10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☒  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2017

or

☐  Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______to______

Commission file number 001-33997

KANDI TECHNOLOGIES GROUP, INC. 
(Exact name of registrant as specified in charter)

Delaware	90-0363723
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

Jinhua City Industrial Zone
Jinhua, Zhejiang Province
People’s Republic of China
Post Code 321016
(Address of principal executive offices)

(86 - 579) 82239856
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)  Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
(Do not check if a smaller reporting company)		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐    No ☒

As of November 6, 2017, the registrant had issued and outstanding 48,036,538 shares of common stock, par value $0.001 per share.

TABLE OF CONTENTS

		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 2016	1
	Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (unaudited) – Three Months and Nine Months Ended September 30, 2017 and 2016	2
	Condensed Consolidated Statements of Cash Flows (unaudited) –Nine Months Ended September 30, 2017 and 2016	3
	Notes to the Condensed Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	63
Item 4.	Controls and Procedures	64
PART II — OTHER INFORMATION
Item 1.	Legal proceedings	65
Item 1A.	Risk Factors	66
Item 6.	Exhibits	67

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	September 30, 2017			December 31, 2016
Current assets
Cash and cash equivalents	$	3,560,510		$	12,235,921
Restricted cash		20,735,921			12,957,377
Short term investment		-			4,463,097
Accounts receivable		41,774,453			32,394,613
Inventories (net of provision for slow moving inventory of $574,165 and $415,797 as of September 30, 2017 and December 31, 2016, respectively		15,176,578			11,914,110
Notes receivable from JV Company and related party		1,542,147			400,239
Other receivables		238,577			66,064
Prepayments and prepaid expense		5,471,257			4,317,855
Due from employees		25,901			4,863
Advances to suppliers		14,536,366			38,250,818
Amount due from JV Company, net		136,632,901			136,536,159
Amount due from related party		6,437,261			10,484,816
TOTAL CURRENT ASSETS		246,131,872			264,025,932
LONG-TERM ASSETS
Property, Plant and equipment, net		12,962,632			15,194,442
Land use rights, net		12,045,926			11,775,720
Construction in progress		47,676,068			27,054,181
Deferred taxes assets		4,555,018			-
Long Term Investment		1,427,798			1,367,723
Investment in JV Company		67,087,803			77,453,014
Goodwill		322,591			322,591
Intangible assets		351,640			413,211
Advances to suppliers		27,695,209			33,819,419
Other long term assets		7,726,179			8,271,952
Amount due from JV Company, net		15,907,183			-
TOTAL Long-Term Assets		197,758,047			175,672,253
TOTAL ASSETS	$	443,889,919		$	439,698,185
CURRENT LIABILITIES
Accounts payables	$	131,047,418		$	115,870,051
Other payables and accrued expenses		6,523,693			4,835,952
Short-term loans		32,613,923			34,265,065
Customer deposits		125,411			41,671
Notes payable		26,212,569			14,797,325
Income tax payable		2,282,514			1,364,235
Due to employees		31,956			21,214
Deferred taxes liabilities		-			118,643
Deferred income		1,397,138			6,363,751
Loss contingency-litigation		601,178			-
Total Current Liabilities		200,835,800			177,677,907
LONG-TERM LIABILITIES
Long term bank loans		30,058,915			28,794,172
Deferred taxes liabilities		-			878,639
Total Long-Term Liabilities		30,058,915			29,672,811
TOTAL LIABILITIES		230,894,715			207,350,718
STOCKHOLDER’S EQUITY
Common stock, $0.001 par value; 100,000,000 shares authorized;  48,034,038 and 47,699,638 shares issued and outstanding at September 30,2017 and December 31,2016, respectively		48,034			47,700
Additional paid-in capital		233,409,326			227,911,477
Retained earnings (the restricted portion is $4,217,753 and $4,219,808 at September 30,2017 and December 31,2016, respectively)		(9,248,214	)		24,545,163
Accumulated other comprehensive loss		(11,213,942	)		(20,156,873	)
TOTAL STOCKHOLDERS’ EQUITY		212,995,204			232,347,467
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	443,889,919		$	439,698,185

See accompanying notes to condensed consolidated financial statements

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KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2017			2016			2017			2016
REVENUES FROM UNRELATED PARTY, NET		6,604,109			5,211,201		$	10,720,595		$	46,165,105
REVENUES FROM JV COMPANY AND RELATED PARTY, NET		21,749,790			1,155,179			49,233,156			66,076,536
REVENUES, NET		28,353,899			6,366,380			59,953,751			112,241,641
COST OF GOODS SOLD		23,522,406			5,715,211			50,697,990			96,417,337
GROSS PROFIT		4,831,493			651,169			9,255,761			15,824,304
OPERATING EXPENSES:
Research and development		657,851			522,806			26,569,624			1,222,967
Selling and marketing		216,351			374,102			976,913			1,150,880
General and administrative		2,196,201			373,411			12,074,147			18,031,487
Total Operating Expenses		3,070,403			1,270,319			39,620,684			20,405,334
INCOME (LOSS) FROM OPERATIONS		1,761,090			(619,150)			(30,364,923)			(4,581,030)
OTHER INCOME (EXPENSE):
Interest income		619,923			832,031			1,709,990			2,397,364
Interest expense		(598,523	)		(425,152)			(1,761,786)			(1,299,549)
Change in fair value of financial instruments		-			10,692			-			3,823,590
Government grants		474,950			594,323			5,804,561			2,292,180
Share of income (loss) after tax of JV		444,181			(299,538)			(13,455,786)			(203,375)
Other expense, net		(6,560	)		(106,299	)		143,617			202,878
Total other income (expense), net		933,971			606,057			(7,559,404)			7,213,088
INCOME (LOSS) BEFORE INCOME TAXES		2,695,061			(13,093)			(37,924,327)			2,632,058
INCOME TAX (EXPENSE) BENEFIT		(776,985	)		(552,848)			4,130,951			(316,399)
NET INCOME (LOSS)		1,918,076			(565,941)			(33,793,376)			2,315,659
OTHER COMPREHENSIVE INCOME(LOSS)
Foreign currency translation		4,032,652			(805,216	)		8,942,931			(6,433,480	)
COMPREHENSIVE INCOME (LOSS)	$	5,950,728		$	(1,371,157	)	$	(24,850,445	)	$	(4,117,821	)
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC		48,028,467			47,695,290			47,913,028			47,436,418
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED		48,028,467			47,695,290			47,913,028			47,436,418
NET INCOME (LOSS) PER SHARE, BASIC	$	0.04		$	(0.01	)		(0.71)		$	0.05
NET INCOME(LOSS) PER SHARE, DILUTED	$	0.04		$	(0.01	)		(0.71	)	$	0.05

See accompanying notes to condensed consolidated financial statements

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KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	September 30, 2017			September 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(33,793,376	)	$	2,315,659
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		3,556,661			3,681,345
Assets Impairments		136,936			-
Deferred taxes		(5,596,103	)		(2,608,702	)
Change in fair value of financial instruments		-			(3,823,590	)
Share of loss after tax of JV Company		13,455,786			203,375
Stock Compensation cost		5,522,358			13,930,829
Changes in operating assets and liabilities, net of effects of acquisition:
(Increase) Decrease In:
Accounts receivable		(8,926,990	)		(48,534,492	)
Notes receivable		-			918,018
Notes receivable from JV Company and related party		4,923,967			-
Inventories		(2,814,129	)		1,802,780
Other receivables and other assets		754,661			(11,868,318	)
Due from employee		(10,766	)		17,718
Advances to supplier and Prepayments and prepaid expenses		23,878,150			(31,684,685	)
Advances to suppliers-Long term		(4,804,200	)		-
Amount due from JV Company		(33,071,177	)		(87,973,693	)
Amount due from JV Company-Long-term		(15,907,183	)		-
Due from related party		4,406,105			28,994,314
Increase (Decrease) In:
Accounts payable		53,078,541			106,924,655
Other payables and accrued liabilities		2,173,413			10,415,706
Notes payable		(3,933,839	)		(5,849,988	)
Customer deposits		80,057			(13,598	)
Income Tax payable		732,405			607,422
Deferred income		(5,127,455	)		-
Loss contingency-litigation		587,579			-
Net cash used in operating activities	$	(698,599	)	$	(22,545,245	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment, net		(420,037	)		(39,250	)
Purchases of construction in progress		(1,565,244	)		(4,236,301	)
Repayment of notes receivable		-			10,436,303
Restricted cash		5,875,786			-
Short Term Investment		4,553,734			1,592,024
Net cash provided by investing activities	$	8,444,239		$	7,752,776
CASH FLOWS FROM FINANCING ACTIVITIES:
Restricted cash		(12,922,105	)		1,519,477
Proceeds from short-term bank loans		24,854,574			-
Repayments of short-term bank loans		(27,939,362	)		-
Proceeds from notes payable		13,367,413			-
Repayment of notes payable		(14,060,961	)		-
Warrant exercise		-			434,666
Net cash (used) provided by financing activities	$	(16,700,441	)	$	1,954,143
NET DECREASE IN CASH AND CASH EQUIVALENTS		(8,954,801	)		(12,838,326	)
Effect of exchange rate changes on cash		279,390			(210,383	)
Cash and cash equivalents at beginning of year		12,235,921			16,738,559
CASH AND CASH EQUIVALENTS AT END OF PERIOD		3,560,510			3,689,850
SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid		1,072,082			2,322,747
Interest paid		1,164,774			1,283,843
SUPPLEMENTAL NON-CASH DISCLOSURES:
Prepayment transferred to construction in progress		12,241,736			-
Purchase of construction in progress by accounts payable		6,244,120			-
Advances to suppliers-long term adjusted for other payable		1,057,152			-
Settlement of due from JV Company and related parties with notes receivable		39,197,964			46,791,213
Settlement of accounts receivables with notes receivable from unrelated parties		1,150,038			15,198,694
Assignment of notes receivable to supplier to settle accounts payable		34,325,141			61,497,480
Settlement of accounts payable with notes payables		15,149,150			5,187,040
Deferred tax change to other comprehensive income		52,266			-

See accompanying notes to condensed consolidated financial statements

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NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES

Kandi Technologies Group, Inc. (“Kandi Technologies”) was incorporated under the laws of the State of Delaware on March 31, 2004. Kandi Technologies changed its name from Stone Mountain Resources, Inc. to Kandi Technologies, Corp. on August 13, 2007, and on December 21, 2012, Kandi Technologies changed its name to Kandi Technologies Group, Inc. As used herein, the term the “Company” means Kandi Technologies and its operating subsidiaries, as described below.

Headquartered in Jinhua City, Zhejiang Province, People’s Republic of China, the Company is one of the People’s Republic of China’s (“China”) leading producers and manufacturers of electric vehicle (“EV”) products, EV parts, and off-road vehicles for sale in China and global markets. The Company conducts its primary business operations through its wholly-owned subsidiary, Zhejiang Kandi Vehicles Co., Ltd. (“Kandi Vehicles”), and the partially and wholly-owned subsidiaries of Kandi Vehicles.

The Company’s organizational chart is as follows:

 

4

Operating Subsidiaries:

Pursuant to agreements executed in January 2011, Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests (100% of profits and losses) of Jinhua Kandi New Energy Vehicles Co., Ltd. (“Kandi New Energy”). Kandi New Energy currently holds battery pack production licensing rights and supplies battery packs to the JV Company (as such term is defined below). In April 2012, pursuant to a share exchange agreement, the Company acquired 100% of Yongkang Scrou Electric Co, Ltd. (“Yongkang Scrou”), a manufacturer of automobile and EV parts. Yongkang Scrou currently manufactures and sells EV drive motors, EV controllers, air conditioners and other electric products to the JV Company.

In March 2013, pursuant to a joint venture agreement (the “JV Agreement”) entered into by Kandi Vehicles and Shanghai Maple Guorun Automobile Co., Ltd. (“Shanghai Guorun”), a 99%-owned subsidiary of Geely Automobile Holdings Ltd. (“Geely”), the parties established Zhejiang Kandi Electric Vehicles Co., Ltd. (the “JV Company”) to develop, manufacture and sell EV products and related auto parts. Each of Kandi Vehicles and Shanghai Guorun has 50% ownership interest in the JV Company. In March 2014, the JV Company changed its name to Kandi Electric Vehicles Group Co., Ltd. At present, the JV Company is a holding company and all products are manufactured by its subsidiaries. In an effort to improve the JV Company’s development, Zhejiang Geely Holding Group, the parent company of Geely, became the JV Company’s -shareholder on October 26, 2016, through its purchase of the 50% equity of the JV Company held by Shanghai Guorun at a premium price (a price exceeding the cash amount of the aggregate of the original investment and the shared profits over the years). On May 19, 2017, due to business development, Geely Holding entrusted Hu Xiaoming, Chairman of the Board of the JV Company, to hold 19% equity of the JV Company from its 50% holding of the JV Company on behalf of Geely Holding as a nominal holder. On the same day, Geely Holding transferred its remaining 31% equity in the JV Company to Geely Group (Ningbo) Ltd., a company wholly owned by Li Shufu, Chairman of the Board of Geely Holding. On May 25, 2017, Mr. Hu pledged his 19% equity in the JV Company held on behalf of Geely Holding to Geely Holding. On June 30, 2017, due to the JV Company’s operational needs, Kandi Vehicles pledged its 50% equity in the JV Company to Geely Holding as counter-guarantee, because Geely Holding provides a 100% guarantee on the JV Company’s borrowings. Despite of the pledge, guarantee and counter-guarantee arrangements stated above, there is no change in control with respect to the 50% ownership held by each shareholder of the JV Company. In order to streamline the equity structure, on October 24, 2017, Mr. Hu transferred the 19% equity of the JV Company to Geely Group (Ningbo) Ltd. Now, Kandi Vehicles and Geely Group (Ningbo) Ltd. each owns 50% of equity of the JV Company.

In March 2013, Kandi Vehicles formed Kandi Electric Vehicles (Changxing) Co., Ltd. (“Kandi Changxing”) in the Changxing (National) Economic and Technological Development Zone. Kandi Changxing is engaged in the production of EV products. In the fourth quarter of 2013, Kandi Vehicles entered into an ownership transfer agreement with the JV Company pursuant to which Kandi Vehicles transferred 100% of its ownership in Kandi Changxing to the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Changxing.

In July 2013, Zhejiang ZuoZhongYou Electric Vehicle Service Co., Ltd. (the “Service Company”) was formed. The Service Company is engaged in various pure EV leasing businesses, generally referred to as the Micro Public Transportation (“MPT”) program. The Company, through Kandi Vehicles, has 9.5% ownership interest in the Service Company.

5

In November 2013, Kandi Electric Vehicles Jinhua Co., Ltd. (“Kandi Jinhua”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jinhua, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua.

In November 2013, Zhejiang JiHeKang Electric Vehicle Sales Co., Ltd. (“JiHeKang”) was formed by the JV Company. JiHeKang is engaged in the car sales business. The JV Company has a 100% ownership interest in JiHeKang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang.

In December 2013, the JV Company entered into an ownership transfer agreement with Shanghai Guorun, pursuant to which the JV Company acquired a 100% ownership interest in Kandi Electric Vehicles (Shanghai) Co., Ltd. (“Kandi Shanghai”). As a result, Kandi Shanghai is a wholly-owned subsidiary of the JV Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Shanghai.

In January 2014, Kandi Electric Vehicles Jiangsu Co., Ltd. (“Kandi Jiangsu”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jiangsu, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jiangsu. Kandi Jiangsu is mainly engaged in EV research and development, manufacturing, and sales.

In November 2015, Hangzhou Puma Investment Management Co., Ltd. (“Puma Investment”) was formed by the JV Company. Puma Investment provides investment and consulting services. The JV Company has a 50% ownership interest in Puma Investment (the other 50% is owned by Zuozhongyou Electric Vehicles Service (Hangzhou) Co., Ltd., a subsidiary of the Service Company), and the Company, indirectly through the JV Company, has a 25% economic interest in Puma Investment.

In November 2015, Hangzhou JiHeKang Electric Vehicle Service Co., Ltd. (the “JiHeKang Service Company”) was formed by the JV Company. The JiHeKang Service Company focuses on after-market services for EV products. The JV Company has a 100% ownership interest in the JiHeKang Service Company, and the Company, indirectly through the JV Company, has a 50% economic interest in the JiHeKang Service Company.

In January 2016, Kandi Electric Vehicles (Wanning) Co., Ltd. (“Kandi Wanning”) was renamed Kandi Electric Vehicles (Hainan) Co., Ltd. (“Kandi Hainan”). Kandi Hainan was originally formed in Wanning City in Hainan Province by Kandi Vehicles and Kandi New Energy in April 2013, and was transferred to Haikou City in January 2016. Kandi Vehicles has a 90% ownership interest in Kandi Hainan, and Kandi New Energy has the remaining 10% ownership interest. In fact, Kandi Vehicles is, effectively, entitled to 100% of the economic benefits, voting rights and residual interests (100% of the profits and losses) of Kandi Hainan as Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests of Kandi New Energy.

In August 2016, Jiangsu JiDian Electric Vehicle Sales Co., Ltd. (“Jiangsu JiDian”) was formed by JiHeKang. Jiangsu JiDian is engaged in the car sales business. Since JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Jiangsu JiDian, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Jiangsu JiDian.

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In October 2016, JiHeKang acquired Tianjin BoHaiWan Vehicle Sales Co., Ltd. (“Tianjin BoHaiWan”), which is engaged in the car sales business. Since JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Tianjin BoHaiWan, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Tianjin BoHaiWan.

In November 2016, Changxing Kandi Vehicle Maintenance Co., Ltd. (“Changxing Maintenance”) was formed by Kandi Changxing. Changxing Maintenance is engaged in the car repair and maintenance business. Since Kandi Changxing is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Changxing Maintenance, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Changxing Maintenance.

In March 2017, Hangzhou Liuchuang Electric Vehicle Technology Co., Ltd.(“Liuchuang”) was formed by Kandi Jiangsu. Since Kandi Jiangsu is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Liuchuang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Liuchuang.

In April 2017, in order to promote business development, Kandi Jinhua, JiHeKang, and JiHeKang Service Company were reorganized to become subsidiaries of Kandi Jiangsu. As the JV Company has a 100% ownership interest in Kandi Jiangsu, the JV Company has 100% ownership interests in Kandi Jinhua, JiHeKang, and JiHeKang Service Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua, JiHeKang, and JiHeKang Service Company.

The Company’s primary business operations are designing, developing, manufacturing and commercializing EV products, EV parts and off-road vehicles. As part of its strategic objective of becoming a leading manufacturer of EV products (through the JV Company) and related services, the Company has increased its focus on pure EV-related products, with a particular emphasis on expanding its market share in China.

NOTE 2 – LIQUIDITY

The Company had a working capital surplus of $45,296,072 as of September 30, 2017, a decrease of $41,051,953 from $86,348,025 as of December 31, 2016. As of September 30, 2017, the Company had credit lines from commercial banks of $32,313,334. Although the Company expects that most of the Company’s outstanding trade receivables from its customers will be collected in the next twelve months, there are uncertainties about the timing in collecting these receivables, especially the receivables due from the JV Company, because most of them are indirectly impacted by the timely receipt of government subsidies. Since the amount due from the JV Company accounts for the majority of the Company’s outstanding receivables, and since the Company cannot control the timing of the receipt of government subsidies, the Company believes that its internally-generated cash flows may not be sufficient to support the growth of future operations and to repay short-term bank loans for the next twelve months. However, the Company believes its access to existing financing sources and its good credit will enable it to meet its obligations and fund its ongoing operations. The Company expects to approximately maintain the current debt level for the next twelve months given the Company’s current financial position and business development needs. 

7

The Company has historically financed its operations through short-term commercial bank loans from Chinese banks. The term of these loans is typically for one year, and upon the payment of all outstanding principal and interest on a particular loan, the banks have typically rolled over the loan for an additional one-year term, with adjustments made to the interest rate to reflect prevailing market rates. This practice has been ongoing year after year and the Company believes that short-term bank loans will remain available on normal trade terms if needed.

NOTE 3 – BASIS OF PRESENTATION

The Company maintains its general ledger and journals using the accrual method of accounting for financial reporting purposes. The Company’s financial statements and notes are the representations of the Company’s management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States and have been consistently applied in the Company’s presentation of its financial statements.

NOTE 4 – PRINCIPLES OF CONSOLIDATION

The Company’s consolidated financial statements reflect the accounts of the Company and its ownership interests in the following subsidiaries:

(1) Continental Development Limited (“Continental”), a wholly-owned subsidiary of the Company incorporated under the laws of Hong Kong;

(2) Kandi Vehicles, a wholly-owned subsidiary of Continental;

(3) Kandi New Energy, a 50%-owned subsidiary of Kandi Vehicles (Mr. Hu Xiaoming owns the other 50%). Pursuant to agreements executed in January 2011, Mr. Hu Xiaoming contracted with Kandi Vehicles for the operation and management of Kandi New Energy and put his shares of Kandi New Energy into escrow. As a result, Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests of Kandi New Energy;

(4) Yongkang Scrou, a wholly-owned subsidiary of Kandi Vehicles; and

(5) Kandi Hainan, a subsidiary 10% owned by Kandi New Energy and 90% owned by Kandi Vehicles. 

Equity Method Investees

The Company’s consolidated net income also includes the Company’s proportionate share of the net income or loss of its equity method investees as follows:

(1) The JV Company, a 50% owned subsidiary of Kandi Vehicles;

8

(2) Kandi Changxing, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Changxing;

(3) Kandi Jinhua, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua;

(4) JiHeKang, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang;

(5) Kandi Shanghai, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Shanghai;

(6) Kandi Jiangsu, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jiangsu;

(7) The JiHeKang Service Company, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in the JiHeKang Service Company.

(8) Tianjin BoHaiWan, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Tianjin BoHaiWan;

(9) Changxing Maintenance, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Changxing Maintenance;

(10) Liuchuang, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Liuchuang.

(11) Jiangsu Jidian, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Jiangsu Jidian.

All intra-entity profits and losses with regards to the Company’s equity method investees have been eliminated.

NOTE 5 – USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available at the time the estimates are made; however actual results when ultimately realized could differ from those estimates.

9

NOTE 6 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Economic and Political Risks

The Company’s operations are conducted in China. As a result, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in China, and by the general state of the Chinese economy. In addition, the Company’s earnings are subject to movements in foreign currency exchange rates when transactions are denominated in Renminbi (“RMB”), which is the Company’s functional currency. Accordingly, the Company’s operating results are affected by changes in the exchange rate between the U.S. dollar and the RMB.

The Company’s operations in China are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s performance may be adversely affected by changes in the political and social conditions in China, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

(b) Fair Value of Financial Instruments

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

These tiers include:

Level 1—defined as observable inputs such as quoted prices in active markets;

Level 2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3—defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company’s financial instruments primarily consist of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, other receivables, accounts payable, other payables and accrued liabilities, short-term bank loans, notes payable, and warrants.

