last year. We had a working capital deficit of $12.3 million as of September 30, 2018. As Kandi vehicle increased its capital contribution to the JV Company by converting it’s approximately $79 million of loan lend to the JV company’s registered capital, which reflected a decrease of $65.9 million from a working capital suppress of $53.7 million, as of December 31, 2017. That is it from me. Thank you. Kewa?

Kewa Luo

Operator, we are ready to take some questions.

Operator

Thank you. [Operator Instructions] Our first question comes from Arthur Porcari from Corporate Strategies Inc. Please go ahead. Your line open.

Arthur Porcari

Okay, very nice quarter Mr. Hu. I think most of us over received 20% to 25%, the fact you sold so many cars upfront, strong fourth quarter. I am sure you’ll talk about that. I am going to take my questions basically to the U.S. sales because a few ago, I had the opportunity along with our two – what you call it Kandi’s largest shareholder, gentlemen can visit the facility in Dallas, Texas, and business with Johnny Tai very impressive guy. So let me keep checking the area.

Hu Xiaoming

Art, your phone is a little bit skipping, but I get mostly what you said.

Arthur Porcari

Okay, go ahead.

Hu Xiaoming

[Foreign Language]

Arthur Porcari

Okay, by the way what was very really impressive was this $350,000 square foot facility packed ceiling to floor and wall to wall, and two assembly lines going assembly with many employees, assembling the parts and pushing them out. I think a management of auto sports is going to be great for us. Anyway. Let me get onto my questions.

Hu Xiaoming

Let me translate, what you just said.[Foreign Language]

Arthur Porcari

When we visited though the EVs weren’t at the facility, Johnny told us they were are at the California DOT. Has California completed the evaluation of the K22 and EX3 and if not is there an expected time frame for the inspection to be completed. And I’ll add a second part, I got a few more parts to this question. But let me add another part right now. Has the inspection found any major problems that need to be corrected either in Texas or in the other state.

Hu Xiaoming

[Foreign Language] First of all really appreciate your effort by going to our Dallas subsidiary to our visit. And thank you very much, and for now all our three cars are in California and the evaluation is still ongoing. And there are three things that we are happy in working on. First is to apply for the federal tax credit up to 7,500 and which already approved. We announced about a week ago. The second thing is that we also get approved from the bank for the up to $10 million bank loan and which is also good news. And the third is what we are working on right now is waiting for the Department of Transportation’s approval. As of today we have submitted all the required documentations, so we are just waiting hearing from them. Also another thing we are doing right now is the cars we have been selling in China is China version. So, in order to sell that EVs in the U.S., we have to adjust a lot of technology to U.S. standard. So that’s what we have been doing, but we’re thinking probably either end of this year or beginning next year once we receive the approval from DOT the sales, is expect to start by then.

Arthur Porcari

Okay. We were told that the tax credits would be around $7,500 for the federal? We can see that by pulling up the IRS website, there is additional $2,500 to $500 in most of the rest of the state. Johnny said that that would probably keep the cost to consumer well under $20,000 for the top of the EX3 is. Then part of the question as – any consideration be given to collect refundable deposits prior to starting sales. A few more to go. [Foreign Language]

Hu Xiaoming

[Foreign Language] I think we’re just going to go with our team in the U.S there is a working plan on how the sales is going to be. Anyway, just waiting for the DOT’s, approval once that is received, when we started the sales and we welcome any suggestions to help us fully prepare for our entrance into the U.S. market. Yes that’s what we’re planning to do.

Arthur Porcari

Okay. Just two more quick ones. Since Kandi is now exporting to the U.S., are there any plans to export to other countries such as Asia or the European Union? [Foreign Language]

Hu Xiaoming

[Foreign Language] We are currently doing preparation work to export our EV to the U.S., which is our first steps towards going global. As of now, we don’t have any plans yet to export to other countries. But once the time comes, I will make the announcement to the market.

Arthur Porcari

Okay. Here’s the last one, a bit off topic and it’s a follow-up from last conference call. In the last conference call Mr.Hu stated he intended to buy from $3 million to $5 million worth of Kandi stock over the next six months. To his credit, he did buy some $1.1 million in shares. Is it his intention to buy the remaining to $2 million to $4 million in stock over the remaining 90 days? [Foreign Language]

Hu Xiaoming

[Foreign Language] It all depends on the after situation for buying back the shares.