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, other receivables, accounts payable, other payables and accrued liabilities, and notes payable approximate fair value because of the short-term nature of these items. The estimated fair values of short-term bank loans were not materially different from their carrying value as presented due to the brief maturities and because the interest rates on these borrowings approximate those that would have been available for loans of similar remaining maturities and risk profiles. As the carrying amounts are reasonable estimates of fair value, these financial instruments are classified within Level 1 of the fair value hierarchy. The Company identified notes payable as Level 2 instruments due to the fact that the inputs to valuation are primarily based upon readily observable pricing information. The balance of notes payable, which was measured and disclosed at fair value, was $26,212,569 and $14,797,325 at September 30, 2017 and December 31, 2016, respectively.

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Warrants, which are accounted for as liabilities, are treated as derivative instruments, and are measured at each reporting date for their fair value using Level 3 inputs. The fair value of warrants was $0 at September 30, 2017 and December 31, 2016, respectively. Also see Note 6(t).

(c) Cash and Cash Equivalents

The Company considers highly-liquid investments purchased with original maturities of three months or less to be cash equivalents.

Restricted cash, as of September 30, 2017, and December 31, 2016, includes time deposits on account for earning interest income. As of September 30, 2017, and December 31, 2016, the Company’s restricted cash was $20,735,921 and $12,957,377, which includes a one-year Certificate of Time Deposit (CD) of $6,011,783 with Hangzhou Bank Jinhua Branch, which matured on October 9, 2017.

(d) Inventories

Inventories are stated at the lower of cost or net realizable value (market value). The cost of raw materials is determined on the basis of weighted average. The cost of finished goods is determined on the basis of weighted average and comprises direct materials, direct labor and an appropriate proportion of overhead.

Net realizable value is based on estimated selling prices less selling expenses and any further costs expected to be incurred for completion. Adjustments to reduce the cost of inventory to net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances.

(e) Accounts Receivable and Due from the JV Company and Related Parties

Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts is recorded for periods in which the Company determines a loss is probable, based on its assessment of specific factors, such as troubled collections, historical experience, accounts aging, ongoing business relations and other factors. Accounts are written off after exhaustive collection efforts. If accounts receivable are to be provided for, or written off, they are recognized in the consolidated statement of operations within the operating expenses line item.

As of September 30, 2017, and December 31, 2016, credit terms with the Company’s customers were typically 210 to 720 days after delivery. The Company extended credit terms with certain customers, mainly the JV Company whose outstanding balance has already exceeded the originally granted credit terms to a much longer period because of delayed subsidy payments for EVs sold by the JV Company from the Chinese government. Because of the industry-wide subsidy review, the Chinese government temporarily delayed issuance of subsidy payments for the EVs sold in 2015 and 2016, which negatively impacted the JV Company’s cash flow position and caused its delay in repaying the Company. By extending the credit term to maximum 720 days, it allows the JV Company sufficient time to repay the Company when the government resumes the subsidy payments. According to the government’s subsidy policies, the EVs sold in 2015 and 2016 by the JV Company are eligible for receiving subsidies and the Chinese government has a good record of paying subsidies. Therefore, the Company believes the issues associated with the outstanding receivables due from the JV Company is timing rather than collectability. Since the collectability is reasonably assured, as of September 30, 2017, and December 31, 2016, the Company had no allowance for doubtful accounts, as per the Company management’s judgment based on their best knowledge. The Company conducts quarterly assessments of the state of the Company’s outstanding receivables and reserves any allowance for doubtful accounts if it becomes necessary. As of September 30, 2017, based on the Company management’s collection experience, approximately $15.9 million of amount due from the JV Company in the current assets was reclassified to amount due from the JV Company in the long-term assets due to the reason mentioned above.

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(f) Notes Receivable

Notes receivable represent short-term loans to third parties with maximum terms of six months. Interest income is recognized according to each agreement between a borrower and the Company on an accrual basis. For notes receivable with banks, the interest rates are determined by banks. For notes receivable with other parties, the interest rates are based on agreements between the parties. If notes receivable are paid back, that transaction will be recognized in the relevant year. If notes receivable are not paid back, or are written off, that transaction will be recognized in the relevant year if default is probable, reasonably assured, and the loss can be reasonably estimated. The Company will recognize income if the written-off loan is recovered at a future date. In case of any foreclosure proceedings or legal actions, the Company provides an accrual for the related foreclosure and litigation expenses. The Company also receives notes receivable from the JV Company and other parties to settle accounts receivable. If the Company decides to discount notes receivable for the purpose of receiving immediate cash, the current discount rate is approximately in the range of 4.80% to 5.00% annually. As of September 30, 2017 and December 31, 2016, the Company had notes receivable from JV Company and other related parties of $1,542,147 and $400,239, respectively, which notes receivable typically mature within six months.

(g) Advances to Suppliers

Advances to suppliers represent cash paid in advance to suppliers, and include advances to raw material suppliers, mold manufacturers, and equipment suppliers.

As of September 30, 2017, the Company had made a total advance payments of RMB744 million (approximately $110 million) to Nanjing Shangtong Auto Technologies Co., Ltd. (“Nanjing Shangtong”) as an advance to purchase a production line and develop a new EV model for Kandi Hainan. Nanjing Shangtong is a total solution contractor for Kandi Hainan and provides all the equipment and EV product design and research services used by Kandi Hainan. After transferred to construction in progress and expensed for R&D purposes, the Company had $14,469,823 left in Advance to Suppliers in current assets and $16,212,788 left in Advance to Suppliers in long-term assets related to the purchases from Nanjing Shangtong as of September 30, 2017.

Advances for raw material purchases are typically settled within two months of the Company’s receipt of the raw materials. Prepayment is offset against the purchase price after the equipment or materials are delivered.

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(h) Property, Plants and Equipment

Property, plants and equipment are carried at cost less accumulated depreciation. Depreciation is calculated over the asset’s estimated useful life using the straight-line method. Leasehold improvements are amortized over the life of the asset or the term of the lease, whichever is shorter. Estimated useful lives are as follows:

Buildings	30 years
Machinery and equipment	10 years
Office equipment	5 years
Motor vehicles	5 years
Molds	5 years

The costs and related accumulated depreciation of assets sold or otherwise retired are eliminated from the Company’s accounts and any gain or loss is included in the statements of income. The cost of maintenance and repairs is charged to expenses as incurred, whereas significant renewals and betterments are capitalized.

(i) Construction in Progress

Construction in progress (“CIP”) represents the direct costs of construction and the acquisition costs of buildings or machinery. Capitalization of these costs ceases, and construction in progress is transferred to plants and equipment, when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided for until the assets are completed and ready for their intended use. $1,601,472 of interest expenses have been capitalized for CIP as of September 30, 2017.

(j) Land Use Rights

According to Chinese law, land in China is owned by the government and land ownership rights cannot be sold to an individual or to a private company. However, the Chinese government grants the user a “land use right” to use the land. The land use rights granted to the Company are amortized using the straight-line method over a term of fifty years.

(k) Accounting for the Impairment of Long-Lived Assets

The Company periodically evaluates the carrying value of long-lived assets to be held and used, including intangible assets subject to amortization, when events and circumstances warrant such a review, pursuant to the guidelines established in Statement of Financial Accounting Standards (“SFAS”) No. 144 (now known as “ASC 360”). The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for disposal costs.

The Company recognized no impairment loss during the reporting period.

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(l) Revenue Recognition

Revenue represents the invoiced value of goods sold. Revenue is recognized when the Company ships the goods to its customers and all of the following criteria are met:

● Persuasive evidence of an arrangement exists;

● Delivery has occurred or services have been rendered;

● The seller’s price to the buyer is fixed or determinable; and

● Collectability is reasonably assured.

The Company recognized revenue when the products and the risks they carry are transferred to the other party.

(m) Research and Development

Expenditures relating to the development of new products and processes, including improvements to existing products, are expensed as incurred. Research and development expenses were $657,851 and $522,806 for the three months ended September 30, 2017 and 2016, respectively. Research and development expenses were $26,569,624 and $1,222,967 for the nine months ended September 30, 2017 and 2016, respectively.

(n) Government Grants

Grants and subsidies received from the Chinese government are recognized when the proceeds are received or collectible and related milestones have been reached and all contingencies have been resolved.

For the three months ended September 30, 2017 and 2016, respectively, the Company’s subsidiaries recognized $474,950 and $594,323 in grants from the Chinese government. For the nine months ended September 30, 2017 and 2016, respectively, the Company’s subsidiaries recognized $5,804,561 and $2,292,180 in grants from the Chinese government.

(o) Income Taxes

The Company accounts for income tax using an asset and liability approach, which allows for the recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The accounting for deferred tax calculation represents the Company management’s best estimate of the most likely future tax consequences of events that have been recognized in our financial statements or tax returns and related future anticipation. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future realization will be uncertain.

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(p) Foreign Currency Translation

The accompanying consolidated financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). Capital accounts of the consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred.

Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the reporting period, which rates are obtained from the website: http:// www.ofx.com

	September 30,		December 31,		September 30,
	2017		2016		2016
Period end RMB : USD exchange rate		6.6536		6.94585		6.67106
Average RMB : USD exchange rate		6.807608		6.64520		6.58121

(q) Comprehensive Income

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. Comprehensive income includes net income and the foreign currency translation changes.

(r) Segments

In accordance with ASC 280-10, Segment Reporting, the Company’s chief operating decision makers rely upon the consolidated results of operations when making decisions about allocating resources and assessing the performance of the Company. As a result of the assessment made by the Company’s chief operating decision makers, the Company has only one operating segment. The Company does not distinguish between markets or segments for the purpose of internal reporting.

(s) Stock Option Expenses

The Company’s stock option expenses are recorded in accordance with ASC 718 and ASC 505.

The fair value of stock options is estimated using the Black-Scholes-Merton model. The Company’s expected volatility assumption is based on the historical volatility of the Company’s common stock. The expected life assumption is primarily based on the expiration date of the option. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The recognition of stock option expenses is based on awards expected to vest. ASC standards require forfeitures to be estimated at the time of grant and revised in subsequent periods, if necessary, if actual forfeitures differ from those estimates.

15

The stock-based option expenses for the three months ended September 30, 2017 and September 30, 2016, were $997,496 and $2,777,121, respectively. The stock-based option expenses for the nine months ended September 30, 2017 and September 30, 2016, were $4,126,008 and $13,885,604, respectively. See Note 19. There were no forfeitures estimated during the reporting period.

(t) Goodwill

The Company allocates goodwill from business combinations to reporting units based on the expectation that the reporting unit is to benefit from the business combination. The Company evaluates its reporting units on an annual basis and, if necessary, reassigns goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

Application of the goodwill impairment test requires judgments, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of each reporting unit. The Company first assesses qualitative factors to determine whether it is more likely than not that goodwill is impaired. If the more likely than not threshold is met, the Company performs a quantitative impairment test.

As of September 30, 2017 and September 30, 2016, the Company determined that its goodwill was not impaired.

(u) Intangible Assets

Intangible assets consist of trade names and customer relations associated with the purchase price from the allocation of Yongkang Scrou. Such assets are being amortized over their estimated useful lives of 9.7 years. Intangible assets are amortized as of September 30, 2017. The amortization expenses for intangible assets were $20,524 and $20,524 for the three months ended September 30, 2017 and September 30, 2016, respectively. The amortization expenses for intangible assets were $61,571 and $61,571 for the nine months ended September 30, 2017 and September 30, 2016, respectively.

(v) Accounting for Sale of Common Stock and Warrants

Gross proceeds are first allocated according to the initial fair value of the freestanding derivative instruments (i.e. the warrants issued to the Company’s investors in its previous offerings, or the “Investor Warrants”). The remaining proceeds are allocated to common stock. The related issuance expenses, including the placement agent cash fees, legal fees, the initial fair value of the warrants issued to the placement agent and others were allocated between the common stock and the Investor Warrants based on how the proceeds are allocated to these instruments. Expenses related to the issuance of common stock were charged to paid-in capital. Expenses related to the issuance of derivative instruments were expensed upon issuance.

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(w) Consolidation of variable interest entities

In accordance with accounting standards regarding consolidation of variable interest entities, or VIEs, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The Company has concluded, based on the contractual arrangements, that Kandi New Energy is a VIE and that the Company’s wholly-owned subsidiary, Kandi Vehicles, absorbs a majority of the risk of loss from the activities of this company, thereby enabling the Company, through Kandi Vehicles, to receive a majority of its respective expected residual returns.

Additionally, because Kandi New Energy is under common control with other entities, the consolidated financial statements have been prepared as if the transactions had occurred retroactively as to the beginning of the reporting period of these consolidated financial statements.

Control and common control are defined under the accounting standards as “an individual, enterprise, or immediate family members who hold more than 50 percent of the voting ownership interest of each entity.” Because the owners collectively own 100% of Kandi New Energy, and have agreed to vote their interests in concert since the establishment of each of these three companies as memorialized the Voting Rights Proxy Agreement, the Company believes that the owners collectively have control and common control of Kandi New Energy. Accordingly, the Company believes that Kandi New Energy was constructively held under common control by Kandi Vehicles as of the time the contractual agreements were entered into, establishing Kandi Vehicles as their primary beneficiary. Kandi Vehicles, in turn, is owned by Continental, which is owned by the Company.

NOTE 7 – NEW ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements that the Company has adopted or may be required to adopt in the future are summarized below:

In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers” to replace the existing revenue recognition criteria for contracts with customers. The Company currently expects to adopt the new accounting standard ASC 606 and all the related amendments (the “New Revenue Standard”) to all contracts using the modified retrospective method on January 1, 2018. The Company’s sales revenue continues to be recognized when products are shipped from its manufacturing facilities. The Company does not expect the adoption of the New Revenue Standard to have a material impact on its net income on an ongoing basis. Its interpretation is subject to change as a result of future changes in market conditions or product offerings.

In January 2017, the FASB issued ASU No. 2017-1 “Topic 805, Business Combinations: Clarifying the Definition of a Business”. The amendments in this update provide a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. The amendments in this update affect all reporting entities that must determine whether they have acquired or sold a business. Public business entities should apply the amendments in this update to annual periods beginning after December 15, 2017, including interim periods within those periods. All other entities should apply the amendments to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The Company does not expect the adoption of ASU 2017-1 to have a material impact on its consolidated financial statements.

17

In January 2017, the FASB issued ASU No. 2017-4 “Topic 350: Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment.” The amendments in this update eliminate step two of the goodwill impairment test and specifies that goodwill impairment should be measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets should be disclosed. The amendments in this update are effective for annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019; early adoption is permitted. The Company does not expect the adoption of ASU 2017-4 to have a material impact on its consolidated financial statements.

NOTE 8 – CONCENTRATIONS

(a) Customers

For the three-month periods ended September 30, 2017 and September 30, 2016, the Company’s major customer, who accounted for more than 10% of the Company’s consolidated revenue, was as follows:

	Sales						Trade Receivable
	Three Months			Three Months
	Ended			Ended
	September 30,			September 30,			September 30,			December 31,
Major Customers	2017			2016			2017			2016
Kandi Electric Vehicles Group Co., Ltd. and its subsidiaries		77	%		19	%		69	%		71	%
Jinhua Chaoneng Automobile Sales Co., Ltd.		19	%		56	%		24	%		19	%

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For the nine-month periods ended September 30, 2017 and September 30, 2016, the Company’s major customer, who accounted for more than 10% of the Company’s consolidated revenue, was as follows:

	Sales						Trade Receivable
	Nine Months			Nine Months
	Ended			Ended
	September 30,			September 30,			September 30,			December 31,
Major Customers	2017			2016			2017			2016
Kandi Electric Vehicles Group Co., Ltd. and its subsidiaries		82	%		55	%		69	%		71	%
Jinhua Chaoneng Automobile Sales Co. Ltd.		11	%		35	%		24	%		19	%

Trade receivable includes accounts receivable, amount due from the JV Company net of loans to the JV Company, and amount due from other related parties.

(b) Suppliers

For the three-month periods ended September 30, 2017 and September 30, 2016, the Company’s material suppliers, each of whom accounted for more than 10% of the Company’s total purchases, were as follows:

	Purchases						Accounts Payable
	Three Months			Three Months
	Ended			Ended
	September 30,			September 30,			September 30,			December 31,
Major Suppliers	2017			2016			2017			2016
Dongguan Chuangming Battery Technology Co., Ltd.		37	%		56	%		22	%		22	%
Zhejiang Tianneng Energy Technology Co., Ltd.		13	%		-			13	%		15	%

For the nine-month periods ended September 30, 2017 and September 30, 2016, the Company’s material suppliers, each of whom accounted for more than 10% of the Company’s total purchases, were as follows:

	Purchases						Accounts Payable
	Nine Months			Nine Months
	Ended			Ended
	September 30,			September 30,			September 30,			December 31,
Major Suppliers	2017			2016			2017			2016
Dongguan Chuangming Battery Technology Co., Ltd.		31	%		48	%		22	%		22	%
Zhejiang Tianneng Energy Technology Co., Ltd.		15	%		19	%		13	%		15	%

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NOTE 9 – EARNINGS PER SHARE

The Company calculates earnings per share in accordance with ASC 260, Earnings per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the reporting period. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding stock options, warrants and convertible notes (using the if-converted method). For the three months ended September 30, 2017 and September 30, 2016, the average number of potentially dilutive common shares was 0 and 0, respectively. For the nine months ended September 30, 2017 and September 30, 2016, the average number of potentially dilutive common shares was 0 and 0, respectively. The potential dilutive common shares as at the nine months ended September 30, 2017 and September 30, 2016, were 4,400,000 and 4,900,000 shares respectively.

The following is the calculation of earnings per share for the three-month periods ended September 30, 2017 and 2016:

	For Three Months Ended
	September 30,
	2017		2016
Net income (loss)	$	1,918,076	$	(565,941	)
Weighted average shares used in basic computation		48,028,467		47,695,290
Dilutive shares		-		-
Weighted average shares used in diluted computation		48,028,467		47,695,290
Earnings per share:
Basic	$	0.04	$	(0.01	)
Diluted	$	0.04	$	(0.01	)

The following is the calculation of earnings per share for the nine-month periods ended September 30, 2017 and 2016:

	For Nine Months Ended
	September 30,
	2017			2016
Net (loss) income	$	(33,793,376	)	$	2,315,659
Weighted average shares used in basic computation		47,913,028			47,436,418
Dilutive shares		-			-
Weighted average shares used in diluted computation		47,913,028			47,436,418
Earnings per share:
Basic	$	(0.71	)	$	0.05
Diluted	$	(0.71	)	$	0.05

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NOTE 10 – ACCOUNTS RECEIVABLE

Accounts receivable are summarized as follows:

	September 30,		December 31,
	2017		2016
Accounts receivable	$	41,774,453	$	32,394,613
Less: Provision for doubtful debts		-		-
Accounts receivable, net	$	41,774,453	$	32,394,613

NOTE 11 – INVENTORIES

Inventories are summarized as follows:

	September 30,			December 31,
	2017			2016
Raw material	$	5,612,594		$	2,529,149
Work-in-progress		6,651,788			1,786,087
Finished goods		3,486,361			8,014,671
Total inventories		15,750,743			12,329,907
Less: provision for slowing moving inventories		(574,165	)		(415,797	)
Inventories, net	$	15,176,578		$	11,914,110

NOTE 12 – NOTES RECEIVABLE

Notes receivable from the JV Company and related parties as of September 30, 2017, and December 31, 2016, are summarized as follows:

	September 30,		December 31,
	2017		2016
Notes receivable as below:
Bank acceptance notes		1,542,147		400,239
Notes receivable	$	1,542,147	$	400,239

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Details of notes receivable from the JV Company and related parties as of September 30, 2017, are as set forth below:

Index	Amount ($)		Counter party	Relationship	Nature	Manner of settlement
1		1,542,147	Kandi Electric Vehicles Group Co., Ltd.	Joint Venture of the Company	Payments for sales	Not due

Details of notes receivable from the JV Company and related parties as of December 31, 2016, are as set forth below:

Index	Amount ($)		Counter party	Relationship	Nature	Manner of settlement
1		400,239	Kandi Shanghai	Subsidiary of the JV Company	Payments for sales	Not due

NOTE 13 – PLANTS AND EQUIPMENT

Plants and equipment as of September 30, 2017 and December 31, 2016, consisted of the following:

	September 30, 2017			December 31, 2016
At cost:
Buildings	$	13,547,482		$	12,977,465
Machinery and equipment		7,740,522			8,585,666
Office equipment		518,412			475,162
Motor vehicles		374,413			321,207
Moulds		27,693,283			26,463,472
		49,874,112			48,822,972
Less : Accumulated depreciation
Buildings	$	(4,465,344	)	$	(3,948,909	)
Machinery and equipment		(7,035,228	)		(8,107,884	)
Office equipment		(280,296	)		(216,226	)
Motor vehicles		(296,387	)		(274,197	)
Moulds		(24,781,790	)		(21,031,086	)
		(36,859,045	)		(33,578,302	)
Less: provision for impairment for fixed assets		(52,435	)		(50,228	)
Plant and equipment, net	$	12,962,632		$	15,194,442

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As of September 30, 2017 and December 31, 2016, the net book value of plants and equipment pledged as collateral for bank loans was $8,931,851 and $8,875,111, respectively.

Depreciation expenses for the three months ended September 30, 2017 and September 30, 2016 were $1,119,307 and $1,106,755, respectively. Depreciation expenses for the nine months ended September 30, 2017 and September 30, 2016 were $3,253,653 and $3,370,032, respectively.

NOTE 14 – LAND USE RIGHTS

The Company’s land use rights as of September 30, 2017 and December 31, 2016, consisted of the following:

	September 30, 2017			December 31, 2016
Cost of land use rights	$	14,907,523		$	14,280,282
Less: Accumulated amortization		(2,861,597	)		(2,504,562	)
Land use rights, net	$	12,045,926		$	11,775,720

As of September 30, 2017, and December 31, 2016, the net book value of land use rights pledged as collateral for the Company’s bank loans was $8,856,627 and $8,660,097, respectively. Also see Note 16.