Arthur Porcari

Well that’s kind of okay. We’ll see. Aside from that, it was a great quarter irrespective of what the freight market seems to be doing to your stock Mr. Hu. This is much better than the U.S. investors were expecting. So keep up the good work. Thank you. [Foreign Language]

Hu Xiaoming

[Foreign Language] We can take the next question.

Operator

Our next question comes from Lee Gal a private investor. Please go ahead your line is open.

Unidentified Analyst

I have one question with first-in first-out. My question evolved as they stated of the K22, 27 and EX3, and first of all my question, is which factory is producing what model and are all three in Kandi production. [Foreign Language]

Hu Xiaoming

[Foreign Language] This is a pretty simple question. Our EX3 is being produced in Shanghai factory and both K27 and K22 are produced in [indiscernible] facility. At the hour we are going to be mostly producing EX3 for the rest of time.

Unidentified Analyst

My second question is, so are there any preorders for each model and if so, how many? The reason I ask this question is because on Chinese media mainly some management from JV, [indiscernible] X3 received a large pre-order and that is [indiscernible] during the launch ceremony. [Foreign Language]

Hu Xiaoming

[Foreign Language] The report from research is not very accurate. In fact, we have about 2,000 to 3,000 pre-orders for EX3 and for other two models we have various fields altogether a couple of thousand. Since this year we haven’t been really in a normal production. So we haven’t been having a lot of pre-orders.

Unidentified Analyst

Thank you. The second part of my question is about 2019. So can you please provide estimates of each model for – for rest of 2018 and also for 2019?

Hu Xiaoming

[Foreign Language] Well, let me put this way, due to the investigation from the Chinese Government on these battery situations. So the company sales in the past years have been impacted negatively. I will say that that it’s good at least we still survived. So for now we do a three-year business planned out we have been working on. And we consider 2018 is the year of resurrection. And the year of 2019, next year will be the year of returning alive. And the year of 2020 is expected it to be the year of sales booming. We will elaborate the future development plans according to the actual progress and since we haven’t really finalized all the details in the business plans. So I cannot disclose any to you at this moment, but we’ll keep everyone posted once the business plan is completed.

Unidentified Analyst

Thank you. The final part of my question is about the October sales. So today it is November 9 and the Chinese media we have reported October EVCL in China anytime soon, maybe out in two days. So, I know EX3 has a lot of promotions going on since September and also in Beijing in October JV has a big promotion send home, and Chengdu, et cetera. So as an investor we – I’m very eager to know how many cars you sell over the year in October?

Bing Mei

[Foreign Language]

Hu Xiaoming

[Foreign Language] Approximately 700 to 800 units, but don’t quote me on that because I haven’t really got the exact number, but that’s what I estimated.

Unidentified Analyst

[Foreign Language] Thank you.

Hu Xiaoming

Thank you.

Operator

[Operator Instructions] Our next question comes from Mark Kahnau from Swiss Liquid Future. Please go ahead.

Mark Kahnau

Yes. Hello, everybody. And congratulations on this quite good results. I Have one question consisting of three parts. Kandi the holder of the manufacturing license missed by the joint venture, recently receiving unexpected value added tax refund of $44 million. Now the first part is has this money is being transferred to the joint venture and how is that money to be allocated?

Hu Xiaoming

Thank you. Yes, I hear you. [Foreign Language]

Bing Mei

[Foreign Language] This refund is a surprise and is still in a discussion how this is going to be allocated. But as of now, RMB60 million of this tax reform money has been pre-allocated to the JV company and the rest of will be paid after the calculating company income context. But I think all the money, once we receive, will all go to JV company.

Mark Kahnau

Okay will this money then be added to be revenues in the fourth quarter?

Hu Xiaoming

[Foreign Language]

Bing Mei

[Foreign Language] And this I want you to verify this is a value added tax reform, not a sales income. So it’s not going to be added as the income. But however, this additional cash flow will increase liquidity and further improve the JV company’s competitiveness.

Mark Kahnau

Okay, I see. And then the last part of my question is apparently lease VAT works were only given to a few selected companies in a smaller number of industry. Was this totally unexpected? And are you at liberty to discuss why Kandi was chosen?