The amortization expenses for the three months ended September 30, 2017 and September 30, 2016, were $82,054 and $95,906, respectively. The amortization expenses for the nine months ended September 30, 2017 and September 30, 2016, were $241,437 and $249,742, respectively. Amortization expenses for the next five years and thereafter is as follows:

2017(Three Months)	$	120,719
2018		482,874
2019		482,874
2020		482,874
2021		482,874
Thereafter		9,993,712
Total	$	12,045,926

NOTE 15 – CONSTRUCTION-IN-PROGRESS

Hainan Facility

In April 2013, the Company signed an agreement with the Wanning city government in Hainan Province to invest a total of RMB 1 billion to establish a factory in Wanning to manufacture 100,000 EVs annually. Also in 2013, the Company contracted with an unrelated third-party supplier, Nanjing Shangtong, to purchase a production line in connection with the manufacturing facility and to help develop a new EV model. In January 2016, the Hainan Province government implemented a development plan to centralize manufacturing in certain designated industry parks. As a result, the Wanning facility was relocated from Wanning city to the Haikou city high-tech zone. Based on our agreement with the government, all the expenses and lost assets resulting from the relocation were compensated for by the local government. As a result of the relocation, the contracts to build the manufacturing facility had to be revised in terms of total contract amount, technical requirements, completion milestones and others for the new construction site in Haikou. Because of this change, part of the construction-in-progress previously recorded was transferred back to the advances to suppliers in accordance with the revised contract terms and technical requirements. Currently, the Hainan facility has completed the second round of producing the K23 prototype model and plans to send the qualified prototype model to the National Testing Center for inspection in the coming months. Once the prototype passes the inspection, the Company will launch the trial production thereafter.

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No depreciation is provided for CIP until such time as the Hainan facility is completed and placed into operation.

The contractual obligations under CIP of the Company as of September 30, 2017 are as follows:

Project	Total in CIP as of September 30, 2017		Estimate to complete		Total contract amount
Kandi Hainan facility	$	47,676,068	$	36,555,128	$	84,231,196
Total	$	47,676,068	$	36,555,128	$	84,231,196

As of September 30, 2017, and December 31, 2016, the Company had CIP amounting to $47,676,068 and $27,054,181, respectively.

$557,460 and $0 of interest expense has been capitalized for CIP for three months ended September 30, 2017 and 2016, respectively. $1,601,472 and $0 of interest expense has been capitalized for CIP for nine months ended September, 2017 and 2016, respectively.

NOTE 16 – SHORT -TERM AND LONG-TERM BANK LOANS

Short-term loans are summarized as follows:

	September 30,		December 31,
	2017		2016
Loans from China Ever-bright Bank
Interest rate 5.22% per annum, due on April 25, 2018, secured by the assets of Kandi Vehicle, guaranteed by Mr. Hu Xiaoming and his wife, also guaranteed by company’s subsidiaries. Also see Note 13 and Note 14.		10,520,621		11,229,727
Loans from Hangzhou Bank
Interest rate 4.35% per annum, due on October 16, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		7,334,375		7,025,778
Interest rate 4.79% per annum, due on July 4, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		10,851,268		10,394,696
Interest rate 4.35% per annum, paid off on March 23, 2017, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		-		5,614,864
Interest rate 4.35% per annum, due March 26, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		3,607,070		-
Loans from Individual Third Parties
Interest rate 12% per annum		300,589		-
	$	32,613,923		34,265,065

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Long-term loans are summarized as follows:

	September 30,		December 31,
	2017		2016
Loans from Haikou Rural Credit Cooperative
Interest rate 7% per annum, due on December 12, 2021, guaranteed by Kandi Vehicle and Kandi New Energy.		30,058,915		28,794,172
	$	30,058,915		28,794,172

The interest expense of short-term and long-term bank loans for the three months ended September 30, 2017, and 2016 was $598,523 and $425,152, respectively. The interest expense of short-term and long-term bank loans for the nine months ended September 30, 2017, and 2016 was $1,761,786 and $1,299,549, respectively.

As of September 30, 2017, the aggregate amount of short-term and long-term loans guaranteed by various third parties was $0.

NOTE 17 – NOTES PAYABLE

By issuing bank notes payable rather than paying cash to suppliers, the Company can defer payments until the bank notes payable are due. Depending on bank requirements, the Company may need to deposit restricted cash in banks to back up the bank notes payable, while the restricted cash deposited in the banks will generate interest income.

A bank acceptance note is a promised future payment, or time draft, which is accepted and guaranteed by a bank and drawn on a deposit at the bank. The banker’s acceptance specifies the amount of the funds, the date, and the person to which the payment is due.

After acceptance, the draft becomes an unconditional liability of the bank, but the holder of the draft can sell (exchange) it for cash at a discount to a buyer who is willing to wait until the maturity date for the funds in the deposit. $14,724,136 and $3,279,656 were held as collateral for the notes payable as of September 30, 2017, and December 31, 2016, respectively.

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As is common business practice in the PRC, the Company issues notes payable to its suppliers as settlement for accounts payable.

The Company’s notes payable also include the borrowing from the third party.

Notes payable for September 30, 2017 and December 31, 2016 were summarized as follows:

	September 30,		December 31,
	2017		2016
Bank acceptance notes:	$		$
Due March 22, 2017		-		400,239
Due March 29, 2017		-		1,439,709
Due June 21, 2017		-		1,439,709
Due October 6, 2017		174,466
Due October 21, 2017		819,105		-
Due November 2, 2017		6,763,256		-
Due November 4, 2017		901,767		-
Due December 6, 2017		901,767		-
Due December 22, 2017		93,465		-
Due January 4, 2018		4,877,059
Due June 21, 2018		367,717		-
Other Notes Payable:
Due May 6, 2017		-		11,517,668
Due May 6, 2019		11,313,967		-
Total	$	26,212,569	$	14,797,325

NOTE 18 – TAXES

(a) Corporation Income Tax

Pursuant to the tax laws and regulations of the PRC, the Company’s applicable corporate income tax (“CIT”) rate is 25%. However, Kandi Vehicles qualifies as a High and New Technology Enterprise (“HNTE”) company in the PRC, and is entitled to pay a reduced income tax rate of 15% for the years presented, which reduced rate will expire in 2017. An entity may re-apply for an HNTE certificate when the prior certificate expires. Historically, Kandi Vehicles has successfully re-applied for such certificates when the its prior certificates expired. The applicable CIT rate of each of the Company’s three other subsidiaries, Kandi New Energy, Yongkang Scrou and Kandi Hainan, the JV Company and its subsidiaries, and the Service Company is 25%.

After combining research and development tax credits of 25% on certain qualified research and development expenses, the Company’s final effective tax rate for September 30, 2017, and 2016 was 10.89% and 12.02%, respectively. The effective tax rates for each of the periods mentioned above are disclosed in the summary table of income tax expenses for September 30, 2017 and 2016.

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Effective January 1, 2007, the Company adopted the guidance in ASC 740 related to uncertain tax positions. The guidance addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of September 30, 2017, the Company did not have any liability for unrecognized tax benefits. The Company files income tax returns with the U.S. Internal Revenue Services (“IRS”) and those states where the Company has operations. The Company is subject to U.S. federal or state income tax examinations by the IRS and relevant state tax authorities for years after 2006. During the periods open to examination, the Company has net operating loss carry forwards (“NOLs”) for U.S. federal and state tax purposes that have attributes from closed periods. Since these NOLs may be utilized in future periods, they remain subject to examination. The Company also files certain tax returns in the PRC. As of September 30, 2017, the Company was not aware of any pending income tax examinations by U.S. or PRC tax authorities. The Company records interest and penalties on uncertain tax provisions as income tax expense. As of September 30, 2017, the Company has no accrued interest or penalties related to uncertain tax positions. The Company has not recorded a provision for U.S. federal income tax for nine months ended September 30, 2017, due to a net operating loss in 2016 and an accumulated net operating loss carry forward from prior years in the United States.

Income tax expenses for the three months and nine months ended September 30, 2017 and 2016 are summarized as follows:

	For Three Months Ended September 30,
	(Unaudited)
	2017			2016
Current:
Provision for CIT	$	957,129		$	(1,483,866	)
Provision for Federal Income Tax		-			-
Deferred:
Provision for CIT		(180,144	)		2,036,714
Income tax expense	$	776,985		$	552,848

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	For Nine Months Ended September 30,
	(Unaudited)
	2017			2016
Current:
Provision for CIT	$	1,465,152		$	2,925,100
Provision for Federal Income Tax		-			-
Deferred:
Provision for CIT		(5,596,103	)		(2,608,701	)
Income tax (benefit) expense	$	(4,130,951	)	$	316,399

The Company’s income tax expenses differ from the “expected” tax expenses for nine months ended September 30, 2017 and 2016 (computed by applying the U.S. Federal Income Tax rate of 34% and the PRC CIT rate of 25%, respectively, to income before income taxes) as follows:

	For Nine Months Ended September 30,
	(Unaudited)
	2017			2016
Expected taxation at PRC statutory tax rate	$	(9,481,082	)		658,015
Effect of differing tax rates in different jurisdictions		(553,564	)		(611,065	)
Non-taxable income		-			-
Non-deductible expenses (1)		2,021,055			32,122
Research and development super-deduction		(55,439	)		(128,865	)
Under-accrued EIT for previous years		267,574			(2,727,454	)
Effect of PRC preferential tax rates		1,670,185			(100,974	)
Addition to valuation allowance		2,092,000			3,194,621
Other		(91,680	)		-
Income tax  (benefit) expense	$	(4,130,951	)		316,399

(1) It’s mainly due to share of (loss) in JV Company and its subsidiaries.

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The tax effects of temporary differences that give rise to the Company’s net deferred tax assets and liabilities as of September 30, 2017 and December 31, 2016 are summarized as follows:

	September 30,			December 31,
	2017			2016
Deferred tax assets:
Expense (2)		554,177			72,742
Depreciation		194,257			230,156
Loss carried forward		33,130,243			27,218,934
less: valuation allowance		(27,740,715	)		(26,820,811	)
Total deferred tax assets, net of valuation allowance		6,137,962			701,021
Deferred tax liabilities:
Expense (3)		1,582,944			1,698,303
Total deferred tax liability		1,582,944			1,698,303
Net deferred tax assets (liabilities)	$	4,555,018		$	(997,282	)

(2) It’s provision for impairment inventory, fixed assets and loss contingency-litigation.

(3) It’s due to the difference of tax basis and GAAP basis of other long term assets.

As of September 30, 2017, the aggregate NOLs incurred in 2013 through 2017 of $81.59 million deriving from entities in the U.S. will expire in varying amount between 2018 and 2022. The aggregate NOLs in 2016 through 2017 of $21.78 million deriving from entities in the PRC will expire in varying amount between 2021 and 2022. As of December 31, 2016, the aggregate NOLs incurred in 2012 through 2016 of $78.88 million deriving from entities in the U.S. will expire in varying amount between 2017 and 2021. The aggregate NOLs incurred in 2016 of $2.12 million deriving from entities in the PRC will expire in 2021. The cumulative net loss in the PRC and U.S. can be carried forward for five years, to offset future net profits for income tax purposes. The cumulative net loss in Hong Kong can be carried forward without an expiration date.

Income (loss) before income taxes from PRC and non-PRC sources for the nine months ended September 30, 2017 and 2016 are summarized as follows:

	For Nine Months Ended
	September 30,
	(Unaudited)
	2017			2016
Income(loss) before income taxes consists of:
PRC	$	(31,709,013	))	$	13,309,481
Non-PRC		(6,215,314	)		(10,677,423	)
Total	$	(37,924,327	)	$	2,632,058

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Net change in the valuation allowance of deferred tax assets are summarized as follows:

Net change of valuation allowance of Deferred tax assets
Balance at December 31,2016		26,820,811
Additions-change to tax expense		2,092,000
Deduction-expired of loss carried forward (4)		1,172,096
Balance at September 30,2017		27,740,715

(4) It’s due to the loss carried forward deduction-expired of Kandi Technologies of 2012.

(b) Tax Holiday Effect

For the nine months ended September 30, 2017, and 2016, the PRC CIT rate was 25%. Certain subsidiaries of the Company are entitled to tax exemptions (tax holidays) for the nine months ended September 30, 2017 and 2016.

The combined effects of income tax expense exemptions and reductions available to the Company for the nine months ended September 30, 2017 and 2016 are as follows:

	For Nine Months Ended
	September 30,
	2017		2016
Tax benefit (holiday) credit	$	55,439	$	229,839
Basic net income per share effect	$	0.000	$	0.005

NOTE 19 – STOCK OPTIONS AND WARRANTS

(a) Stock Options

On May 29, 2015, the Compensation Committee of the Board of Directors of the Company approved the grant of stock options to purchase 4,900,000 shares of the Company’s common stock, at an exercise price of $9.72 per share, to the Company’s directors, officers and senior employees. The stock options will vest ratably over three years and expire on the tenth anniversary of the grant date. The Company valued the stock options at $39,990,540 and will amortize the stock compensation expense using the straight-line method over the service period from May 29, 2015, through May 29, 2018. The value of the stock options was estimated using the Black Scholes Model with an expected volatility of 90%, an expected life of 10 years, a risk-free interest rate of 2.23% and an expected dividend yield of 0.00%. There were $4,126,008 in stock compensation expenses associated with stock options booked for the nine months ended September 30, 2017.

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The following is a summary of the stock option activities of the Company:

Outstanding as of January 1, 2016	4,900,000		$	9.72
Granted	–			–
Exercised	–			–
Cancelled	–			–
Forfeited	(333,333	)		9.72
Outstanding as of January 1, 2017	4,566,667			9.72
Granted	–			–
Exercised	–			–
Cancelled	–			–
Forfeited	(166,667	)		9.72
Outstanding as of September 30, 2017	4,400,000		$	9.72

The fair value of each of the options to purchase 4,900,000 shares of common stock issued to the employees and directors on May 29, 2015 is $8.1613 per share.

(b) Warrants

As of September 30, 2017 and December 31, 2016, all the warrants had been exercised and the derivative liability relating to the warrants issued to the investors and a placement agent was $0.

NOTE 20 – STOCK AWARD

In connection with the appointment of Mr. Henry Yu as a member of the Board of Directors (the “Board”), and as compensation, the Board authorized the Company to provide Mr. Henry Yu with 5,000 shares of Company’s restricted common stock every six months, beginning in July 2011.

As compensation for Mr. Jerry Lewin’s service as a member of the Board, the Board authorized the Company to provide Mr. Jerry Lewin with 5,000 shares of Company’s restricted common stock every six months, beginning in August 2011.

As compensation for Ms. Kewa Luo’s service as the Company’s investor relation officer, the Board authorized the Company to provide Ms. Kewa Luo with 5,000 shares of Company’s common stock every six months, beginning in September 2013.

In November 2016, the Company entered into a three-year employment agreement with Mr. Mei Bing, who is now the Company’s Chief Financial Officer. Under the agreement, Mr. Mei Bing is entitled to receive an aggregate of 10,000 shares of common stock each year, vested in four equal quarterly installments of 2,500 shares.

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The fair value of stock awards based on service is determined based on the closing price of the common stock on the date the shares are approved by the Board for grant. The compensation costs for awards of common stock are recognized over the requisite service period of three or six months.

On December 30, 2013, the Board approved a proposal (as submitted by the Compensation Committee) of an award (the “Board’s Pre-Approved Award Grant Sub-Plan under the 2008 Plan”) for certain executives and other key employees, comprising a total of 335,000 shares of common stock for each fiscal year, beginning with the 2013 fiscal year, under the Company’s 2008 Omnibus Long-Term Incentive Plan (the “2008 Plan”), if the Company’s “Non-GAAP Net Income” for the current fiscal year increased by 10% comparing to that of the prior year. The specific number of shares of common stock to be issued in respect of such award could proportionally increase or decrease if the actual Non-GAAP Net Income increase is more or less than 10%. “Non-GAAP Net Income” means the Company’s net income for a particular year calculated in accordance with GAAP, excluding option-related expenses, stock award expenses, and the effects caused by the change of fair value of financial derivatives. For example, if Non-GAAP Net Income for the 2014 fiscal year increased by 10% compared to the Non-GAAP Net Income for the 2013 fiscal year, the selected executives and other key employees each would be granted his or her target amount of common stock of the Company. If Non-GAAP Net Income in 2014 is less than Non-GAAP Net Income in 2013, then no common stock would be granted. If Non-GAAP Net Income in 2014 increased compared to Non-GAAP Net Income in 2013 but the increase is less than 10%, then the target amount of the common stock grant would be proportionately decreased. If Non-GAAP Net Income in 2014 increased compared to Non- GAAP Net Income in 2013 but the increase is more than 10%, then the target amount of the common stock grant would be proportionately increased up to 200% of the target amount based on the modification to 2013’s proposal in 2014. Any such increase in the grant would be subject to the total number of shares available under the 2008 Plan, and the Company’s Board and shareholders will need to approve any increase in the number of shares reserved under the 2008 Plan if all the shares originally reserved are granted. On May 20, 2015, the shareholders of the Company approved an increase of 9,000,000 shares under the 2008 Plan at its annual meeting. On September 26, 2016, the Board approved to terminate the previous Board’s Pre-Approved Award Grant Sub-Plan under the 2008 Plan and adopted a new plan to reduce the total number of shares of common stock of the stock award for selected executives and key employees from 335,000 shares of common stock to 250,000 shares of common stock for each fiscal year, with the other terms remaining the same. On February 13, 2017, the Board authorized the Company to grant 246,900 shares of common shares to certain management members as compensation for their past services under the 2008 Plan.

The fair value of each award granted under the 2008 Plan is determined based on the closing price of the Company’s stock on the date of grant of such award. Stock-based compensation expenses are calculated based on grant date fair value and number of awards expected to be earned at the end of each quarter and recognized in the quarter. In subsequent periods, stock-based compensation expenses are adjusted based on grant date fair value and the change of number of awards expected to be earned. Final stock-based compensation expenses for the year are calculated based on grant date fair value and number of awards earned for the year and recognized at the end of year.

For the three months ended September 30, 2017 and 2016, the Company recognized $31,675 and $(3,980,325) of employee stock award expenses for stock compensation and annual incentive award under the 2008 Plan paid to Board members, management and consultants under General and Administrative Expenses, respectively. For the nine months ended September 30, 2017 and 2016, the Company recognized $1,396,350 and $68,775 of employee stock award expenses for stock compensation and annual incentive award under the 2008 Plan paid to Board members, management and consultants under General and Administrative Expenses, respectively.

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NOTE 21 – INTANGIBLE ASSETS

The following table provides the gross carrying value and accumulated amortization for each major class of our intangible assets, other than goodwill:

		September 30,			December 31,
	Remaining useful life	2017			2016
Gross carrying amount:
Trade name	4.25 years	$	492,235		$	492,235
Customer relations	4.25 years		304,086			304,086
			796,321			796,321
Less : Accumulated amortization
Trade name		$	(274,874	)	$	(236,815	)
Customer relations			(169,807	)		(146,295	)
			(444,681	)		(383,110	)
Intangible assets, net		$	351,640		$	413,211

The aggregate amortization expenses for those intangible assets that continue to be amortized is reflected in amortization of intangible assets were $20,524 and $20,524 for the three months ended September 30, 2017 and 2016, $61,571 and $61,571 for the nine months ended September 30, 2017 and 2016, respectively.

Amortization expenses for the next five years and thereafter are as follows:

2017 (Three months)	$	20,524
2018		82,095
2019		82,095
2020		82,095
2021		82,095
Thereafter		2,736
Total	$	351,640

NOTE 22 – SUMMARIZED INFORMATION OF EQUITY METHOD INVESTMENT IN THE JV COMPANY

The Company’s consolidated net income includes the Company’s proportionate share of the net income or loss of the Company’s equity method investees. When the Company records its proportionate share of net income in such investees, it increases equity income (loss) – net in the Company’s consolidated statements of income and the Company’s carrying value in that investment. Conversely, when the Company records its proportionate share of a net loss in such investees, it decreases equity income (loss) – net in the Company’s consolidated statements of income and the Company’s carrying value in that investment. All intra-entity profits and losses with the Company’s equity method investees have been eliminated.

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In March 2013, pursuant to a joint venture agreement (the “JV Agreement”) entered into between Kandi Vehicles and Shanghai Maple Guorun Automobile Co., Ltd. (“Shanghai Guorun”), a 99%-owned subsidiary of Geely Automobile Holdings Ltd. (“Geely”), the parties established Zhejiang Kandi Electric Vehicles Co., Ltd., and the company name was changed to Kandi Electric Vehicles Group Co., Ltd. in March 2014 (the “JV Company”) to develop, manufacture and sell electric vehicles (“EVs”) and related auto parts. Each of Kandi Vehicles and Shanghai Guorun has a 50% ownership interest in the JV Company. In the fourth quarter of 2013, Kandi Vehicles entered into an ownership transfer agreement with the JV Company pursuant to which Kandi Vehicles transferred 100% of its ownership in Kandi Changxing to the JV Company. As a result, the Company now has a 50% indirect economic interest in Kandi Changxing through its 50% ownership interest in the JV Company. In order to improve the JV Company’s development, Zhejiang Geely Holding Group (“Geely Holding”), the parent company of Geely, became a shareholder of the JV Company on October 26, 2016, by purchasing the 50% in the JV Company held by Shanghai Guorun at a purchase price exceeding the cash amount of the aggregate of the original investment and past shared profits. On May 19, 2017, due to business development, Geely Holding entrusted Mr. Hu Xiaoming, Chairman of the Board of the JV Company, to hold 19% equity of the JV Company from its 50% holding of the JV Company on behalf of Geely Holding as a nominal holder. On the same day, Geely Holding transferred its remaining 31% equity in the JV Company to Geely Group (Ningbo) Ltd., a company wholly owned by Li Shufu, Chairman of the Board of Geely Holding. On May 25, 2017, Mr. Hu pledged his 19% equity in the JV Company held on behalf of Geely Holding to Geely Holding. On June 30, 2017, due to the JV Company’s operational needs, Kandi Vehicle pledged its 50% equity in the JV Company to Geely Holding as counter-guarantee, because Geely Holding provides a 100% guarantee on the JV Company’s borrowings. Despite the pledge, the guarantee and the counter-guarantee arrangements stated above, there is no change in control with respect to the 50% ownership held by each shareholder of the JV Company. In order to streamline the equity structure, on October 24, 2017, Mr. Hu transferred the 19% equity of the JV Company to Geely Group (Ningbo) Ltd. Now, Kandi Vehicles and Geely Group (Ningbo) Ltd. each own 50% equity in the JV Company.

In November 2013, Kandi Electric Vehicles Jinhua Co., Ltd. (“Kandi Jinhua”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jinhua, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua.

In November 2013, Zhejiang JiHeKang Electric Vehicle Sales Co., Ltd. (“JiHeKang”) was formed by the JV Company. The JV Company has a 100% ownership interest in JiHeKang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang.

In December 2013, the JV Company entered into an ownership transfer agreement with Shanghai Guorun pursuant to which the JV Company acquired 100% of the ownership of Kandi Electric Vehicles (Shanghai) Co., Ltd. (“Kandi Shanghai”). As a result, Kandi Shanghai is now a wholly-owned subsidiary of the JV Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Shanghai.

34

In January 2014, Kandi Electric Vehicles Jiangsu Co., Ltd. (“Kandi Jiangsu”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jiangsu, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jiangsu.

In July 2013, Zhejiang ZuoZhongYou Electric Vehicle Service Co., Ltd. (the “Service Company”) was formed. The JV Company had a 19% ownership interest in the Service Company. In March 2014, the JV Company changed its name to Kandi Electric Vehicles Group Co., Ltd., and in August 2015, the JV Company transferred its shares of the Service Company to Shanghai Guorun and Kandi Vehicles for 9.5% respectively. As the result, the JV Company no longer has any ownership in the Service Company.

In November 2015, Hangzhou Puma Investment Management Co., Ltd. (“Puma Investment”) was formed by the JV Company. The JV Company has a 50% ownership interest in Puma Investment and the Company, indirectly through its 50% ownership interest in the JV Company, has a 25% economic interest in Puma Investment.

In November 2015, Hangzhou JiHeKang Electric Vehicle Service Co., Ltd. (“JiHeKang Service Company”) was formed by the JV Company. The JV Company has a 100% ownership interest in JiHeKang Service Company and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang Service Company.

In August 2016, Jiangsu JiDian Electric Vehicle Sales Co., Ltd. (“Jiangsu JiDian”) was formed by JiHeKang. Jiangsu JiDian is engaged in the car sales business. Because JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Jiangsu JiDian, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Jiangsu JiDian.

In October 2016, JiHeKang acquired Tianjin BoHaiWan Vehicle Sales Co., Ltd. (“Tianjin BoHaiWan”). Tianjin BoHaiWan is engaged in the car sales business. Because JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Tianjin BoHaiWan, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Tianjin BoHaiWan.

In November 2016, Changxing Kandi Vehicle Maintenance Co., Ltd. (“Changxing Maintenance”) was formed by Kandi Changxing. Changxing Maintenance is engaged in the car repair and maintenance business. Because Kandi Changxing is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Changxing Maintenance, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Changxing Maintenance.

In March 2017, Hangzhou Liuchuang Electric Vehicle Technology Co., Ltd. (“Liuchuang”) was formed by Kandi Jiangsu. Since Kandi Jiangsu is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Liuchuang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Liuchuang.

In April 2017, in order to promote business development, Kandi Jinhua, JiHeKang, and JiHeKang Service Company were reorganized to become subsidiaries of Kandi Jiangsu. Because the JV Company has a 100% ownership interest in Kandi Jiangsu, it has 100% ownership interests in Kandi Jinhua, JiHeKang, and JiHeKang Service Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua, JiHeKang, and JiHeKang Service Company.

35

As of September 30, 2017, the JV Company consolidated its interests in the following entities on its financial statements: (1) its 100% interest in Kandi Changxing; (2) its 100% interest in Kandi Jinhua; (3) its 100% interest in JiHeKang; (4) its 100% interest in Kandi Shanghai; (5) its 100% interest in Kandi Jiangsu; (6) its 100% interest in JiHeKang Service Company; (7) its 100% interest in Jiangsu JiDian; (8) its 100% interest in Tianjin BoHaiWan; (9) its 100% interest in Changxing Maintenance; and (10) its 100% interest in Liuchuang. The Company accounted for its investments in the JV Company under the equity method of accounting because the Company has a 50% ownership interest in the JV Company. As a result, the Company’s consolidated net income for the three months and nine months ended September 30, 2017, and 2016, included equity income from the JV Company during such periods.

The combined results of operations and financial position of the JV Company are summarized below:

	Three Months Ended
	September 30,
Condensed income statement information:	2017			2016
Net revenues	$	86,181,120		$	11,688,178
Gross income		5,279,283			5,937,134
% of net revenues		6.1	%		50.8	%
Net loss		(480,622	)		(426,797	)
Company’s share in net (loss) income of JV based on 50% ownership	$	(240,311	)	$	(213,399	)

	Nine Months Ended
	September 30,
Condensed income statement information:	2017			2016
Net revenues	$	106,109,272		$	122,959,660
Gross income		3,454,547			19,538,305
% of net revenues		3.3	%		15.9	%
Net (loss) income		(25,665,734	)		131,323
Company’s share in net (loss) income of JV based on 50% ownership	$	(12,832,867	)	$	65,662

	September 30,		December 31,
Condensed balance sheet information:	2017		2016
Current assets	$	578,690,686	$	514,958,008
Noncurrent assets		196,056,068		177,563,801
Total assets	$	774,746,754	$	692,521,809
Current liabilities		597,354,181		505,356,626
Noncurrent liabilities		41,481,303		31,817,560
Equity		135,911,270		155,347,623
Total liabilities and equity	$	774,746,754	$	692,521,809

36

For the nine months ended September 30, 2017, and 2016, the JV Company’s revenues were derived primarily from the sales of EV products and EV parts in China. Because the Company has a 50% ownership interest in the JV Company and accounted for its investments in the JV Company under the equity method of accounting, the Company did not consolidate the JV Company’s financial results, but rather included equity income from the JV Company during such periods.

Note: The following table illustrates the captions used in the Company’s Income Statements for its equity based investment in the JV Company.

The Company’s equity method investments in the JV Company as of September 30, 2017 and December 31, 2016 are as follows:

	September 30,			December 31,
	2017			2016
Investment in JV Company, beginning of the period,	$	77,453,014		$	90,337,899
Share of loss
Company’s share in net loss of JV Company based on  50% ownership		(12,832,867	)		(7,077,789	)
Intercompany transaction elimination		(848,200	)		(230,787	)
Year 2016 unrealized profit realized		225,281			1,066
Subtotal		(13,455,786	)		(7,307,510	)
Exchange difference		3,090,575			(5,577,375	)
Investment in JV Company, end of the period	$	67,087,803		$	77,453,014

Sales to the Company’s customers, the JV Company and its subsidiaries, for the three months ended September 30, 2017, were $21,749,790 or 77% of the Company’s total revenue, an increase of 1740.6% from the same quarter last year. Sales to the Company’s customers, the JV Company and its subsidiaries, for the nine months ended September 30, 2017, were $49,233,156 or 82% of the Company’s total revenue, a decrease of 20.8% from the same period last year. Sales to the JV Company and its subsidiaries were primarily battery packs, body parts, EV drive motors, EV controllers, air conditioning units and other auto parts.

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The breakdown of sales to the JV Company and its subsidiaries is as follows:

	Three Months Ended
	September 30,
	2017		2016
JV Company	$	21,513,825	$	5,915,518
Kandi Changxing		601		(1,570,084	)
Kandi Shanghai		334		(3,300,932	)
Kandi Jinhua		-		(313	)
Kandi Jiangsu		235,030		137,480
Total sales to JV	$	21,749,790	$	1,181,669

	Nine Months Ended
	September 30,
	2017		2016
JV Company	$	48,541,220	$	60,920,788
Kandi Changxing		61,410		247,848
Kandi Shanghai		34,176		623,499
Kandi Jinhua		-		46,753
Kandi Jiangsu		596,350		286,570
Total sales to JV	$	49,233,156	$	62,125,458

As of September 30, 2017 and December 31, 2016, the current and noncurrent amount due from the JV Company and its subsidiaries, was $153,640,932 and $136,536,725, respectively, of which the majority were balances with the JV Company, Kandi Jinhua, Kandi Changxing, Kandi Jiangsu and Kandi Shanghai. The breakdown is as below:

	September 30,		December 31,
	2017		2016
Kandi Shanghai	$	836,805	$	281,657
Kandi Changxing		17,136,881		16,359,721
Kandi Jinhua		5,265,527		5,050,525
Kandi Jiangsu		1,023,686		352,587
JV Company		129,378,033		114,492,235
Consolidated JV	$	153,640,932	$	136,536,725

The current and noncurrent amounts due from the JV Company include seven short-term loans in the total amount of $44,336,900 that Kandi Vehicles lent to the JV Company. Each such loan carries an annual interest rate of 4.35%.

38

As of September 30, 2017 and December 31, 2016, the current and noncurrent amount due to the JV Company and its subsidiaries, was $1,100,847 and $566, respectively, of which the majority were balances with Kandi Changxing and Kandi Shanghai. The breakdown is as below:

	September 30,		December 31,
	2017		2016
Kandi Shanghai	$	729,044	$	-
Kandi Changxing		235,724		566
Kandi Jinhua		136,079		-
Consolidated JV	$	1,100,847	$	566

NOTE 23 – COMMITMENTS AND CONTINGENCIES

Guarantees and pledged collateral for bank loans to other parties

As of September 30, 2017, and December 31, 2016, the Company provided guarantees for the following parties:

(1) Guarantees for bank loans

	September 30,		December 31,
Guarantee provided to	2017		2016
Zhejiang Shuguang Industrial Co., Ltd.		-		4,175,155
Nanlong Group Co., Ltd.		-		2,879,417
Kandi Electric Vehicles Group Co., Ltd.		37,573,644		46,790,530
Total	$	37,573,644	$	53,845,102

On March 15, 2013, the Company entered into a guarantee contract to serve as the guarantor of Nanlong Group Co., Ltd. (“NGCL”) for NGCL’s loan in the amount of $3,005,892 from Shanghai Pudong Development Bank Jinhua Branch, with a related loan period of March 15, 2013, to March 15, 2016. NGCL is not related to the Company. Under this guarantee contract, the Company agreed to perform all the obligations of NGCL under the loan contract if NGCL fails to perform its obligations as set forth therein. Because NGCL defaulted on the loan principal and interest, Shanghai Pudong Development Bank brought a lawsuit to the People’s Court of Zhejiang Province in Yongkang City against NGCL, the Company and ten other guarantors in April, 2017. A judicial mediation took place at the court in Yongkang City on May 27, 2017 and the plaintiff agreed NGCL would repay the loan principal and interest plus legal expenses in installments, and the Company understands that Shanghai Pudong Development Bank has reached a settlement with NGCL. As of September 30, 2017, according to the enterprise credit report issued by the Credit Center of People’s Bank of China (PBOC) or the central bank of the People’s Republic of China, the Company’s guarantee for NGCL’s loan has been removed. The Company expects the likelihood of incurring losses in connection with this matter to be remote.

39

On September 29, 2015, the Company entered into a guarantee contract to serve as the guarantor of Zhejiang Shuguang Industrial Co., Ltd. (“ZSICL”) for a bank loan in the amount of $4,358,543 from Ping An Bank, with a related loan period of September 29, 2015, to September 28, 2016. ZSICL is not related to the Company. Under this guarantee contract, the Company agreed to perform all the obligations of ZSICL under the loan contract if ZSICL fails to perform its obligations as set forth therein. Because ZSICL defaulted on the loan interest, Ping An Bank brought a lawsuit against ZSICL, the Company and three other parties, and a court ruling was issued in December 2016 ordering ZSICL to repay the principal and interest of the bank loan to Ping An Bank, with the Company and three other parties assuming joint liability for the default. ZSICL and the Company appealed the ruling results on February 6, 2017, and the court rejected the appeal on March 29, 2017. On July 31, 2017, the Company and Ping An Bank reached an agreement to settle this case. According to the agreement, the Company will pay Ping An Bank RMB 20 million or approximately $3.0 million in four installments before October 31, 2017 to release the Company from the guarantor liability for this default. As of September 30, 2017, the Company has made three out of four installments or RMB 16 million to Ping An Bank and has an accrued remaining liability of RMB 4 million or approximately $0.6 million for the estimated contingent loss in connection with this matter. According to the Company’s agreement with ZSICL, ZSICL agreed to reimburse all the Company’s losses due to ZSICL’s default on the loan principal and interests. As of the date of this report, the four installments in the total of RMB 20 million or approximately $3.0 million were paid to Ping An Bank, and thus, the Company has been released from the guarantor liability for this default. According to the agreement, ZSICL will reimburse the Company for the same amount. The Company expects the likelihood of incurring losses in connection with this matter to be low.

On December 14, 2015, the Company entered into a guarantee contract to serve as the guarantor for the JV Company for bank loans in the aggregate amount of $37,573,644 from China Import & Export Bank with a related loan period of December 14, 2015, to December 13, 2016, which was extended to October 15, 2017. Under this guarantee contract, the Company agreed to perform all the obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein. The loan was paid off on October 15, 2017.

On July 20, 2016, the Company entered into a guarantee contract to serve as the guarantor for the JV Company for bank loans in the aggregate amount of $11,272,093 from Bank of China, with a related loan period of July 20, 2016 to July 19, 2017. Under this guarantee contract, the Company agreed to perform all the obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein. The loan was paid off on July 21, 2017.

All guarantee periods are two years from the date of expiration of the debt performance under the principal loan contracts.

(2) Pledged collateral for bank loans to other parties.

As of September 30, 2017 and December 31, 2016, none of the Company’s land use rights or plants and equipment were pledged as collateral securing bank loans to other parties.

Contingencies

As of September 30, 2017 and December 31, 2016, our loss contingencies are summarized as follow:

	September 30,		December 31,
Loss contingencies – litigation	2017		2016
Zhejiang Shuguang Industrial Co., Ltd.	$	601,178	$	-
Total	$	601,178	$	-

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Litigation

Beginning in March 2017, putative shareholder class actions were filed against Kandi Technologies Group, Inc. and certain of its current and former directors and officers in the United States District Court for the Central District of California and the United States District Court for the Southern District of New York. The complaints generally allege violations of the federal securities laws based Kandi’s disclosure in March 2017 that its financial statements for the years 2014, 2015 and the first three quarters of 2016 would need to be restated, and seek damages on behalf of putative classes of shareholders who purchased or acquired Kandi’s securities prior to March 13, 2017. Motions for the appointment of lead plaintiff and lead counsel are pending.

Beginning in May 2017, purported shareholder derivative actions based on the same underlying events described above were filed against certain current and former directors of Kandi in the United States District Court for the Southern District of New York. A motion for the appointment of lead plaintiff and lead counsel is pending.

In October 2017, a purported shareholder filed a books and records action against Kandi in Delaware state court seeking the production of certain documents generally relating to the same underlying events described above as well as attorney’s fees.

The Company believes that the claims referenced above are without merit and intend to defend against these lawsuits vigorously. The Company is unable to estimate the possible loss, if any, associated with these lawsuits. 

NOTE 24 – SEGMENT REPORTING

The Company has one operating segment. The Company’s revenue and long-lived assets are primarily derived from and located in China. The Company only has manufacturing operations in China.

The following table sets forth revenues by geographic area:

	Three Months Ended September 30,
	2017					2016
	Sales Revenue		Percentage			Sales Revenue		Percentage
Overseas	$	1,218,901		4	%	$	1,520,367		24	%
China		27,134,998		96	%		4,846,013		76	%
Total	$	28,353,899		100	%	$	6,366,380		100	%

	Nine Months Ended September 30,
	2017					2016
	Sales Revenue		Percentage			Sales Revenue		Percentage
Overseas	$	3,621,439		6	%		3,134,750		3	%
China		56,332,312		94	%		109,106,891		97	%
Total	$	59,953,751		100	%		112,241,641		100	%

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NOTE 25 – Related Party Transactions

The Board must approve all related party transactions. All material related party transactions will be made or entered into on terms that are no less favorable to the Company than can be obtained from unaffiliated third parties.

The following table lists sales to related parties (other than the JV Company and its subsidiaries) for the three months ended September 30, 2017 and 2016:

	Three Months ended
	September 30,
	2017		2016
Service Company		-		(26,490	)
Total	$	-		(26,490	)

The following table lists sales to related parties (other than the JV Company and its subsidiaries) for the nine months ended September 30, 2017 and 2016:

	Nine Months ended
	September 30,
	2017		2016
Service Company		-		3,951,078
Total	$	-		3,951,078

The details for amounts due from related parties (other than the JV Company and its subsidiaries) as of September 30, 2017 and December 31, 2016 were as below:

	September 30,		December 31,
	2017		2016
Service Company		6,437,261		10,484,816
Total due from related party	$	6,437,261		10,484,816

The Company has a 9.5% ownership interest in the Service Company and Mr.Hu, Chairman and CEO of the Company, has a 13% ownership interest in the Service Company. The main transactions between the Company and the Service Company are purchases by the Service Company of batteries and EV parts.

For transactions with the JV Company and its subsidiaries, please refer to Note 22.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This report contains forward-looking statements within the meaning of the federal securities laws that relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology, such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “intend,” “potential” or “continue” or the negative of such terms or other comparable terminology, although not all forward-looking statements contain such terms.

In addition, these forward-looking statements include, but are not limited to, statements regarding implementing our business strategy; development and marketing of our products; our estimates of future revenue and profitability; our expectations regarding future expenses, including research and development, sales and marketing, manufacturing and general and administrative expenses; difficulty or inability to raise additional financing, if needed, on terms acceptable to us; our estimates regarding our capital requirements and our needs for additional financing; attracting and retaining customers and employees; sources of revenue and anticipated revenue; and competition in our market.

Forward-looking statements are only predictions. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. All of our forward-looking information is subject to risks and uncertainties that could cause actual results to differ materially from the results expected. Although it is not possible to identify all factors, these risks and uncertainties include the risk factors and the timing of any of those risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2016 and those set forth from time to time in our other filings with the Securities and Exchange Commission (“SEC”). These documents are available on the SEC’s Electronic Data Gathering and Analysis Retrieval System at http://www.sec.gov.

Critical Accounting Policies and Estimates

This section should be read together with the Summary of Significant Accounting Policies in the attached consolidated financial statements included in this report.

Estimates affecting accounts receivable and inventories

The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect our reporting of assets and liabilities (and contingent assets and liabilities). These estimates are particularly significant where they affect the reported net realizable value of our accounts receivable and inventories.

Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts is recorded in the period when a loss is probable based on an assessment of specific factors, such as troubled collection, historical experience, accounts aging, ongoing business relations and other factors. Accounts are written off after exhaustive efforts at collection. If accounts receivable are to be provided for, or written off, they would be recognized in the consolidated statement of operations within operating expenses. We had an allowance for doubtful accounts of $0 as of September 30, 2017 and December 31, 2016, in accordance with our management’s judgment based on their best knowledge. The Company conducts quarterly assessments of the state of the Company’s outstanding receivables and reserves any allowance for doubtful accounts if it becomes necessary.

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Inventory is stated at the lower of cost, determined on a weighted average basis, or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale. Adjustments to reduce the cost of inventory to its net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances. When inventories are sold, their carrying amount is charged to expense in the year in which the revenue is recognized. Write-downs for declines in net realizable value or for losses of inventories are recognized as an expense in the year the impairment or loss occurs. There was a $574,165 and $415,797 of decline in net realizable value of inventory as of September 30, 2017 and December 31, 2016, respectively, due to our provision for slow moving inventory.

Although we believe that there is little likelihood that actual results will differ materially from our current estimates, if customer demand for our products decreases significantly in the near future, or if the financial condition of our customers deteriorates in the near future, we could realize significant write downs for slow-moving inventories or uncollectible accounts receivable.

Policy affecting recognition of revenue

Our revenue recognition policy plays a key role in our consolidated financial statements. Revenues represent the invoiced value of goods sold, recognized upon the shipment of goods to customers, and revenues are recognized when all of the following criteria are met:

1.	Persuasive evidence of an arrangement exists;
2.	Delivery has occurred or services have been rendered;
3.	The seller’s price to the buyer is fixed or determinable; and
4.	Collectability is reasonably assured.

Our revenue recognition policies for our EV products (through the JV Company), EV parts and legacy products, including ATVs, go-karts and other products are the same: When the products are delivered, the associated risk of loss is deemed transferred, and we recognize revenue at that time.

Policy affecting options, warrants and convertible notes

Our stock option cost is recorded in accordance with ASC 718 and ASC 505. The fair value of stock options is estimated using the Black-Scholes-Merton model. Our expected volatility assumption is based on the historical volatility of our stock. The expected life assumption is primarily based on the expiration date of the option. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Stock option expense recognition is based on awards expected to vest. There were no estimated forfeitures. ASC standards require forfeitures to be estimated at the time of grant and revised in subsequent periods, if necessary, if actual forfeitures differ from those estimates.

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Warranty Liability

Our products that are exported out of China to foreign countries are subject to legal and regulatory requirements with which we are not familiar. The development of warranty policies for the exported products in each of these countries would be virtually impossible and prohibitively expensive. Therefore, we provide price incentives and free parts to our customers and in exchange, our customers establish appropriate warranty policies and assume warranty responsibilities.

Consequently, warranty issues are taken into consideration during price negotiations for our products. Free parts are delivered along with the products, and when products are sold, the related parts are recorded as cost of goods sold. Due to the reliability of our products, we have been able to maintain this warranty policy and we have not had any product liability attributed to our products.

For the EV products that we sell in China, we provide a three year or 50,000 kilometer manufacturer warranty. This warranty affects the Company through our participation and investment in the JV Company, which manufactures the EV products.

Results of Operations

Overview

We are one of the leading manufacturers of EV products (through the JV Company), EV parts and off- road vehicles in China. For the three months ended September 30, 2017, we recognized total revenue of $28,353,899 as compared to $6,366,380 for the three months ended September 30, 2016, an increase of $21,987,519, or 345.4%. During the third quarter 2017, we gradually resumed normal production and turned losses in the past two consecutive quarters to profits generated in this period. For the nine months ended September 30, 2017, we recognized total revenue of $59,953,751 as compared to $112,241,641 for the nine months ended September 30, 2016, a decrease of $52,287,890, or 46.6%. Although we improved our operations in the third quarter 2017, the decrease in revenue for the nine months ended September 30, 2017 was primarily due to weak EV parts demand for the first half of 2017 from the JV Company and its subsidiaries because of the overruling and re-announcement of the MIIT’s (as such term is defined below) directory of recommended models of new energy vehicles as a result of the PRC government’s new subsidy policies effective as of January 1, 2017, as well as the extended delays of subsidy payments for EVs manufactured in previous years resulting from the Chinese government’s industry-wide subsidy review in 2016, which resulted in temporary difficulties for the JV Company to increase production in the first half of 2017. Our primary source of revenue is from the sale of our EV parts, which accounted for 93.2% of our total revenue in the nine months ended September 30, 2017. For the nine months ended September 30, 2017, our EV parts revenues were $55,875,765, a decrease of $48,840,820, or 46.6%, as compared to our EV parts revenues of $104,716,584 for the nine months ended September 30, 2016. Our off-road vehicle revenue increased $307,374 from the year ago period, or 8.2%, to $4,077,986 for the nine months ended September 30, 2017 as compared to the same period a year ago, mainly as a result of organic growth. For the nine months ended September 30, 2017, we recorded $9,255,761 of gross profits, a decrease of 41.5% from the same period of 2016, primarily due to the decrease of revenue from the sale of EV parts. Gross margin for the nine months ended September 30, 2017, was 15.4%, a slight increase from 14.1% from the nine months ended September 30, 2016. We recorded a net loss of $33,793,376 for the nine months ended September 30, 2017, compared to net income of $2,315,659 in the same period of 2016, largely due to share of loss from the JV Company of $13,455,786 and significantly increased research and development (“R&D”) costs of $26,569,624 mainly used to develop a new EV model K23 to prepare the Company for business growth in the coming years, Excluding the effects of stock award expenses, which were $5,522,358 and $13,954,379 for the nine months ended September 30, 2017, and 2016, respectively, and the change of the fair value of financial derivatives, which were $0 and a gain of $3,823,590 for the nine months ended September 30, 2017, and 2016, respectively, our net loss (non-GAAP) was $28,271,018 for the nine months ended September 30, 2017, as compared to net income (non-GAAP) of $12,446,448 for the nine months ended September 30, 2016, a decrease of $40,717,466 or 327.1%.