Hu Xiaoming

[Foreign Language]

Bing Mei

[Foreign Language] Sure it is expected. We are very happy to receive this. Based on the state administration taxations new policy intending to promote sustainable economic development, they are a select the number of advanced equipment manufacturers giving text reforms on the value added tax with many tax credits at the end of this year’s tax season. So JV company made tax reform requirement and very likely was chosen to be the one of leading pure PV manufacturing companies.

Mark Kahnau

Okay, got that. Thanks for taking my questions Kewa, and Mr. Hu and I look forward to two years from now.

Kewa Luo

Thank you very much.

Operator

Our next question comes from John [indiscernible] a Private Investor. Please go ahead.

Unidentified Analyst

Yes my question is in reference to the micro public transport fleets. Now they consist of many vehicles. But they are older models. And I was wondering when they might be ordering replacement vehicles, or will they be using any upgraded automobiles and have any orders for replacement has been received?

Hu Xiaoming

[Foreign Language]

Bing Mei

[Foreign Language] ZZY, the service provider, they are an independent operating. They will of course make the purchase order of our EV models to replace the old one according to their market demand. Currently they are – some cars being in the process of being replacing the old ones. So yes, so this is going to be a gradual process.

Unidentified Analyst

Okay. Thank you very much.

Operator

Thank you. Our next question comes from Ted Schwartz from TAS Associates. Please go ahead.

Ted Schwartz

Hi, Kewa. There have been many articles about the carbon credit program due to start in China. Is the program as far as Mr. Hu knows, is the program still going to start in January of 2019 as indicated in these articles? And if so, it would kind of benefit. Does Mr. Hu expect to gain from this program starting in 2019?

Kewa Luo

Okay, thank you, Ted. [Foreign Language]

Hu Xiaoming

[Foreign Language] As you’re talking about the media reports from China, then it’s really hard to say because there were so many of them. And there was no official documents have been published yet but we also have been heard that China carbon credit trading as expected to start implementing in 2020. So that’s a timeline we’ve been hearing as well. Well, in regarding to you, whether this is going to benefit Kandi, of course, but how it’s going to benefit Kandi in terms of whether this going to contribute additional revenue, then is going to depending on the actual policy and standard they are giving out. For now, we don’t know. We have to wait for the government to give out the final answer.

Ted Schwartz

Thank you.

Kewa Luo

Thank you very much.

Operator

Our next question comes from [indiscernible] Private Investor. Please go ahead.

Unidentified Analyst

Good morning. I have one two-part question. In the past you mentioned negotiations with the government of Jinhua, about the possible purchase of land owned by Kandi itself for about $160 million. Does this parcel of land they’re discussing contain the eight building factory complex or is this a different parcel of land containing 400 acres. And what would be the present status of the negotiations?

Kewa Luo

[Foreign Language]

Hu Xiaoming

[Foreign Language]

Kewa Luo

Regarding to the Jinhua government asset acquisition, we are still in discussions with them, I want to say is that this – I’m sorry, I don’t know the unit translation between our acre in China or acre in America, but Mr. Hu want to emphasize that this land has 400 acres in the Chinese standard. So you can convert that later. But this – basically, this is the government contract and will be guided through the municipal government plan, actually reform and development. There is no final thing yet but still in the discussion with – we are trying to obtain the maximum interest for the entity. But we think the longer the discussion last, the more valuable this land will become. So, we’re not really rushing the government.

Unidentified Analyst

Okay. Thank you very much.

Kewa Luo

Thank you.

Operator

[Operator Instructions] Our next question comes from [indiscernible] Private Investor. Please go ahead.

Unidentified Analyst

Yes, good morning. Your previous communications to shareholders was that both owed subsidies and manufacturing license should have already come to pass? Unfortunately, they have not. I realized that you could only relate to us the information that your contract in the PRC has applied. You haven’t updated date as to when either how the event might occur. And have you been given any explanation for the delay as how much does the PRC owe this time to PMV?

Kewa Luo

[Foreign Language]

Hu Xiaoming

[Foreign Language] We have been making a great effort to work on these two things, for sure. While the manufacturing license application approval process have been advancing at a very slow pace in the past. But recently we do see a very positive progress and believe it will be approved in the near future. We got into the PRC debt and the government owes us over RMB 130 million in subsidy payments. We have been told that the related department will start clearing and settling work for 2015 and 2016 in owed subsidies. And these two years, is about RMB 800 million.