45

The JV Company continues to enhance its vehicle offering, and its new model K27 is now listed on the Government’s thirteenth approved directory of New Energy Vehicles and qualified for a purchase tax exemption. Model K27 is an upgraded model based on model K17 with an advanced driving motor, resulting in improved speed acceleration and stabilization for the vehicle’s performance. Additionally, a number of innovative features are added to the Model K27, such as engine start/stop button, user remote control over vehicle software, remote monitoring, in-vehicle 4G Internet access, Controller Area Network (CAN) and event data recorder. Equipped with the most advanced technologies available today, the Model K27 has fascinated customers even before its official launch. We look forward to seeing the positive impact this will have on K27 sales. In addition, K22 model has also been approved as a new electric vehicle model  in the Public Notice No. 47 in 2017 issued by China’s Ministry of Industry and Information Technology (“MIIT”). We believe it will be included as a new recommended model vehicle in the Directory of New Energy Vehicles and listed on the directory qualified for a purchase tax exemption in the near future. These new additions of EV models will help us regain revenue growth momentum.

Comparison of the Three Months Ended September 30, 2017 and 2016

The following table sets forth the amounts and percentage relationship to revenue of certain items in our condensed consolidated statements of income (loss) and comprehensive income (loss) for the three months ended September 30, 2017 and 2016.

	Three Months Ended
	September 30, 2017			% of Revenue			September 30, 2016			% of Revenue			Change in Amount			Change in %
REVENUES FROM UNRELATED PARTY, NET		6,604,109			23.3	%		5,211,201			81.9	%		1,392,908			26.7	%
REVENUES FROM JV COMPANY AND RELATED PARTY, NET		21,749,790			76.7	%		1,155,179			18.1	%		20,594,611			1782.8	%
REVENUES, NET		28,353,899						6,366,380						21,987,519			345.4	%
COST OF GOODS SOLD		23,522,406			83.0	%		5,715,211			89.8	%		17,807,195			311.6	%
GROSS PROFIT		4,831,493			17.0	%		651,169			10.2	%		4,180,324			642.0	%
OPERATING EXPENSES:
Research and development		657,851			2.3	%		522,806			8.2	%		135,045			25.8	%
Selling and marketing		216,351			0.8	%		374,102			5.9	%		(157,751	)		(42.2	%)
General and administrative		2,196,201			7.7	%		373,411			5.9	%		1,822,790			488.1	%
Total Operating Expenses		3,070,403			10.8	%		1,270,319			20.0	%		1,800,084			141.7	%
INCOME (LOSS) FROM  OPERATIONS		1,761,090			6.2	%		(619,150	)		(9.7	%)		2,380,240			(384.4	%)
OTHER INCOME(EXPENSE):
Interest income		619,923			2.2	%		832,031			13.1	%		(212,108	)		(25.5	%)
Interest expense		(598,523	)		(2.1	%)		(425,152	)		(6.7	%)		(173,371	)		40.8	%
Change in fair value of financial instruments		-			0.0	%		10,692			0.2	%		(10,692	)		(100.0	%)
Government grants		474,950			1.7	%		594,323			9.3	%		(119,373	)		(20.1	%)
Share of profit (loss) after tax of JV		444,181			1.6	%		(299,538	)		(4.7	%)		743,719			(248.3	%)
Other income (expense), net		(6,560	)		(0.0	%)		(106,299	)		(1.7	%)		99,739			(93.8	%)
Total other expense, net		933,971			3.3	%		606,057			9.5	%		327,914			54.1	%
INCOME (LOSS) BEFORE INCOME TAXES		2,695,061			9.5	%		(13,093	)		(0.2	%)		2,708,154			(20684.0	%)
INCOME TAX EXPENSE		(776,985	)		(2.7	%)		(552,848	)		(8.7	%)		(224,137	)		40.5	%
NET INCOME (LOSS)		1,918,076			6.8	%		(565,941	)		(8.9	%)		2,484,017			(438.9	%)

46

(a) Revenue

For the three months ended September 30, 2017, our revenue was $28,353,899 compared to $6,366,380 for the same period of 2016, an increase of $21,987,519 or 345.4%. Our products include EV parts and off-road vehicles, including ATVs, utility vehicles, go-karts, and others. The increase in revenue was mainly due to the increase in EV parts sales during this quarter. The selling prices of our products for the three months ended September 30, 2017 decreased on average from the same period last year. The increase in revenues was primarily due to the increase in sales volume.

The following table summarizes our revenues by product types for the three months ended September 30, 2017 and 2016:

	Three Months Ended September 30,
	2017		2016
	Sales		Sales
EV parts	$	27,008,051	$	4,712,106
EV products		-		(25,172	)
Off-road vehicles		1,345,848		1,679,446
Total	$	28,353,899	$	6,366,380

EV Parts

Among our total revenues during the three months ended September 30, 2017, approximately $27,008,051, or 95.3%, resulted from the sale of EV parts. We started our EV parts business in 2014, and revenue from EV parts in the third quarter of 2017 increased $22,295,944 or 473.2% compared to the third quarter of 2016. Our EV parts sales primarily consisted of the sales of battery packs, body parts, EV drive motors, EV controllers, air conditioning units and other auto parts, which accounted for 95.3% of total sales. Among total sales for the three months ended September 30, 2017, approximately 74.4% were related to the sale of battery packs. In compliance with the regulation of the Chinese auto industry, we hold the necessary production licenses to manufacture the battery packs exclusively used in EV products manufactured by the JV Company. Besides the sale of battery packs, approximately 8.6% of total sales were related to sales of EV controllers, approximately 7.3% of the total sales were related to sales of air conditioning units, and approximately 3.5% of total sales were related to sales of EV drive motors.

During the three months ended September 30, 2017 and 2016, our revenues from the sale of EV parts to the JV Company and its subsidiaries accounted for approximately 77% and 19% of our total net revenue for the quarter, respectively. The EV parts we sold were used in manufacturing pure EV products by the JV Company’s subsidiaries.

Off-Road Vehicles

Among our total revenues during the three months ended September 30, 2017, approximately $1,345,848, or 4.7%, resulted from the sale of off-road vehicles. The off-road vehicles revenue decreased $333,598, or 19.9% compared to the same period of 2016.

47

(b) Cost of goods sold

Cost of goods sold was $23,522,406 during the three months ended September 30, 2017, representing an increase of $17,807,195, or 311.6%, compared to that of the same period of 2016. The increase was primarily due to the corresponding increase in sales resulting from increased demand for our EV parts by the JV Company.

(c) Gross profit

The margins by products for the three months ended September 30, 2017 and 2016 are as below:

	Three Months Ended September 30,
	2017									2016
	Sales		Cost		Gross Profit		Margin %			Sales			Cost			Gross Profit			Margin %
EV parts	$	27,008,051		22,349,887		4,658,164		17.2	%	$	4,712,106			4,123,261			588,845			12.5	%
EV products		-		-		-		-			(25,172	)		(23,337	)		(1,835	)		-
Off-road vehicles		1,345,848		1,172,519		173,329		12.9	%		1,679,446			1,615,287			64,159			3.8	%
Total	$	28,353,899		23,522,406		4,831,493		17.0	%	$	6,366,380			5,715,211			651,169			10.2	%

Gross profit for the third quarter of 2017 increased 642.0% to $4,831,493, compared to $651,169 for the same period last year. This was primarily attributable to the sales increase. Our gross margin increased to 17.0% compared to 10.2% for the same period of 2016. The increase in our gross margin was mainly due to the decreased raw material purchase prices, increased production line personnel productivity and using less expensive but same quality new material to cut costs. 

(d) Research and development

R&D expenses were $657,851 for the third quarter of 2017, an increase of $135,045 or 25.8% compared to the same period of last year. This increase was primarily due to R&D expenses related to various EV and off-road vehicles R&D projects for the three months ended September 30, 2017.

(e) Sales and marketing expenses

Selling and marketing expenses were $216,351 for the third quarter of 2017, compared to $374,102 for the same period last year, a decrease of $157,751 or 42.2%. This decrease was primarily attributable to the decreased shipping costs and decreased product maintenance expenses for batteries during this period.

48

(f) General and administrative expenses

General and administrative expenses were $2,196,201 for the third quarter of 2017, compared to $373,411 for the same period of last year, an increase of $1,822,790 or 488.1%. For the three months ended September 30, 2017, general and administrative expenses included $1,029,171 in expenses for common stock awards to employees and consultants, compared to a $1,203,204 of reduction adjustment for common stock awards and stock options to employees for the same period in 2016. Excluding stock compensation expense, our net general and administrative expenses for the three months ended September 30, 2017 were $1,167,030, a decrease of $409,585, or 26.0%, from $1,576,615 for the same period of 2016, which was largely due to the various taxes of $0.45 million paid to Hainan Wanning local government during the third quarter of last year for the relocation of Hainan facility from Wanning city to the Haikou city high-tech zone.

(g) Government grants

Government grants were $474,950 for the third quarter of 2017, compared to $594,323 for the same quarter last year, representing a decrease of $119,373, or 20.1%, which was mainly due to the receipt of less government awards and subsidies this period.

(h) Interest income

Interest income was $619,923 for the third quarter of 2017, a decrease of $212,108 or 25.5% compared to the same period of last year. This decrease was primarily attributable to decreased interest rates on loans to the JV Company. The interest rate was reduced to 4.35% in 2017 from 8.7% in 2016 although the loan amount increased from the same quarter last year. In addition, we had interest income from a loan to a third party in the third quarter last year but we didn’t have such loan in the third quarter of 2017.

(i) Interest expenses

Interest expenses were $598,523 in the third quarter of 2017, an increase of $173,371 or 40.8% compared to the same period of last year. This increase was primarily due to the additional interest expenses associated with the note payable to a third party. Of the interest expenses, $608 and $18,875 were discounts associated with the settlement of bank acceptance notes for the three months ended September 30, 2017 and 2016, respectively.

(j) Change in fair value of financial instruments

For the third quarter of 2017, the gain or loss related to changes in the fair value of derivative liability relating to the warrants issued to the investors and a placement agent was $0, a decrease of $10,692 from the same period of last year, which was mainly the result of all remaining unexercised warrants expired as of September 30, 2017.

(k) Share of profit (loss) after tax of the JV Company

For the third quarter of 2017, the JV Company’s net sales were $86,181,120, gross income was $5,279,283, and net loss was $480,622. We accounted for our investments in the JV Company under the equity method of accounting because we have a 50% ownership interest in the JV Company. As a result, we recorded 50% of the JV Company’s loss for $240,311 for the third quarter of 2017. After eliminating intra-entity profits and losses, our share of the after tax profit of the JV Company was $444,181 for the third quarter of 2017, an increase of $743,719 compared to the same period of last year. The decrease of the JV Company’s losses was because the JV Company gradually resumed normal production during the third quarter this year.

49

During the third quarter of 2017, the JV Company sold 6,765 units of EV products including 2,747 units of K17 and 4,018 of k12 as compared to 184 units of EV products sold in the same period of last year, an increase of 6,581 units of EV products or 3576.63%.

(l) Other expense, net

Net other expense was $6,560 for the third quarter of 2017, compared to 106,299 for the same period of last year, which was largely due to a late fee paid to Hainan Wanning local government associated to land use taxes last year. In 2016, the Hainan facility was relocated from Wanning city to the Haikou city high-tech zone due to the realignment of the government’s development planning and we had a temporary delay in the payment of land use taxes incurred during the relocation. 

(m) Net income (loss) from continuing operation

Net income was $1,918,076 for the third quarter of 2017, an increase of $2,484,017 compared to a net loss of $565,941 for the same period of last year. The increase was primarily attributable to significantly increased revenue and gross profits this period as compared to the same period of last year. Excluding the effects of stock compensation expenses, which were $1,029,171 and $(1,203,204) for the third quarter of 2017 and 2016, respectively, and the change of the fair value of financial derivatives which was $0 and a gain of $10,692 for the three months ended September 30, 2017 and 2016, respectively, our non-GAAP net income was $2,947,247 for the three months ended September 30, 2017 as compared to non-GAAP net loss $1,779,837 for the same period of 2016, an increase of $4,727,084. The increase in net income (non-GAAP) was primarily attributable to the significantly increased revenue and gross profits in the third quarter of 2017.

We make reference to certain non-GAAP financial measure, i.e., the adjusted net income. Management believes that such adjusted financial results are useful to investors in evaluating our operating performance because they present meaningful measures of corporate performance. See the non-GAAP reconciliation table below. Any non-GAAP measures should not be considered as a substitute for, and should only be read in conjunction with measures of financial performance prepared in accordance with GAAP.

	Three Months Ended
	September 30,
	2017		2016
GAAP net income (loss) from continuing operations	$	1,918,076	$	(565,941	)
Stock award expenses		1,029,171		(1,203,204	)
Change of the fair value of financial derivatives		-		(10,692	)
Non-GAAP net income (loss) from continuing operations	$	2,947,247	$	(1,779,837	)

50

Comparison of the Nine Months Ended September 30, 2017 and 2016

The following table sets forth the amounts and percentage relationship to revenue of certain items in our condensed consolidated statements of income (loss) and comprehensive income (loss) for the nine months ended September 30, 2017 and 2016.

	Nine Months Ended
	September 30, 2017			% of Revenue			September 30, 2016			% of Revenue			Change in Amount			Change in %
REVENUES FROM UNRELATED PARTY, NET	$	10,720,595			17.9	%	$	46,165,105			41.1	%	$	(35,444,510	)		(76.8	%)
REVENUES FROM JV COMPANY AND RELATED PARTY, NET		49,233,156			82.1	%		66,076,536			58.9	%		(16,843,380	)		(25.5	%)
REVENUES, NET		59,953,751			100.0	%		112,241,641			100.0	%		(52,287,890	)		(46.6	%)
COST OF GOODS SOLD		50,697,990			84.6	%		96,417,337			85.9	%		(45,719,347	)		(47.4	%)
GROSS PROFIT		9,255,761			15.4	%		15,824,304			14.1	%		(6,568,543	)		(41.5	%)
OPERATING EXPENSES:
Research and development		26,569,624			44.3	%		1,222,967			1.1	%		25,346,657			2072.6	%
Selling and marketing		976,913			1.6	%		1,150,880			1.0	%		(173,967	)		(15.1	%)
General and administrative		12,074,147			20.1	%		18,031,487			16.1	%		(5,957,340	)		(33.0	%)
Total Operating Expenses		39,620,684			66.1	%		20,405,334			18.2	%		19,215,350			94.2	%
LOSS FROM  OPERATIONS		(30,364,923	)		(50.6	%)		(4,581,030	)		(4.1	%)		(25,783,893	)		562.8	%
OTHER INCOME(EXPENSE):
Interest income		1,709,990			2.9	%		2,397,364			2.1	%		(687,374	)		(28.7	%)
Interest expense		(1,761,786	)		(2.9	%)		(1,299,549	)		(1.2	%)		(462,237	)		35.6	%
Change in fair value of financial instruments		0			0.0	%		3,823,590			3.4	%		(3,823,590	)		(100.0	%)
Government grants		5,804,561			9.7	%		2,292,180			2.0	%		3,512,381			153.2	%
Share of loss after tax of JV		(13,455,786	)		(22.4	%)		(203,375	)		(0.2	%)		(13,252,411	)		6516.2	%
Other income (expense), net		143,617			0.2	%		202,878			0.2	%		(59,261	)		(29.2	%)
Total other expense, net		(7,559,404	)		(12.6	%)		7,213,088			6.4	%		(14,772,492	)		(204.8	%)
LOSS BEFORE INCOME TAXES		(37,924,327	)		(63.3	%)		2,632,058			2.3	%		(40,556,385	)		(1540.9	%)
INCOME TAX BENEFIT (EXPENSE)		4,130,951			6.9	%		(316,399	)		(0.3	%)		4,447,350			(1405.6	%)
NET (LOSS) INCOME		(33,793,376	)		(56.4	%)		2,315,659			2.1	%		(36,109,035	)		(1559.3	%)

51

(a) Revenue

For the nine months ended September 30, 2017, our revenue was $59,953,751 compared to $112,241,641 for the same period of 2016, a decrease of $52,287,890 or 46.6%. Our products include EV parts and off-road vehicles, including ATVs, utility vehicles, go-karts, and others. The decrease in revenue was mainly due to the significant decrease in EV parts sales during first half of 2017. The selling prices of our products for the nine months ended September 30, 2017 decreased on average from the same period last year. The decrease in revenue was primarily due to the decrease in sales volume.

The following table summarizes our revenues by product types for the nine months ended September 30, 2017 and 2016:

	Nine Months Ended September 30,
	2017		2016
	Sales		Sales
EV parts	$	55,875,765	$	104,716,584
EV products		-		3,754,444
Off-road vehicles		4,077,986		3,770,613
Total	$	59,953,751	$	112,241,641

EV Parts

Among our total revenues during the nine months ended September 30, 2017, approximately $55,875,765, or 93.2%, resulted from the sale of EV parts. We started our EV parts business in 2014, and revenue from EV parts decreased $48,840,820 or 46.6% compared to the same period of 2016. Our EV parts sales primarily consisted of the sales of battery packs, body parts, EV drive motors, EV controllers, air conditioning units and other auto parts, which accounted for 93.2% of total sales. Among total sales for the nine months ended September 30, 2017, approximately 67.8% were related to the sale of battery packs. In compliance with the regulation of the Chinese auto industry, we hold the necessary production licenses to manufacture the battery packs exclusively used in EV products manufactured by the JV Company. Besides the sale of battery packs, approximately 10.5% of total sales were related to sales of EV controllers, approximately 7.8% of the total sales were related to sales of air conditioning units, and approximately 5.3% of total sales were related to sales of EV drive motors.

During the nine months ended September 30, 2017 and 2016, our revenues from the sale of EV parts to the JV Company and its subsidiaries accounted for approximately 82% and 55% of our total net revenue for the period, respectively. The EV parts we sold were used in manufacturing pure EV products by the JV Company’s subsidiaries.

During the nine months ended September 30, 2017 and 2016, our revenue from the sale of EV parts to the Service Company was 0% and 4% of total sales, respectively. The Service Company purchased the battery packs for speed upgrades and other EV parts for repair and maintenance.

Off-Road Vehicles

Among our total revenues during the nine months ended September 30, 2017, approximately $4,077,986, or 6.8%, resulted from the sale of off-road vehicles. The off-road vehicles revenue increased $307,374, or 8.2% compared to the same period of 2016, mainly due to its organic growth.

(b) Cost of goods sold

Cost of goods sold was $50,697,990 during the nine months ended September 30, 2017, representing a decrease of $45,719,347, or 47.4%, compared to that of the same period of 2016. The decrease was primarily due to the corresponding decrease in sales resulting from weak demand for our EV parts by the JV Company in the first half of 2017.

52

(c) Gross profit

The margins by products for the nine months ended September 30, 2017 and 2016 are as below:

	Nine Months Ended September 30,
	2017									2016
	Sales		Cost		Gross Profit		Margin %			Sales		Cost		Gross Profit		Margin %
EV parts	$	55,875,765		47,147,335		8,728,430		15.6	%	$	104,716,584		89,263,446		15,453,138		14.8	%
EV products		-		-		-		-			3,754,444		3,667,459		86,985		2.3	%
Off-road vehicles		4,077,986		3,550,655		527,331		12.9	%		3,770,613		3,486,432		284,181		7.5	%
Total	$	59,953,751		50,697,990		9,255,761		15.4	%	$	112,241,641		96,417,337		15,824,304		14.1	%

Gross profit for the nine months ended September 30, 2017 decreased 41.5% to $9,255,761, compared to $15,824,304 for the same period last year. This was primarily attributable to the sales decrease. Our gross margin increased to 15.4% compared to 14.1% for the same period of 2016. The increase in our gross margin was mainly due to the decreased raw material purchase prices, increased production line personnel productivity and using less expensive material of the same quality to cut costs offset by the decreased selling prices of battery to the JV Company in the nine months ended September 30, 2017.

(d) Research and development

R&D expenses were $26,569,624 for the nine months ended September 30, 2017, an increase of $25,346,657 or 2072.6% compared to the same period of last year. This increase was primarily due to significantly increased R&D expenses related to the development of a new EV model at Hainan facility for the nine months ended September 30, 2017. For the nine months ended September 30, 2017 and 2016, approximately 96.5% and 0% of our research and development expenses were spent on the R&D of a new EV product model at Hainan facility, respectively, and the rest was spent on other various EV and off-road vehicles R&D projects.

(e) Sales and marketing expenses

Selling and marketing expenses were $976,913 for the nine months ended September 30, 2017, compared to $1,150,880 for the same period last year, a decrease of $173,967 or 15.1%. This decrease was primarily attributable to the decreased shipping costs due to the decreased sales this period.

(f) General and administrative expenses

General and administrative expenses were $12,074,147 for the nine months ended September 30, 2017, compared to $18,031,487 for the same period of last year, a decrease of $5,957,340 or 33.0%. For the nine months ended September 30, 2017, general and administrative expenses included $5,522,358 in expenses for common stock awards to employees and consultants, compared to $13,954,379 for the same period in 2016. Excluding stock compensation expense, our net general and administrative expenses for the nine months ended September 30, 2017 were $6,551,789, an increase of $2,474,681, or 60.7%, from $4,077,108 for the same period of 2016. The increase was largely due to the contingent loss accrued in connection with litigation.

53

(g) Government grants

Government grants were $5,804,561 for the nine months ended September 30, 2017, compared to $2,292,180 for the same quarter last year, representing an increase of $3,512,381, or 153.2%, which was primarily due to subsidies we received from the Hainan provincial government to assist our development of a new EV model.

(h) Interest income

Interest income was $1,709,990 for the nine months ended September 30, 2017, a decrease of $687,374 or 28.7% compared to the same period of last year. This decrease was primarily attributable to decreased interest rates on loans to the JV Company. The interest rate was reduced to 4.35% in 2017 from 8.7% in 2016 although the loan amount increased from the same period last year. In addition, we had interest income from a loan to a third party in the same period of last year that did not continue into the nine months ended September 30, 2017.

(i) Interest expenses

Interest expenses were $1,761,786 in the nine months ended September 30, 2017, an increase of $462,237 or 35.6% compared to the same period of last year. This increase was primarily due to the additional interest expenses associated with the note payable to a third party. Of the interest expenses, $62,191 and $18,875 were discounts associated with the settlement of bank acceptance notes for the nine months ended September 30, 2017 and 2016, respectively.

(j) Change in fair value of financial instruments

For the nine months ended September 30, 2017, the gain or loss related to changes in the fair value of derivative liability relating to the warrants issued to the investors and a placement agent was $0, a decrease of $3,823,590 to the same period of last year, which was mainly the result of all remaining unexercised warrants expiring as of September 30, 2017.

(k) Share of loss after tax of the JV Company

For the nine months ended September 30, 2017, the JV Company’s net sales were $106,109,272, gross income was $3,454,547, and net loss was $25,665,734. We accounted for our investments in the JV Company under the equity method of accounting because we have a 50% ownership interest in the JV Company. As a result, we recorded 50% of the JV Company’s loss for $12,832,867 for the nine months ended September 30, 2017. After eliminating intra-entity profits and losses, our share of the after tax losses of the JV Company was $13,455,786 for the nine months ended September 30, 2017, an increase in loss of $13,252,411 compared to the same period of last year. The increase of the JV Company’s loss was primarily due to the decreased EV product sales in the nine months ended September 30, 2017 because of the re-announcement of the MIIT’s directory of recommended models of new energy vehicles as a result of new government’s subsidy policies effective as of January 1, 2017 as well as the extended delays of subsidy payments for EVs manufactured in previous years, which resulted in temporary difficulties for the JV Company to increase or maintain production.

54

During the nine months ended September 30, 2017, the JV Company sold 7,130 units of EV products, including 50 units of K11, 3,062 units of K17 and 4,018 of K12, as compared to a total of 7,384 units of EV products sold by the JV Company in the same period of last year, a decrease of 254 units of EV products or 3.4%..

(l) Other income, net

Net other income was $143,617 for the nine months ended September 30, 2017, a decrease of $59,261 or 29.2% compared to the same period of last year.

(m) Net income (loss) from continuing operation

Net loss was $33,793,376 for the nine months ended September 30, 2017, a negative change of $36,109,035 compared to net income $2,315,659 for the same period of last year. The negative change was primarily attributable to significantly decreased sales and gross profits in the first half of 2017, losses from the JV Company and significantly increased R&D expenses. Excluding the effects of stock compensation expenses, which were $5,522,358 and $13,954,379 for the nine months ended September 30, 2017 and 2016, respectively, and the change of the fair value of financial derivatives which was $0 and a gain of $3,823,590 for the nine months ended September 30, 2017 and 2016, respectively, our non-GAAP net loss was $28,271,018 for the nine months ended September 30, 2017 as compared to non-GAAP net income $12,446,448 for the same period of 2016, a negative change of $40,717,466, or 327.1%. The decrease in net income (non-GAAP) was primarily attributable to the decrease in revenue and gross profits in the first half of 2017, the JV Company’s net losses, and significantly increased R&D expenses made in an effort to prepare the Company for future business growth.

We make reference to certain non-GAAP financial measure, i.e., the adjusted net income. Management believes that such adjusted financial results are useful to investors in evaluating our operating performance because they present meaningful measures of corporate performance. See the non-GAAP reconciliation table below. Any non-GAAP measures should not be considered as a substitute for, and should only be read in conjunction with measures of financial performance prepared in accordance with GAAP.

	Nine Months Ended
	September 30,
	2017			2016
GAAP net (loss) income from continuing operations	$	(33,793,376	)	$	2,315,659
Stock award expenses		5,522,358			13,954,379
Change of the fair value of financial derivatives		-			(3,823,590	)
Non-GAAP net (loss) income from continuing operations	$	(28,271,018	)	$	12,446,448

55

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow

For the nine months ended September 30, 2017, cash used in operating activities was $698,599 as compared to $22,545,245 for the same period of last year. Our operating cash inflows include cash received primarily from sales of our EV parts and off-road vehicles. These cash inflows are offset largely by cash paid to our suppliers for production materials and parts used in our manufacturing process, operation expenses, employee compensation, and interest expenses on our financings. The major operating activities that provided cash for the nine months ended September 30, 2017 were a decrease in advances to suppliers and prepayments and prepaid expenses of $23,878,150 and an increase in accounts payable of $53,078,541. The major operating activities that used cash for nine months ended September 30, 2017 were net losses of $33,793,376, an increase in accounts due from JV Company of $33,071,177 and an increase in long-term accounts due from the JV Company of $15,907,183.

For the nine months ended September 30, 2017, cash provided by investing activities was $8,444,239, as compared to $7,752,776 for the same period of last year. The major investing activity that provided cash for the nine months ended September 30, 2017 was the decrease in restrict cash of $5,875,786 and decrease in short term investments of $4,553,734. The major investing activities that used cash for nine months ended September 30, 2017 were $1,565,244 of purchases of construction in progress.

For the nine months ended September 30, 2017, cash used in financing activities was $16,700,441, as compared to cash provided by financing activities of $1,954,143 for the same period of last year. The major financing activities that provided cash for the nine months ended September 30, 2017 were proceeds from notes payable of $13,367,413 and proceeds from short-term bank loans of $24,854,574. The major financing activities that used cash for the nine months ended September 30, 2017 were $27,939,362 of repayments of short-term bank loans and $14,060,961 of repayments of notes payables.

Working Capital

We had a working capital surplus of $45,296,072 at September 30, 2017, compared to $86,348,025 as of December 31, 2016.

We have historically financed our operations through short-term commercial bank loans from Chinese banks. The term of these loans is typically for one year, and upon the payment of all outstanding principal and interest in a particular loan, the banks have typically rolled over the loan for an additional one-year term, with adjustments made to the interest rate to reflect prevailing market rates. We believe this practice has been ongoing year after year and that short-term bank loans will be available with normal trade terms if needed.

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Capital Requirements and Capital Provided

Capital requirements and capital provided for the nine months ended September 30, 2017 were as follows:

	Nine Months Ended
	September 30, 2017
	(In Thousands)
Capital requirements
Purchase of plant and equipment	$	420
Purchase of construction in progress		1,565
Repayments of short-term bank loans		27,939
Repayments of notes payable		14,061
Increase in restricted cash		12,922
Internal cash used in operations		699
Total capital Requirements	$	57,606
Capital provided
Proceeds from short-term bank loan		24,855
Proceeds from notes payable		13,367
Repayments of short term investment		4,554
Decrease in cash		8,675
Decrease in restricted cash		5,876
Total capital provided	$	57,327

The difference between capital provided and capital required is caused by the effect of exchange rate changes over the past nine months.

Contractual Obligations and Off-balance Sheet Arrangements

Contractual Obligations

The following table summarizes our contractual obligations:

Contractual obligations	Payments due by period
	Total		Less than 1 year		3-5 years		More than 5 years
R&D Obligations	$	9,017,675		9,017,675		-		-
Hainan Obligations		16,231,814		16,231,814		-		-
Loans from Haikou Rural Credit Cooperative	$	30,058,915		-		30,058,915		-
Total	$	55,308,404		25,249,489		30,058,915		-

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To build the Hainan facility, the Company signed contracts with Nanjing Shangtong Auto Technologies Co., Ltd. (“Nanjing Shangtong”) to purchase a production line and develop a new EV model. As of September 30, 2017, the total revised contractual amount with Nanjing Shangtong was RMB 912,000,000 or approximately $137 million, of which RMB 744,000,000 or approximately $112 million has been paid and RMB168,000,000 or approximately $25 million of remaining payments are outstanding as contractual obligations.

Short-term and long-term loans:

Short-term loans are summarized as follows:

	September 30,		December 31,
	2017		2016
Loans from China Ever-bright Bank
Interest rate 5.22% per annum, due on April 25, 2018, secured by the assets of Kandi Vehicle, guaranteed by Mr. Hu Xiaoming and his wife, also guaranteed by company’s subsidiaries. Also see Note 13 and Note 14.		10,520,621		11,229,727
Loans from Hangzhou Bank
Interest rate 4.35% per annum, due on October 16, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		7,334,375		7,025,778
Interest rate 4.79% per annum, due on July 4, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		10,851,268		10,394,696
Interest rate 4.35% per annum, paid off on March 23, 2017, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		-		5,614,864
Interest rate 4.35% per annum, due March 26, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		3,607,070		-
Loans from Individual Third Parties
Interest rate 12% per annum		300,589		-
	$	32,613,923		34,265,065

Long-term loans are summarized as follows:

	September 30,		December 31,
	2017		2016
Loans from Haikou Rural Credit Cooperative
Interest rate 7% per annum, due on December 12, 2021, guaranteed by Kandi Vehicle and Kandi New Energy.		30,058,915		28,794,172
	$	30,058,915		28,794,172

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Notes payable:

	September 30,		December 31,
	2017		2016
Bank acceptance notes:	$		$
Due March 22, 2017		-		400,239
Due March 29, 2017		-		1,439,709
Due June 21, 2017		-		1,439,709
Due October 6, 2017		174,466
Due October 21, 2017		819,105		-
Due November 2, 2017		6,763,256		-
Due November 4, 2017		901,767		-
Due December 6, 2017		901,767		-
Due December 22, 2017		93,465		-
Due January 4, 2018		4,877,059
Due June 21, 2018		367,717		-
Other Notes Payable:
Due May 6, 2017		-		11,517,668
Due May 6, 2019		11,313,967		-
Total	$	26,212,569	$	14,797,325

Guarantees and pledged collateral for third-party bank loans

As of September 30, 2017 and December 31, 2016, we provided guarantees for the following third parties:

(1) Guarantees for bank loans

	September 30,		December 31,
Guarantee provided to	2017		2016
Zhejiang Shuguang industrial Co., Ltd.		-		4,175,155
Nanlong Group Co., Ltd.		-		2,879,417
Kandi Electric Vehicles Group Co., Ltd.		37,573,644		46,790,530
Total	$	37,573,644	$	53,845,102

On March 15, 2013, the Company entered into a guarantee contract to serve as the guarantor of Nanlong Group Co., Ltd. (“NGCL”) for NGCL’s loan in the amount of $3,005,892 from Shanghai Pudong Development Bank Jinhua Branch, with a related loan period of March 15, 2013, to March 15, 2016. NGCL is not related to the Company. Under this guarantee contract, the Company agreed to perform all the obligations of NGCL under the loan contract if NGCL fails to perform its obligations as set forth therein. Because NGCL defaulted on the loan principal and interest, Shanghai Pudong Development Bank brought a lawsuit to the People’s Court of Zhejiang Province in Yongkang City against NGCL, the Company and ten other guarantors in April, 2017. A judicial mediation was taken place at court in Yongkang City on May 27, 2017 and the plaintiff agreed NGCL would repay the loan principal and interest plus legal expenses in installments, and the Company understands that Shanghai Pudong Development Bank has reached a settlement with NGCL. As of September 30, 2017, according to the enterprise credit report issued by the Credit Center of People’s Bank of China (PBOC) or the central bank of the People’s Republic of China, the Company’s guarantee for NGCL’s loan has been removed. The Company expects the likelihood of incurring losses in connection with this matter to be remote.

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On September 29, 2015, the Company entered into a guarantee contract to serve as the guarantor of Zhejiang Shuguang Industrial Co., Ltd. (“ZSICL”) for a bank loan in the amount of $4,358,543 from Ping An Bank, with a related loan period of September 29, 2015, to September 28, 2016. ZSICL is not related to the Company. Under this guarantee contract, the Company agreed to perform all the obligations of ZSICL under the loan contract if ZSICL fails to perform its obligations as set forth therein. Because ZSICL defaulted on the loan interest, Ping An Bank brought a lawsuit against ZSICL, the Company and three other parties, and a court ruling was issued in December 2016 to order ZSICL to repay the principal and interest of the bank loan to Ping An Bank, with the Company and three other parties assuming joint liability for the default. ZSICL and the Company appealed the ruling results on February 6, 2017, and the court rejected the appeal on March 29, 2017. On July 31, 2017, the Company and Ping An Bank reached an agreement to settle this case. According to the agreement, the Company will pay Ping An Bank RMB 20 million or approximately $3.0 million in four installments before October 31, 2017 to release the Company from the guarantor liability for this default. As of September 30, 2017, the Company has made three out of four installments or RMB 16 million to Ping An Bank and has an accrued remaining liability of RMB 4 million or $0.6 million for the estimated contingent loss in connection with this matter. According to the Company’s agreement with ZSICL, ZSICL agreed to reimburse all the Company’s losses due to ZSICL’s default on the loan principal and interests. As of the date of this report, the four installments of RMB 20 million or approximately $3.0 million was paid to Ping An Bank, and thus, the Company has been released from the guarantor liability for this default. According to the agreement, ZSICL will reimburse the Company for the same amount. The Company expects the likelihood of incurring losses in connection with this matter to be low.

On December 14, 2015, the Company entered into a guarantee contract to serve as the guarantor for the JV Company for bank loans in the aggregate amount of $37,573,644 from China Import & Export Bank with a related loan period of December 14, 2015, to December 13, 2016, which was extended to October 15, 2017. Under this guarantee contract, the Company agreed to perform all the obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein. The loan was paid off on October 15, 2017.

On July 20, 2016, the Company entered into a guarantee contract to serve as the guarantor for the JV Company for bank loans in the aggregate amount of $11,272,093 from Bank of China, with a related loan period of July 20, 2016 to July 19, 2017. Under this guarantee contract, the Company agreed to perform all the obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein. The loan was paid off on July 21, 2017.

 All guarantee periods are two years from the date of expiration of the debt performance under the principal loan contracts.

(2) Pledged collateral for bank loans to other parties.

As of September 30, 2017 and December 31, 2016, none of the Company’s land use rights or plants and equipment were pledged as collateral securing bank loans to other parties.

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Contingencies

As of September 30, 2017 and December 31, 2016, our loss contingencies are summarized as follow:

	September 30,		December 31,
Loss contingencies – litigation	2017		2016
Zhejiang Shuguang Industrial Co., Ltd.	$	601,178	$	-
Total	$	601,178	$	-

Recent Development Activities:

On August 21, 2017, the Company announced that the Party Secretary of Jiangsu Province Mr. Li Qiang, along with other local political leaders, visited Rugao City and learned about the progress of renewable energy vehicle development. Mr. Li gave high praise of Kandi’s accomplishments in electric vehicle development in Rugao City. Mr. Li also explained to the delegation that Kandi was among the earliest manufacturers and developers of pure electric vehicles in China, and has achieved many milestones in the research and development of electric vehicles. Now, it is time for Kandi to accelerate its growth with Jiangsu government’s strong support. Mr. Hu Xiaoming, Chairman and CEO of Kandi, also highlighted the innovation of “no charging station, no charging needed, no staff attended, no place restricted, no mileage worry and no environmental pollution” in the Car-share model. Mr. Li emphasized that Car-share begins a new era for electric vehicle development and he believes with the provincial and municipal government’s unwavering support, Kandi will make progress in its unique innovative Car-share business model. He encouraged Kandi to take hold of the unprecedented opportunity and enormous growth potential in the electric vehicle industry and urged Kandi to create an attractive path to that goal through Car-share innovation to enhance the efficiency of electric vehicle use.

On September 1, 2017, the Company announced that Mr. Li Guoliang, Deputy Governor of Hainan Province, along with other political leaders, toured the Kandi’s Hainan production facility and learned about the progress updates on the Hainan Facility’s first prototype of a pure electric vehicle, Model K23. Kandi’s Model K23 incorporates internationally-recognized advanced driver technology, and features a touchscreen control interface, high-pressure 4-in-1 power controls, an automated collision prevention system, an ultra-lightweight structure, increased motor efficiency, a superior battery-energy ratio, and wireless internet capabilities, among other exciting features. The Model K23 has a wheelbase of 2.65 meters and a maximum speed of 100 km/h, and drivers can choose between driving ranges of 150 km or 250 km, according to intended use, whether as family transportation or for use as part of a car-hailing service. Deputy Governor Li was impressed with the progress the Hainan Facility has achieved and praised the development of the Model K23. He encouraged Kandi to accelerate its pace in research and development, and urged Kandi to continue to innovate new vehicle types to satisfy market demand for electric vehicles. Deputy Governor Li also reaffirmed the Hainan Provincial Government’s continuous support for Kandi’s renewable energy vehicle development.

On September 5, 2017, the Company announced that the “JV Company” sold 3,213 units of electric vehicle (“EV”) products in August. Mr. Hu Xiaoming, Chairman and CEO of Kandi, commented “Our business was heavily impacted last year due to the confusion surrounding the reusable battery exchange model. We have been working diligently to gradually resume normal production. We believe that we will regain our leading market position in the EV industry by the year end.”

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On September 29, 2017, the Company announced that the “JV Company” and Hangzhou Vocational & Technical College entered into a strategic agreement to jointly establish the Renewable Energy Automotive Institution and the Kandi Renewable Energy Vehicle Collaborative Innovation Center. The goal of the agreement is to institutionalize renewable energy research and to develop an outreach strategy to promote the renewable energy vehicle industry. The Chinese government, with the current global interest in renewable energy vehicles in mind, has identified the promotion of the Chinese renewable energy automotive industry as a primary national strategic objective. However, until now there has not been a professional institution specifically focused on training personnel for the renewable energy automotive sector, which, unlike the traditional automotive industry, is experiencing rapid growth and a shortage of skilled and specialized technicians. The Kandi Renewable Energy Automotive Institution is the result of a successful combination of Kandi’s extensive experience with the renewable energy automotive industry, electric vehicle sharing, and advanced technology, with Hangzhou V&T College’s targeted educational training programs designed to advance students’ careers. The two parties have also jointly launched the Kandi Renewable Energy Automotive Research Institution to further develop renewable energy vehicle technologies and automotive networking application research, development, and operations, as well as the Car Sharing Innovation Research Center to support research on car-sharing and other new and innovative automotive business models. Hangzhou V&T College is an accredited career training college in China whose graduates are regularly recruited by the top 50 ranked businesses. The collaboration between the two is an innovation in renewable energy automotive research in the academic field.

On November 1, 2017, the Company announced that according to public Notice No. 46 issued by China’s Ministry of Industry and Information Technology (“MIIT”) and State Administration of Taxation (“SAT”) promulgated on October 31, 2017, Kandi’s Geely Brand Electric Vehicle (“EV”) SMA7001BEV40 (Model K27) was listed on the thirteenth approved directory of New Energy Vehicles. As a result, the Model K27 is now qualified for a purchase tax exemption. Kandi’s Model K27 is an upgraded model based on the model K17. Equipped with an advanced drive motor, its motor power has increased by 6kW compared to the model K17, and its energy consumption has been reduced by 5-10%, resulting in improved speed acceleration and stabilization for the vehicle’s performance. A number of innovative features are added to the Model K27, such as engine start/stop button, user remote control over vehicle software, remote monitoring, in-vehicle 4G Internet access, Controller Area Network (CAN) and event data recorder. Equipped with the most advanced technologies available today, the Model K27 has fascinated customers even before its official launch. We look forward to seeing the positive impact this will have on K27 sales. In addition, Model K22 has also been approved as a new electric vehicle model  in the Public Notice No. 47 in 2017 issued by MIIT. We believe it will be included as a new recommended model vehicle in the Directory of New Energy Vehicles and listed on the directory qualified for a purchase tax exemption in the near future. We anticipate that these new additions of EV models will help us regain revenue growth momentum.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Exchange Rate Risk

While our reporting currency is the U.S. dollar, to date the majority of our revenues and costs are denominated in RMB and a significant portion of our assets and liabilities are denominated in RMB. As a result, we are exposed to foreign exchange risk because our revenues and results of operations may be affected by fluctuations in the exchange rate between the U.S. dollar and the RMB. If the RMB depreciates against the U.S. dollar, the value of our RMB revenues and assets as expressed in our U.S. dollar financial statements will decline. Since 2005, China reformed its exchange rate regime and the RMB is no longer pegged to the U.S. dollar. In 2010, the People’s Bank of China decided to move to further reform the RMB exchange rate regime to enhance the flexibility of the RMB exchange rate. Starting August 11, 2015, the RMB changed its trend of appreciation and began to depreciate as compared to the U.S. dollar. In the long term, the RMB may appreciate or depreciate more significantly in value against the U.S. dollar or other foreign currencies, depending on the market supply and demand with reference to a basket of currencies.

While the Chinese RMB is freely convertible under the current account, it remains strictly regulated in the capital account. Chinese authorities have expressed their willingness to allow the RMB to be fully convertible in the near future.

To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the effectiveness of these hedges may be limited and we may not be able to successfully hedge our exposure. Accordingly, we may incur economic losses in the future due to foreign exchange rate fluctuations, which could have a negative impact on our financial condition and results of operations.

Interest Rate Risk

We had cash, cash equivalents and restricted cash totaling $24.3 million and notes receivable from JV Company and related parties of $1.5 million as of September 30, 2017. Cash and cash equivalents are held for working capital purposes. We do not enter into investments for trading or speculative purposes. As of September 30, 2017, we had $32.6 million of short-term bank loans and $30.1 million of long-term loans outstanding, which are fixed rate instruments. Our exposure to interest rate risk primarily relates to the interest income generated from cash held in bank deposits and notes receivable, and interest expenses generated from short-term bank loans. We believe that we do not have any material exposure to changes in fair value as a result of changes in interest rates due to the short term nature of our cash equivalents. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates.

Economic and Political Risks

Our operations in China are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment in China and foreign currency exchange. Our performance may be adversely affected by changes in the political and social conditions in China, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

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Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We have evaluated, under the supervision of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), the effectiveness of disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of September 30, 2017. Based on this evaluation, our CEO and CFO concluded that as of the end of the period covered by this report, our disclosure controls and procedures were not effective.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) is accumulated and communicated to management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016 which we filed with the SEC on March 16, 2017, our management concluded that, as of December 31, 2016, material weaknesses existed in our internal control over financial reporting which affected the effectiveness of our disclosure controls and procedures.

Changes in Internal Control over Financial Reporting

There was no change to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

During the third quarter of 2017, the Company, under the supervision of the Board’s Audit Committee, continued to implement its remediation plans. The management together with the Company’s internal control department reengineered certain control measures to strengthen the Company’s internal control over financial reporting.

i. We reengineered the process and procedures of U.S. GAAP based period financial consolidation and SEC reporting through improved working models with added controls over the areas such as related party transactions, cash flows and equity investments to ensure the completeness and accuracy and regulatory compliance of our financial statements. ;

ii. We also redeveloped the Company’s Accounting Manual to include the exhibits related to the variance between U.S. GAAP and Chinese GAAP and provided comprehensive practice guidance for the conversion of Chinese and the U.S. accounting standards to enhance the professional knowledge and practice skills of the Company’s financial personnel in preparing U.S. based financial statements.