Unidentified Analyst

Okay. Very good, but we don’t have an exact expected timeframe at this point in time.

Kewa Luo

Okay. [Foreign Language]

Hu Xiaoming

[Foreign Language]

Kewa Luo

[Foreign Language]

Hu Xiaoming

[Foreign Language] Okay, Frank. I’d like to correct myself. The total debt government owes us is 1.3 billion, 1.3 billion in subsidy payments. And 2015 and 2016 owed subsidies are totaling approximately RMB 800 million. I’m sorry for the mistake I just made.

Unidentified Analyst

That’s okay. That’s okay. And a quick follow-up question to a previous, the Jinhua parcel of land that’s been discussed. Does that contain the eight building factory complex?

Kewa Luo

[Foreign Language]

Hu Xiaoming

[Foreign Language]

Kewa Luo

Okay, Mr. Hu saying that there are more than eight buildings there, has about 250,000 square meters not square foot, square meters of land?

Unidentified Analyst

Yes. But is that going to be – that’s going to be – the Jinhua as part of the purchase that’s my question in retail?

Kewa Luo

[Foreign Language]

Hu Xiaoming

[Foreign Language]

Kewa Luo

Mr. Hu saying that all these are included if they are going to acquire all these including all buildings then we are going to offer elsewhere that we can purchase [indiscernible] and move our battery to these new place.

Unidentified Analyst

Okay. Thank you very much, Kewa. Excellent.

Kewa Luo

Thank you, Frank.

Operator

Our next question comes from [indiscernible] Private Investor. Please go ahead.

Unidentified Analyst

Yes. Apparently the factory in JiHeKang and Hainan is completed and ready to start volume production. And my question is as volume production started and if not, why not?

Kewa Luo

[Foreign Language]

Hu Xiaoming

[Foreign Language]

Kewa Luo

Hainan factory construction is completed, it’s completed. But right now it’s only running the tire production.

Unidentified Analyst

Okay. Is the sale of the factory to the JV depended on manufacturing licenses or is another reason maybe for the purchase not having been completed?

Kewa Luo

[Foreign Language]

Hu Xiaoming

[Foreign Language]

Kewa Luo

It’s not related to the manufacturing license. Following the prior agreement we have signed, the factory in Haikou will be acquired by the JV Company. However, acquiring process will be after the official production begins. Right now it’s only the tire production.

Unidentified Analyst

Okay. What is the status of the final payment of the Hainan graph?

Kewa Luo

[Foreign Language]

Hu Xiaoming

[Foreign Language]

Kewa Luo

So rest of the graph is above RMB100 million. This final payment is in process, hopefully in the nearest future will be received.

Unidentified Analyst

Okay, that’s all I have.

Kewa Luo

Thank you very much.

Operator

Our next question and final question comes from Mark Miller, private investor. Please go ahead.

Mark Miller

Hi. Did I hear you right earlier? You have preorders for 53,000 EX3? Is that correct?

Kewa Luo

We’ll say about 2,000 to 3,000.

Mark Miller

What kind of deposit was required for those vehicles?

Kewa Luo

[Foreign Language]

Hu Xiaoming

[Foreign Language]

Kewa Luo

About RMB200 million.

Mark Miller

Okay. All right. Here’s my question here. In December of 2017, Kandi acquired a new battery division by means of acquisition, Jinhua An Kao, if I’m pronouncing it correctly.

Kewa Luo

Yes.

Mark Miller

At that time it announced that RMB30.2 million framework agreement with the procurement of battery packs was in place, Hangzhou Yao Ding, again, if I’m pronouncing it right. As of the latest 10-Q, some RMB9.5 million of revenues have been contributed by An Kao to Kandi. Here’s the question. Was this contribution part of Hangzhou Yao Ding agreement, which I assume must have been turned into a purchase contract? And if so, how long before the balance of the $21 million remaining will be realized?

Kewa Luo

Okay. [Foreign Language] Hu? Hello? Yes.