We are in the process of implementing and intend to fully implement our remediation plans that were disclosed in our Annual Report on Form 10-K that was filed on March 16, 2017 to address the material weaknesses and will conduct quarterly assessments of the state of the Company’s financial reporting measures and systems, as a whole.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, the Company is involved in legal matters arising in the ordinary course of business. Except as set forth below, our management is currently not aware of any legal matters or pending litigation that would have a significant effect on the Company’s results of operation or financial statements.

In August 2016, Ping An Bank Yiwu Branch (“Ping An Bank”) filed a suit against Zhejiang Shuguang Industrial Co., Ltd. (“ZSICL”), the Company, and three other parties in Zhejiang Province People’s Court in Yiwu City, alleging ZSICL defaulted on a bank loan borrowed from Pin An Bank for a principal amount of RMB 29 million or approximately $4.2 million (the “Principal”), for which the Company is a guarantor along with other three parties (please refer to Note 23 of the notes to our condensed consolidated financial statements contained in this report). On December 25, 2016, the court ruled that ZSICL should repay Ping An Bank the Principal and associated interest remaining on the bank loan within 10 days once the adjudication is effective; and the Company and other three parties, acted as guarantors, have joint liability for this bank loan. ZSICL and the Company appealed the ruling results on February 6, 2017 and the court rejected the appeal on March 29, 2017. On July 31, 2017, the Company and Ping An Bank reached an agreement to settle this case. According to the agreement, the Company will pay Ping An Bank RMB 20 million or approximately $3.0 million in four installments before October 31, 2017 to release the Company from the guarantor liability for this default. As of September 30, 2017, the Company has made three out of four installments or RMB 16 million to Ping An Bank and has an accrued remaining liability of RMB 4 million or $0.6 million for the estimated contingent loss in connection with this matter. According to the Company’s agreement with ZSICL, ZSICL agreed to reimburse all the Company’s losses due to ZSICL’s default on the loan principal and interests. As of the date of this report, the four installments in the total of RMB 20 million or approximately $3.0 million were paid to Ping An Bank and thus the Company has been released from the guarantor liability for this default. According to the agreement, ZSICL will reimburse the Company for the same amount of RMB 20 million or approximately $3.0 million. The Company expects the likelihood of incurring losses in connection with this matter to be low.

In April 2017, Shanghai Pudong Development Bank filed a suit against Nanlong Group Co., Ltd. (“NGCL”), the Company and ten other parties in Zhejiang Province People’s Court in Yongkang City, alleging NGCL defaulted on a bank loan borrowed from Shanghai Pudong Development Bank for a principal amount of approximately $2.9 million, for which the Company is a guarantor along with ten other guarantors (please refer to Note 23 of the notes to our condensed consolidated financial statements contained in this report). On May 27, 2017, a judicial mediation took place in Yongkang City and a mediation settlement reached in court, which the plaintiff agreed NGCL would repay the loan principal and interest plus legal expenses in installments, and the Company understands that Shanghai Pudong Development Bank has reached a settlement with NGCL. As of September 30, 2017, according to the enterprise credit report issued by the Credit Center of People’s Bank of China (PBOC) or the central bank of the People’s Republic of China, the Company’s guarantee for NGCL’s loan has been removed. The Company expects the likelihood of incurring losses in connection with this matter to be remote.

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Beginning in March 2017, putative shareholder class actions were filed against Kandi Technologies Group, Inc. and certain of its current and former directors and officers in the United States District Court for the Central District of California and the United States District Court for the Southern District of New York. The complaints generally allege violations of the federal securities laws based Kandi’s disclosure in March 2017 that its financial statements for the years 2014, 2015 and the first three quarters of 2016 would need to be restated, and seek damages on behalf of putative classes of shareholders who purchased or acquired Kandi’s securities prior to March 13, 2017. Motions for the appointment of lead plaintiff and lead counsel are pending.

Beginning in May 2017, purported shareholder derivative actions based on the same underlying events described above were filed against certain current and former directors of Kandi in the United States District Court for the Southern District of New York. A motion for the appointment of lead plaintiff and lead counsel is pending.

In October 2017, a purported shareholder filed a books and records action against Kandi in Delaware state court seeking the production of certain documents generally relating to the same underlying events described above as well as attorney’s fees.

We believe that the above class action lawsuits and the books and records action are without merit, and we intend to defend against the lawsuits vigorously. We are unable to estimate the possible loss, if any, associated with this lawsuit. The ultimate outcome of any litigation is uncertain and the outcome of these matters, whether favorable or unfavorable, could have a negative impact on our financial condition or results of operations due to defense costs, diversion of management resources and other factors. Litigation can be costly, and adverse results in the cases could result in substantial monetary judgments. No assurance can be made that litigation will not have a material adverse effect on our future financial position.

Other than the above described legal proceedings, the Company is not aware of any other legal matters in which any director, officer, or any owner of record or beneficial owner of more than five percent of any class of voting securities of the Company, or any affiliate of any such director, officer, affiliate of the Company, or security holder, is a party adverse to the Company or has a material adverse interest to the Company. No provision has been made in the consolidated financial statements for the above contingencies related to the shareholder class actions.

Item 1A. Risk Factors.

Given material weaknesses were found in our internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential shareholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. As directed by Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, the SEC adopted rules requiring public companies to include a report of management on our internal controls over financial reporting in their annual reports.

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As disclosed in our Annual Report on Form 10-K filed with the SEC on March 16, 2017, management observed material weaknesses relating to our 2015 and 2014 financial statements that resulted in the addition of separate audited financial statements of the JV Company, the correction in accounting for income taxes and the reclassification of financial statement line items and related financial disclosures.

Although we have taken measures to remediate the material weaknesses, we cannot provide assurance that we will not fail to achieve and maintain an effective internal control environment on an ongoing basis, which may cause investors to lose confidence in our reported financial information and have a material adverse effect on the price of our common stock.

Item 6. Exhibits

Exhibit Number	Description
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to § 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Definitions Linkbase Document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 9, 2017	By:	/s/ Hu Xiaoming
		Hu Xiaoming
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: November 9, 2017	By:	/s/ Mei Bing
		Mei Bing
		Chief Financial Officer
		(Principal Financial Officer and
		Principal Accounting Officer)

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EX-31.1

Exhibit 31.1

Certification Pursuant to
Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended

I, Hu Xiaoming, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kandi Technologies Group, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2017

/s/ Hu Xiaoming

Hu Xiaoming

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification Pursuant to
Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended

I, Mei Bing, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kandi Technologies Group, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2017

/s/ Mei Bing

Mei Bing

Chief Financial Officer

(Principal Financial Officer and
Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (the “Report”) of Kandi Technologies Group, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof, we, Hu Xiaoming, President and Chief Executive Officer, and Mei Bing, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Hu Xiaoming

Hu Xiaoming

President and Chief Executive Officer

(Principal Executive Officer)

/s/ Mei Bing

Mei Bing

Chief Financial Officer

(Principal Financial Officer and
Principal Accounting Officer)

November 9, 2017

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 06, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	Kandi Technologies Group, Inc.
Entity Central Index Key	0001316517
Trading Symbol	KNDI
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		48,036,538

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Condensed Consolidated Balance Sheet (Unaudited) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Current assets
Cash and cash equivalents	$ 3,560,510	$ 12,235,921
Restricted cash	20,735,921	12,957,377
Short term investment		4,463,097
Accounts receivable	41,774,453	32,394,613
Inventories (net of provision for slow moving inventory of $574,165 and $415,797 as of September 30, 2017 and December 31, 2016, respectively	15,176,578	11,914,110
Notes receivable from JV Company and related party	1,542,147	400,239
Other receivables	238,577	66,064
Prepayments and prepaid expense	5,471,257	4,317,855
Due from employees	25,901	4,863
Advances to suppliers	14,536,366	38,250,818
Amount due from JV Company, net	136,632,901	136,536,159
Amount due from related party	6,437,261	10,484,816
TOTAL CURRENT ASSETS	246,131,872	264,025,932
LONG-TERM ASSETS
Property, Plant and equipment, net	12,962,632	15,194,442
Land use rights, net	12,045,926	11,775,720
Construction in progress	47,676,068	27,054,181
Deferred taxes assets	4,555,018
Long Term Investment	1,427,798	1,367,723
Investment in JV Company	67,087,803	77,453,014
Goodwill	322,591	322,591
Intangible assets	351,640	413,211
Advances to suppliers	27,695,209	33,819,419
Other long term assets	7,726,179	8,271,952
Amount due from JV Company, net	15,907,183
TOTAL Long-Term Assets	197,758,047	175,672,253
TOTAL ASSETS	443,889,919	439,698,185
CURRENT LIABILITIES
Accounts payables	131,047,418	115,870,051
Other payables and accrued expenses	6,523,693	4,835,952
Short-term loans	32,613,923	34,265,065
Customer deposits	125,411	41,671
Notes payable	26,212,569	14,797,325
Income tax payable	2,282,514	1,364,235
Due to employees	31,956	21,214
Deferred taxes liabilities		118,643
Deferred income	1,397,138	6,363,751
Loss contingency-litigation	601,178
Total Current Liabilities	200,835,800	177,677,907
LONG-TERM LIABILITIES
Long term bank loans	30,058,915	28,794,172
Deferred taxes liabilities		878,639
Total Long-Term Liabilities	30,058,915	29,672,811
TOTAL LIABILITIES	230,894,715	207,350,718
STOCKHOLDER'S EQUITY
Common stock, $0.001 par value; 100,000,000 shares authorized; 48,034,038 and 47,699,638 shares issued and outstanding at September 30,2017 and December 31,2016, respectively	48,034	47,700
Additional paid-in capital	233,409,326	227,911,477
Retained earnings (the restricted portion is $4,217,753 and $4,219,808 at September 30,2017 and December 31,2016, respectively)	(9,248,214)	24,545,163
Accumulated other comprehensive loss	(11,213,942)	(20,156,873)
TOTAL STOCKHOLDERS' EQUITY	212,995,204	232,347,467
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 443,889,919	$ 439,698,185

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Condensed Consolidated Balance Sheet (Parenthetical) (Unaudited) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Net of provision for slow moving inventory	$ 574,165	$ 415,797
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	48,034,038	47,699,638
Common stock, shares outstanding	48,034,038	47,699,638
Restricted retained earnings	$ 4,217,753	$ 4,219,808

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Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income (Loss) [Abstract]
REVENUES FROM UNRELATED PARTY, NET	$ 6,604,109	$ 5,211,201	$ 10,720,595	$ 46,165,105
REVENUES FROM JV COMPANY AND RELATED PARTY, NET	21,749,790	1,155,179	49,233,156	66,076,536
REVENUES, NET	28,353,899	6,366,380	59,953,751	112,241,641
COST OF GOODS SOLD	23,522,406	5,715,211	50,697,990	96,417,337
GROSS PROFIT	4,831,493	651,169	9,255,761	15,824,304
OPERATING EXPENSES:
Research and development	657,851	522,806	26,569,624	1,222,967
Selling and marketing	216,351	374,102	976,913	1,150,880
General and administrative	2,196,201	373,411	12,074,147	18,031,487
Total Operating Expenses	3,070,403	1,270,319	39,620,684	20,405,334
INCOME (LOSS) FROM OPERATIONS	1,761,090	(619,150)	(30,364,923)	(4,581,030)
OTHER INCOME (EXPENSE):
Interest income	619,923	832,031	1,709,990	2,397,364
Interest expense	(598,523)	(425,152)	(1,761,786)	(1,299,549)
Change in fair value of financial instruments		10,692		3,823,590
Government grants	474,950	594,323	5,804,561	2,292,180
Share of income (loss) after tax of JV	444,181	(299,538)	(13,455,786)	(203,375)
Other expense, net	(6,560)	(106,299)	143,617	202,878
Total other income (expense), net	933,971	606,057	(7,559,404)	7,213,088
INCOME (LOSS) BEFORE INCOME TAXES	2,695,061	(13,093)	(37,924,327)	2,632,058
INCOME TAX (EXPENSE) BENEFIT	(776,985)	(552,848)	4,130,951	(316,399)
NET INCOME (LOSS)	1,918,076	(565,941)	(33,793,376)	2,315,659
OTHER COMPREHENSIVE INCOME(LOSS)
Foreign currency translation	4,032,652	(805,216)	8,942,931	(6,433,480)
COMPREHENSIVE INCOME (LOSS)	$ 5,950,728	$ (1,371,157)	$ (24,850,445)	$ (4,117,821)
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC	48,028,467	47,695,290	47,913,028	47,436,418
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED	48,028,467	47,695,290	47,913,028	47,436,418
NET INCOME (LOSS) PER SHARE, BASIC	$ 0.04	$ (0.01)	$ (0.71)	$ 0.05
NET INCOME(LOSS) PER SHARE, DILUTED	$ 0.04	$ (0.01)	$ (0.71)	$ 0.05

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$ (33,793,376)	$ 2,315,659
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	3,556,661	3,681,345
Assets Impairments	136,936
Deferred taxes	(5,596,103)	(2,608,702)
Change in fair value of financial instruments		(3,823,590)
Share of loss after tax of JV Company	13,455,786	203,375
Stock Compensation cost	5,522,358	13,930,829
(Increase) Decrease In:
Accounts receivable	(8,926,990)	(48,534,492)
Notes receivable		918,018
Notes receivable from JV Company and related party	4,923,967
Inventories	(2,814,129)	1,802,780
Other receivables and other assets	754,661	(11,868,318)
Due from employee	(10,766)	17,718
Advances to supplier and Prepayments and prepaid expenses	23,878,150	(31,684,685)
Advances to suppliers-Long term	(4,804,200)
Amount due from JV Company	(33,071,177)	(87,973,693)
Amount due from JV Company-Long-term	(15,907,183)
Due from related party	4,406,105	28,994,314
Increase (Decrease) In:
Accounts payable	53,078,541	106,924,655
Other payables and accrued liabilities	2,173,413	10,415,706
Notes payable	(3,933,839)	(5,849,988)
Customer deposits	80,057	(13,598)
Income Tax payable	732,405	607,422
Deferred income	(5,127,455)
Loss contingency-litigation	587,579
Net cash used in operating activities	(698,599)	(22,545,245)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment, net	(420,037)	(39,250)
Purchases of construction in progress	(1,565,244)	(4,236,301)
Repayment of notes receivable		10,436,303
Restricted cash	5,875,786
Short Term Investment	4,553,734	1,592,024
Net cash provided by investing activities	8,444,239	7,752,776
CASH FLOWS FROM FINANCING ACTIVITIES:
Restricted cash	(12,922,105)	1,519,477
Proceeds from short-term bank loans	24,854,574
Repayments of short-term bank loans	(27,939,362)
Proceeds from notes payable	13,367,413
Repayment of notes payable	(14,060,961)
Warrant exercise		434,666
Net cash (used) provided by financing activities	(16,700,441)	1,954,143
NET DECREASE IN CASH AND CASH EQUIVALENTS	(8,954,801)	(12,838,326)
Effect of exchange rate changes on cash	279,390	(210,383)
Cash and cash equivalents at beginning of year	12,235,921	16,738,559
CASH AND CASH EQUIVALENTS AT END OF PERIOD	3,560,510	3,689,850
SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid	1,072,082	2,322,747
Interest paid	1,164,774	1,283,843
SUPPLEMENTAL NON-CASH DISCLOSURES:
Prepayment transferred to construction in progress	12,241,736
Purchase of construction in progress by accounts payable	6,244,120
Advances to suppliers-long term adjusted for other payable	1,057,152
Settlement of due from JV Company and related parties with notes receivable	39,197,964	46,791,213
Settlement of accounts receivables with notes receivable from unrelated parties	1,150,038	15,198,694
Assignment of notes receivable to supplier to settle accounts payable	34,325,141	61,497,480
Settlement of accounts payable with notes payables	15,149,150	5,187,040
Deferred tax change to other comprehensive income	$ 52,266

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Organization and Principal Activities

9 Months Ended

Sep. 30, 2017

Organization and Principal Activities [Abstract]

ORGANIZATION AND PRINCIPAL ACTIVITIES

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES

Kandi Technologies Group, Inc. (“Kandi Technologies”) was incorporated under the laws of the State of Delaware on March 31, 2004. Kandi Technologies changed its name from Stone Mountain Resources, Inc. to Kandi Technologies, Corp. on August 13, 2007, and on December 21, 2012, Kandi Technologies changed its name to Kandi Technologies Group, Inc. As used herein, the term the “Company” means Kandi Technologies and its operating subsidiaries, as described below.

Headquartered in Jinhua City, Zhejiang Province, People’s Republic of China, the Company is one of the People’s Republic of China’s (“China”) leading producers and manufacturers of electric vehicle (“EV”) products, EV parts, and off-road vehicles for sale in China and global markets. The Company conducts its primary business operations through its wholly-owned subsidiary, Zhejiang Kandi Vehicles Co., Ltd. (“Kandi Vehicles”), and the partially and wholly-owned subsidiaries of Kandi Vehicles.

The Company’s organizational chart is as follows:

 

Operating Subsidiaries:

Pursuant to agreements executed in January 2011, Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests (100% of profits and losses) of Jinhua Kandi New Energy Vehicles Co., Ltd. (“Kandi New Energy”). Kandi New Energy currently holds battery pack production licensing rights and supplies battery packs to the JV Company (as such term is defined below). In April 2012, pursuant to a share exchange agreement, the Company acquired 100% of Yongkang Scrou Electric Co, Ltd. (“Yongkang Scrou”), a manufacturer of automobile and EV parts. Yongkang Scrou currently manufactures and sells EV drive motors, EV controllers, air conditioners and other electric products to the JV Company.

In March 2013, pursuant to a joint venture agreement (the “JV Agreement”) entered into by Kandi Vehicles and Shanghai Maple Guorun Automobile Co., Ltd. (“Shanghai Guorun”), a 99%-owned subsidiary of Geely Automobile Holdings Ltd. (“Geely”), the parties established Zhejiang Kandi Electric Vehicles Co., Ltd. (the “JV Company”) to develop, manufacture and sell EV products and related auto parts. Each of Kandi Vehicles and Shanghai Guorun has 50% ownership interest in the JV Company. In March 2014, the JV Company changed its name to Kandi Electric Vehicles Group Co., Ltd. At present, the JV Company is a holding company and all products are manufactured by its subsidiaries. In an effort to improve the JV Company’s development, Zhejiang Geely Holding Group, the parent company of Geely, became the JV Company’s -shareholder on October 26, 2016, through its purchase of the 50% equity of the JV Company held by Shanghai Guorun at a premium price (a price exceeding the cash amount of the aggregate of the original investment and the shared profits over the years). On May 19, 2017, due to business development, Geely Holding entrusted Hu Xiaoming, Chairman of the Board of the JV Company, to hold 19% equity of the JV Company from its 50% holding of the JV Company on behalf of Geely Holding as a nominal holder. On the same day, Geely Holding transferred its remaining 31% equity in the JV Company to Geely Group (Ningbo) Ltd., a company wholly owned by Li Shufu, Chairman of the Board of Geely Holding. On May 25, 2017, Mr. Hu pledged his 19% equity in the JV Company held on behalf of Geely Holding to Geely Holding. On June 30, 2017, due to the JV Company’s operational needs, Kandi Vehicles pledged its 50% equity in the JV Company to Geely Holding as counter-guarantee, because Geely Holding provides a 100% guarantee on the JV Company’s borrowings. Despite of the pledge, guarantee and counter-guarantee arrangements stated above, there is no change in control with respect to the 50% ownership held by each shareholder of the JV Company. In order to streamline the equity structure, on October 24, 2017, Mr. Hu transferred the 19% equity of the JV Company to Geely Group (Ningbo) Ltd. Now, Kandi Vehicles and Geely Group (Ningbo) Ltd. each owns 50% of equity of the JV Company.

In March 2013, Kandi Vehicles formed Kandi Electric Vehicles (Changxing) Co., Ltd. (“Kandi Changxing”) in the Changxing (National) Economic and Technological Development Zone. Kandi Changxing is engaged in the production of EV products. In the fourth quarter of 2013, Kandi Vehicles entered into an ownership transfer agreement with the JV Company pursuant to which Kandi Vehicles transferred 100% of its ownership in Kandi Changxing to the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Changxing.

In July 2013, Zhejiang ZuoZhongYou Electric Vehicle Service Co., Ltd. (the “Service Company”) was formed. The Service Company is engaged in various pure EV leasing businesses, generally referred to as the Micro Public Transportation (“MPT”) program. The Company, through Kandi Vehicles, has 9.5% ownership interest in the Service Company.

In November 2013, Kandi Electric Vehicles Jinhua Co., Ltd. (“Kandi Jinhua”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jinhua, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua.

In November 2013, Zhejiang JiHeKang Electric Vehicle Sales Co., Ltd. (“JiHeKang”) was formed by the JV Company. JiHeKang is engaged in the car sales business. The JV Company has a 100% ownership interest in JiHeKang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang.

In December 2013, the JV Company entered into an ownership transfer agreement with Shanghai Guorun, pursuant to which the JV Company acquired a 100% ownership interest in Kandi Electric Vehicles (Shanghai) Co., Ltd. (“Kandi Shanghai”). As a result, Kandi Shanghai is a wholly-owned subsidiary of the JV Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Shanghai.

In January 2014, Kandi Electric Vehicles Jiangsu Co., Ltd. (“Kandi Jiangsu”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jiangsu, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jiangsu. Kandi Jiangsu is mainly engaged in EV research and development, manufacturing, and sales.

In November 2015, Hangzhou Puma Investment Management Co., Ltd. (“Puma Investment”) was formed by the JV Company. Puma Investment provides investment and consulting services. The JV Company has a 50% ownership interest in Puma Investment (the other 50% is owned by Zuozhongyou Electric Vehicles Service (Hangzhou) Co., Ltd., a subsidiary of the Service Company), and the Company, indirectly through the JV Company, has a 25% economic interest in Puma Investment.

In November 2015, Hangzhou JiHeKang Electric Vehicle Service Co., Ltd. (the “JiHeKang Service Company”) was formed by the JV Company. The JiHeKang Service Company focuses on after-market services for EV products. The JV Company has a 100% ownership interest in the JiHeKang Service Company, and the Company, indirectly through the JV Company, has a 50% economic interest in the JiHeKang Service Company.

In January 2016, Kandi Electric Vehicles (Wanning) Co., Ltd. (“Kandi Wanning”) was renamed Kandi Electric Vehicles (Hainan) Co., Ltd. (“Kandi Hainan”). Kandi Hainan was originally formed in Wanning City in Hainan Province by Kandi Vehicles and Kandi New Energy in April 2013, and was transferred to Haikou City in January 2016. Kandi Vehicles has a 90% ownership interest in Kandi Hainan, and Kandi New Energy has the remaining 10% ownership interest. In fact, Kandi Vehicles is, effectively, entitled to 100% of the economic benefits, voting rights and residual interests (100% of the profits and losses) of Kandi Hainan as Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests of Kandi New Energy.