Hu Xiaoming

[Foreign Language]

Kewa Luo

Hangzhou Yao Ding is a wholly-owned subsidiary of Zhejiang Shi Kong Electric Vehicle Company. As of the third quarter, An Kao sold RMB8.4 million worth of battery packs to Yao Ding. Jinhua An Kao and Hangzhou Yao Ding signed up battery pack procurement framework agreement. According to the terms of this agreement, Yao Ding were a precious battery pack from Jinhua An Kao depending on the business need. So as of – to answer your question, when the rest of the – the balance of the RMB21 million will be realized were depending on their market demand.

Mark Miller

Okay, thanks. And then back to the seller, the preorder, when do you folks plan on shipping these or delivering these out to the power customers?

Kewa Luo

[Foreign Language]

Hu Xiaoming

[Foreign Language]

Kewa Luo

[Foreign Language]

Hu Xiaoming

[Foreign Language]

Kewa Luo

A pretty much will be delivered by the end of this year.

Mark Miller

Were the 53,000 cars shipped in the fourth quarter just on that?

Kewa Luo

Say one more time, many cars?

Mark Miller

53,000.

Kewa Luo

53,000?

Mark Miller

Yes. You said you have 53,000 EVs backordered – preordered.

Kewa Luo

No, we said 2,000 to 3,000 of EX3.

Mark Miller

And you’re going to ship this in the fourth quarter?

Kewa Luo

Yes, by the end of this quarter.

Mark Miller

Okay.

Kewa Luo

What are you asking? Can you say one more time?

Mark Miller

Again, you were talking you have a preorder for 53,000 EX3and you’re saying you’re going to ship these out in this quarter four that we’re in?

Kewa Luo

No, I think what we said is as of now we have 2,000 to 3,000 around the number of EX3 orders. I don’t know how you got the 52,000.

Mark Miller

Well, it’s what I asked earlier. I said earlier in the call I thought I heard you had a backorder for 53,000. So you don’t have a backorder?

Kewa Luo

No, I said Q2, I’m sorry, probably I didn’t say it clearly. I said – Mr. Hu answered on the previous investor that we do have 2,000 to 3,000 preorders of EX3.

Mark Miller

Right. And then you said you required a deposit of, what would you say, RMB200 million or whatever? I couldn’t remember that.

Kewa Luo

Yes. Yes.

Mark Miller

Okay. But that 53,000 preordered, do you have an idea when that might ship? How long will it take to get those out?

Kewa Luo

Mr. Hu answered, probably by the end of this year, this quarter.

Mark Miller

53,000 is going to ship at the end of this quarter via the EX3?

Kewa Luo

How – I’m sorry, how can you say 53,000? We have 2,000 to 3,000 EX3 cars.

Mark Miller

So there’s two different statements, you have a preorder for 53,000 that’s out there, but we don’t know when those will ship out, is that right?

Kewa Luo

Mr. Mei, can you elaborate a little bit?

Bing Mei

Yes. I think your calculation is not correct. Kewa is keep saying there should be within 2,000 unit to 3,000 unit. It’s not 53,000. It’s 2,000 – from 2,000 to 3,000.

Mark Miller

And that’s for preorder?

Bing Mei

Yes.

Mark Miller

Okay. I mean, wasn’t I speaking clearly when I said? I thought I heard them say 53,000 preordered. So it’s 3,000 preordered?

Bing Mei

Yes. Actually, it’s from 3,000 – ranging from – from 2,000 to 3,000.

Mark Miller

And what was the required deposit on the car approximately?

Bing Mei

I think Kewa answered your question, that’s RMB100 million…

Kewa Luo

RMB200 million. RMB200 million in total approximately.

Mark Miller

And that’s RMB?

Bing Mei

Yes.

Mark Miller

All right, I got it. All right. Listen, great quarter. Keep up the good work. Thanks for answering the question.

Kewa Luo

Thank you very much. [Foreign Language] Operator, we finished all the questions.

Operator

Thank you. I would like to hand the call back to yourself for any additional or closing remarks.

Hu Xiaoming

[Foreign Language]

Kewa Luo

Thank you, ladies and gentlemen for attending today’s call. In closing, allow me to represent the entire board of directors and the management team at Kandi Technologies Group to reaffirm our commitment. We will continue to work diligently to maximize shareholders’ value by focusing on growing our EV business. Thank you very much for your support. We look forward to talking with you again in our next call. If you have any additional questions, please don’t hesitate to contact our Investor Relations department. Thank you. Good bye.

Operator

This concludes today’s conference. Thank you for your participation. You may now disconnect.