In August 2016, Jiangsu JiDian Electric Vehicle Sales Co., Ltd. (“Jiangsu JiDian”) was formed by JiHeKang. Jiangsu JiDian is engaged in the car sales business. Since JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Jiangsu JiDian, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Jiangsu JiDian.

In October 2016, JiHeKang acquired Tianjin BoHaiWan Vehicle Sales Co., Ltd. (“Tianjin BoHaiWan”), which is engaged in the car sales business. Since JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Tianjin BoHaiWan, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Tianjin BoHaiWan.

In November 2016, Changxing Kandi Vehicle Maintenance Co., Ltd. (“Changxing Maintenance”) was formed by Kandi Changxing. Changxing Maintenance is engaged in the car repair and maintenance business. Since Kandi Changxing is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Changxing Maintenance, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Changxing Maintenance.

In March 2017, Hangzhou Liuchuang Electric Vehicle Technology Co., Ltd.(“Liuchuang”) was formed by Kandi Jiangsu. Since Kandi Jiangsu is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Liuchuang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Liuchuang.

In April 2017, in order to promote business development, Kandi Jinhua, JiHeKang, and JiHeKang Service Company were reorganized to become subsidiaries of Kandi Jiangsu. As the JV Company has a 100% ownership interest in Kandi Jiangsu, the JV Company has 100% ownership interests in Kandi Jinhua, JiHeKang, and JiHeKang Service Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua, JiHeKang, and JiHeKang Service Company.

The Company’s primary business operations are designing, developing, manufacturing and commercializing EV products, EV parts and off-road vehicles. As part of its strategic objective of becoming a leading manufacturer of EV products (through the JV Company) and related services, the Company has increased its focus on pure EV-related products, with a particular emphasis on expanding its market share in China.

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Liquidity

9 Months Ended

Sep. 30, 2017

Liquidity [Abstract]

LIQUIDITY

NOTE 2 – LIQUIDITY

The Company had a working capital surplus of $45,296,072 as of September 30, 2017, a decrease of $41,051,953 from $86,348,025 as of December 31, 2016. As of September 30, 2017, the Company had credit lines from commercial banks of $32,313,334. Although the Company expects that most of the Company’s outstanding trade receivables from its customers will be collected in the next twelve months, there are uncertainties about the timing in collecting these receivables, especially the receivables due from the JV Company, because most of them are indirectly impacted by the timely receipt of government subsidies. Since the amount due from the JV Company accounts for the majority of the Company’s outstanding receivables, and since the Company cannot control the timing of the receipt of government subsidies, the Company believes that its internally-generated cash flows may not be sufficient to support the growth of future operations and to repay short-term bank loans for the next twelve months. However, the Company believes its access to existing financing sources and its good credit will enable it to meet its obligations and fund its ongoing operations. The Company expects to approximately maintain the current debt level for the next twelve months given the Company’s current financial position and business development needs. 

The Company has historically financed its operations through short-term commercial bank loans from Chinese banks. The term of these loans is typically for one year, and upon the payment of all outstanding principal and interest on a particular loan, the banks have typically rolled over the loan for an additional one-year term, with adjustments made to the interest rate to reflect prevailing market rates. This practice has been ongoing year after year and the Company believes that short-term bank loans will remain available on normal trade terms if needed.

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Basis of Presentation

9 Months Ended

Sep. 30, 2017

Basis of Presentation [Abstract]

BASIS OF PRESENTATION

NOTE 3 – BASIS OF PRESENTATION

The Company maintains its general ledger and journals using the accrual method of accounting for financial reporting purposes. The Company’s financial statements and notes are the representations of the Company’s management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States and have been consistently applied in the Company’s presentation of its financial statements.

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Principles of Consolidation

9 Months Ended

Sep. 30, 2017

Principles of Consolidation [Abstract]

PRINCIPLES OF CONSOLIDATION

NOTE 4 – PRINCIPLES OF CONSOLIDATION

The Company’s consolidated financial statements reflect the accounts of the Company and its ownership interests in the following subsidiaries:

(1) Continental Development Limited (“Continental”), a wholly-owned subsidiary of the Company incorporated under the laws of Hong Kong;

(2) Kandi Vehicles, a wholly-owned subsidiary of Continental;

(3) Kandi New Energy, a 50%-owned subsidiary of Kandi Vehicles (Mr. Hu Xiaoming owns the other 50%). Pursuant to agreements executed in January 2011, Mr. Hu Xiaoming contracted with Kandi Vehicles for the operation and management of Kandi New Energy and put his shares of Kandi New Energy into escrow. As a result, Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests of Kandi New Energy;

(4) Yongkang Scrou, a wholly-owned subsidiary of Kandi Vehicles; and

(5) Kandi Hainan, a subsidiary 10% owned by Kandi New Energy and 90% owned by Kandi Vehicles. 

Equity Method Investees

The Company’s consolidated net income also includes the Company’s proportionate share of the net income or loss of its equity method investees as follows:

(1) The JV Company, a 50% owned subsidiary of Kandi Vehicles;

(2) Kandi Changxing, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Changxing;

(3) Kandi Jinhua, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua;

(4) JiHeKang, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang;

(5) Kandi Shanghai, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Shanghai;

(6) Kandi Jiangsu, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jiangsu;

(7) The JiHeKang Service Company, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in the JiHeKang Service Company.

(8) Tianjin BoHaiWan, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Tianjin BoHaiWan;

(9) Changxing Maintenance, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Changxing Maintenance;

(10) Liuchuang, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Liuchuang.

(11) Jiangsu Jidian, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Jiangsu Jidian.

All intra-entity profits and losses with regards to the Company’s equity method investees have been eliminated.

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Use of Estimates

9 Months Ended

Sep. 30, 2017

Use of Estimates [Abstract]

USE OF ESTIMATES

NOTE 5 – USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available at the time the estimates are made; however actual results when ultimately realized could differ from those estimates.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 6 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Economic and Political Risks

The Company’s operations are conducted in China. As a result, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in China, and by the general state of the Chinese economy. In addition, the Company’s earnings are subject to movements in foreign currency exchange rates when transactions are denominated in Renminbi (“RMB”), which is the Company’s functional currency. Accordingly, the Company’s operating results are affected by changes in the exchange rate between the U.S. dollar and the RMB.

The Company’s operations in China are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s performance may be adversely affected by changes in the political and social conditions in China, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

(b) Fair Value of Financial Instruments

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

These tiers include:

Level 1—defined as observable inputs such as quoted prices in active markets;

Level 2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3—defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company’s financial instruments primarily consist of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, other receivables, accounts payable, other payables and accrued liabilities, short-term bank loans, notes payable, and warrants.

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, other receivables, accounts payable, other payables and accrued liabilities, and notes payable approximate fair value because of the short-term nature of these items. The estimated fair values of short-term bank loans were not materially different from their carrying value as presented due to the brief maturities and because the interest rates on these borrowings approximate those that would have been available for loans of similar remaining maturities and risk profiles. As the carrying amounts are reasonable estimates of fair value, these financial instruments are classified within Level 1 of the fair value hierarchy. The Company identified notes payable as Level 2 instruments due to the fact that the inputs to valuation are primarily based upon readily observable pricing information. The balance of notes payable, which was measured and disclosed at fair value, was $26,212,569 and $14,797,325 at September 30, 2017 and December 31, 2016, respectively.

Warrants, which are accounted for as liabilities, are treated as derivative instruments, and are measured at each reporting date for their fair value using Level 3 inputs. The fair value of warrants was $0 at September 30, 2017 and December 31, 2016, respectively. Also see Note 6(t).

(c) Cash and Cash Equivalents

The Company considers highly-liquid investments purchased with original maturities of three months or less to be cash equivalents.

Restricted cash, as of September 30, 2017, and December 31, 2016, includes time deposits on account for earning interest income. As of September 30, 2017, and December 31, 2016, the Company’s restricted cash was $20,735,921 and $12,957,377, which includes a one-year Certificate of Time Deposit (CD) of $6,011,783 with Hangzhou Bank Jinhua Branch, which matured on October 9, 2017.

(d) Inventories

Inventories are stated at the lower of cost or net realizable value (market value). The cost of raw materials is determined on the basis of weighted average. The cost of finished goods is determined on the basis of weighted average and comprises direct materials, direct labor and an appropriate proportion of overhead.

Net realizable value is based on estimated selling prices less selling expenses and any further costs expected to be incurred for completion. Adjustments to reduce the cost of inventory to net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances.

(e) Accounts Receivable and Due from the JV Company and Related Parties

Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts is recorded for periods in which the Company determines a loss is probable, based on its assessment of specific factors, such as troubled collections, historical experience, accounts aging, ongoing business relations and other factors. Accounts are written off after exhaustive collection efforts. If accounts receivable are to be provided for, or written off, they are recognized in the consolidated statement of operations within the operating expenses line item.

As of September 30, 2017, and December 31, 2016, credit terms with the Company’s customers were typically 210 to 720 days after delivery. The Company extended credit terms with certain customers, mainly the JV Company whose outstanding balance has already exceeded the originally granted credit terms to a much longer period because of delayed subsidy payments for EVs sold by the JV Company from the Chinese government. Because of the industry-wide subsidy review, the Chinese government temporarily delayed issuance of subsidy payments for the EVs sold in 2015 and 2016, which negatively impacted the JV Company’s cash flow position and caused its delay in repaying the Company. By extending the credit term to maximum 720 days, it allows the JV Company sufficient time to repay the Company when the government resumes the subsidy payments. According to the government’s subsidy policies, the EVs sold in 2015 and 2016 by the JV Company are eligible for receiving subsidies and the Chinese government has a good record of paying subsidies. Therefore, the Company believes the issues associated with the outstanding receivables due from the JV Company is timing rather than collectability. Since the collectability is reasonably assured, as of September 30, 2017, and December 31, 2016, the Company had no allowance for doubtful accounts, as per the Company management’s judgment based on their best knowledge. The Company conducts quarterly assessments of the state of the Company’s outstanding receivables and reserves any allowance for doubtful accounts if it becomes necessary. As of September 30, 2017, based on the Company management’s collection experience, approximately $15.9 million of amount due from the JV Company in the current assets was reclassified to amount due from the JV Company in the long-term assets due to the reason mentioned above.

(f) Notes Receivable

Notes receivable represent short-term loans to third parties with maximum terms of six months. Interest income is recognized according to each agreement between a borrower and the Company on an accrual basis. For notes receivable with banks, the interest rates are determined by banks. For notes receivable with other parties, the interest rates are based on agreements between the parties. If notes receivable are paid back, that transaction will be recognized in the relevant year. If notes receivable are not paid back, or are written off, that transaction will be recognized in the relevant year if default is probable, reasonably assured, and the loss can be reasonably estimated. The Company will recognize income if the written-off loan is recovered at a future date. In case of any foreclosure proceedings or legal actions, the Company provides an accrual for the related foreclosure and litigation expenses. The Company also receives notes receivable from the JV Company and other parties to settle accounts receivable. If the Company decides to discount notes receivable for the purpose of receiving immediate cash, the current discount rate is approximately in the range of 4.80% to 5.00% annually. As of September 30, 2017 and December 31, 2016, the Company had notes receivable from JV Company and other related parties of $1,542,147 and $400,239, respectively, which notes receivable typically mature within six months.

(g) Advances to Suppliers

Advances to suppliers represent cash paid in advance to suppliers, and include advances to raw material suppliers, mold manufacturers, and equipment suppliers.

As of September 30, 2017, the Company had made a total advance payments of RMB744 million (approximately $110 million) to Nanjing Shangtong Auto Technologies Co., Ltd. (“Nanjing Shangtong”) as an advance to purchase a production line and develop a new EV model for Kandi Hainan. Nanjing Shangtong is a total solution contractor for Kandi Hainan and provides all the equipment and EV product design and research services used by Kandi Hainan. After transferred to construction in progress and expensed for R&D purposes, the Company had $14,469,823 left in Advance to Suppliers in current assets and $16,212,788 left in Advance to Suppliers in long-term assets related to the purchases from Nanjing Shangtong as of September 30, 2017.

Advances for raw material purchases are typically settled within two months of the Company’s receipt of the raw materials. Prepayment is offset against the purchase price after the equipment or materials are delivered.

(h) Property, Plants and Equipment

Property, plants and equipment are carried at cost less accumulated depreciation. Depreciation is calculated over the asset’s estimated useful life using the straight-line method. Leasehold improvements are amortized over the life of the asset or the term of the lease, whichever is shorter. Estimated useful lives are as follows:

Buildings	30 years
Machinery and equipment	10 years
Office equipment	5 years
Motor vehicles	5 years
Molds	5 years

The costs and related accumulated depreciation of assets sold or otherwise retired are eliminated from the Company’s accounts and any gain or loss is included in the statements of income. The cost of maintenance and repairs is charged to expenses as incurred, whereas significant renewals and betterments are capitalized.

(i) Construction in Progress

Construction in progress (“CIP”) represents the direct costs of construction and the acquisition costs of buildings or machinery. Capitalization of these costs ceases, and construction in progress is transferred to plants and equipment, when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided for until the assets are completed and ready for their intended use. $1,601,472 of interest expenses have been capitalized for CIP as of September 30, 2017.

(j) Land Use Rights

According to Chinese law, land in China is owned by the government and land ownership rights cannot be sold to an individual or to a private company. However, the Chinese government grants the user a “land use right” to use the land. The land use rights granted to the Company are amortized using the straight-line method over a term of fifty years.

(k) Accounting for the Impairment of Long-Lived Assets

The Company periodically evaluates the carrying value of long-lived assets to be held and used, including intangible assets subject to amortization, when events and circumstances warrant such a review, pursuant to the guidelines established in Statement of Financial Accounting Standards (“SFAS”) No. 144 (now known as “ASC 360”). The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for disposal costs.

The Company recognized no impairment loss during the reporting period.

(l) Revenue Recognition

Revenue represents the invoiced value of goods sold. Revenue is recognized when the Company ships the goods to its customers and all of the following criteria are met:

● Persuasive evidence of an arrangement exists;

● Delivery has occurred or services have been rendered;

● The seller’s price to the buyer is fixed or determinable; and

● Collectability is reasonably assured.

The Company recognized revenue when the products and the risks they carry are transferred to the other party.

(m) Research and Development

Expenditures relating to the development of new products and processes, including improvements to existing products, are expensed as incurred. Research and development expenses were $657,851 and $522,806 for the three months ended September 30, 2017 and 2016, respectively. Research and development expenses were $26,569,624 and $1,222,967 for the nine months ended September 30, 2017 and 2016, respectively.

(n) Government Grants

Grants and subsidies received from the Chinese government are recognized when the proceeds are received or collectible and related milestones have been reached and all contingencies have been resolved.

For the three months ended September 30, 2017 and 2016, respectively, the Company’s subsidiaries recognized $474,950 and $594,323 in grants from the Chinese government. For the nine months ended September 30, 2017 and 2016, respectively, the Company’s subsidiaries recognized $5,804,561 and $2,292,180 in grants from the Chinese government.

(o) Income Taxes

The Company accounts for income tax using an asset and liability approach, which allows for the recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The accounting for deferred tax calculation represents the Company management’s best estimate of the most likely future tax consequences of events that have been recognized in our financial statements or tax returns and related future anticipation. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future realization will be uncertain.

(p) Foreign Currency Translation

The accompanying consolidated financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). Capital accounts of the consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred.

Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the reporting period, which rates are obtained from the website: http:// www.ofx.com

	September 30,		December 31,		September 30,
	2017		2016		2016
Period end RMB : USD exchange rate		6.6536		6.94585		6.67106
Average RMB : USD exchange rate		6.807608		6.64520		6.58121

(q) Comprehensive Income

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. Comprehensive income includes net income and the foreign currency translation changes.

(r) Segments

In accordance with ASC 280-10, Segment Reporting, the Company’s chief operating decision makers rely upon the consolidated results of operations when making decisions about allocating resources and assessing the performance of the Company. As a result of the assessment made by the Company’s chief operating decision makers, the Company has only one operating segment. The Company does not distinguish between markets or segments for the purpose of internal reporting.

(s) Stock Option Expenses

The Company’s stock option expenses are recorded in accordance with ASC 718 and ASC 505.

The fair value of stock options is estimated using the Black-Scholes-Merton model. The Company’s expected volatility assumption is based on the historical volatility of the Company’s common stock. The expected life assumption is primarily based on the expiration date of the option. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The recognition of stock option expenses is based on awards expected to vest. ASC standards require forfeitures to be estimated at the time of grant and revised in subsequent periods, if necessary, if actual forfeitures differ from those estimates.

The stock-based option expenses for the three months ended September 30, 2017 and September 30, 2016, were $997,496 and $2,777,121, respectively. The stock-based option expenses for the nine months ended September 30, 2017 and September 30, 2016, were $4,126,008 and $13,885,604, respectively. See Note 19. There were no forfeitures estimated during the reporting period.

(t) Goodwill

The Company allocates goodwill from business combinations to reporting units based on the expectation that the reporting unit is to benefit from the business combination. The Company evaluates its reporting units on an annual basis and, if necessary, reassigns goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

Application of the goodwill impairment test requires judgments, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of each reporting unit. The Company first assesses qualitative factors to determine whether it is more likely than not that goodwill is impaired. If the more likely than not threshold is met, the Company performs a quantitative impairment test.

As of September 30, 2017 and September 30, 2016, the Company determined that its goodwill was not impaired.

(u) Intangible Assets

Intangible assets consist of trade names and customer relations associated with the purchase price from the allocation of Yongkang Scrou. Such assets are being amortized over their estimated useful lives of 9.7 years. Intangible assets are amortized as of September 30, 2017. The amortization expenses for intangible assets were $20,524 and $20,524 for the three months ended September 30, 2017 and September 30, 2016, respectively. The amortization expenses for intangible assets were $61,571 and $61,571 for the nine months ended September 30, 2017 and September 30, 2016, respectively.

(v) Accounting for Sale of Common Stock and Warrants

Gross proceeds are first allocated according to the initial fair value of the freestanding derivative instruments (i.e. the warrants issued to the Company’s investors in its previous offerings, or the “Investor Warrants”). The remaining proceeds are allocated to common stock. The related issuance expenses, including the placement agent cash fees, legal fees, the initial fair value of the warrants issued to the placement agent and others were allocated between the common stock and the Investor Warrants based on how the proceeds are allocated to these instruments. Expenses related to the issuance of common stock were charged to paid-in capital. Expenses related to the issuance of derivative instruments were expensed upon issuance.

(w) Consolidation of variable interest entities

In accordance with accounting standards regarding consolidation of variable interest entities, or VIEs, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The Company has concluded, based on the contractual arrangements, that Kandi New Energy is a VIE and that the Company’s wholly-owned subsidiary, Kandi Vehicles, absorbs a majority of the risk of loss from the activities of this company, thereby enabling the Company, through Kandi Vehicles, to receive a majority of its respective expected residual returns.

Additionally, because Kandi New Energy is under common control with other entities, the consolidated financial statements have been prepared as if the transactions had occurred retroactively as to the beginning of the reporting period of these consolidated financial statements.

Control and common control are defined under the accounting standards as “an individual, enterprise, or immediate family members who hold more than 50 percent of the voting ownership interest of each entity.” Because the owners collectively own 100% of Kandi New Energy, and have agreed to vote their interests in concert since the establishment of each of these three companies as memorialized the Voting Rights Proxy Agreement, the Company believes that the owners collectively have control and common control of Kandi New Energy. Accordingly, the Company believes that Kandi New Energy was constructively held under common control by Kandi Vehicles as of the time the contractual agreements were entered into, establishing Kandi Vehicles as their primary beneficiary. Kandi Vehicles, in turn, is owned by Continental, which is owned by the Company.

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New Accounting Pronouncements

9 Months Ended

Sep. 30, 2017

New Accounting Pronouncements [Abstract]

NEW ACCOUNTING PRONOUNCEMENTS

NOTE 7 – NEW ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements that the Company has adopted or may be required to adopt in the future are summarized below:

In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers” to replace the existing revenue recognition criteria for contracts with customers. The Company currently expects to adopt the new accounting standard ASC 606 and all the related amendments (the “New Revenue Standard”) to all contracts using the modified retrospective method on January 1, 2018. The Company’s sales revenue continues to be recognized when products are shipped from its manufacturing facilities. The Company does not expect the adoption of the New Revenue Standard to have a material impact on its net income on an ongoing basis. Its interpretation is subject to change as a result of future changes in market conditions or product offerings.

In January 2017, the FASB issued ASU No. 2017-1 “Topic 805, Business Combinations: Clarifying the Definition of a Business”. The amendments in this update provide a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. The amendments in this update affect all reporting entities that must determine whether they have acquired or sold a business. Public business entities should apply the amendments in this update to annual periods beginning after December 15, 2017, including interim periods within those periods. All other entities should apply the amendments to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The Company does not expect the adoption of ASU 2017-1 to have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-4 “Topic 350: Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment.” The amendments in this update eliminate step two of the goodwill impairment test and specifies that goodwill impairment should be measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets should be disclosed. The amendments in this update are effective for annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019; early adoption is permitted. The Company does not expect the adoption of ASU 2017-4 to have a material impact on its consolidated financial statements.

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Concentrations

9 Months Ended

Sep. 30, 2017

Concentrations [Abstract]

CONCENTRATIONS

NOTE 8 – CONCENTRATIONS

(a) Customers

For the three-month periods ended September 30, 2017 and September 30, 2016, the Company’s major customer, who accounted for more than 10% of the Company’s consolidated revenue, was as follows:

	Sales						Trade Receivable
	Three Months			Three Months
	Ended			Ended
	September 30,			September 30,			September 30,			December 31,
Major Customers	2017			2016			2017			2016
Kandi Electric Vehicles Group Co., Ltd. and its subsidiaries		77	%		19	%		69	%		71	%
Jinhua Chaoneng Automobile Sales Co., Ltd.		19	%		56	%		24	%		19	%

For the nine-month periods ended September 30, 2017 and September 30, 2016, the Company’s major customer, who accounted for more than 10% of the Company’s consolidated revenue, was as follows:

	Sales						Trade Receivable
	Nine Months			Nine Months
	Ended			Ended
	September 30,			September 30,			September 30,			December 31,
Major Customers	2017			2016			2017			2016
Kandi Electric Vehicles Group Co., Ltd. and its subsidiaries		82	%		55	%		69	%		71	%
Jinhua Chaoneng Automobile Sales Co. Ltd.		11	%		35	%		24	%		19	%

Trade receivable includes accounts receivable, amount due from the JV Company net of loans to the JV Company, and amount due from other related parties.

(b) Suppliers

For the three-month periods ended September 30, 2017 and September 30, 2016, the Company’s material suppliers, each of whom accounted for more than 10% of the Company’s total purchases, were as follows:

	Purchases						Accounts Payable
	Three Months			Three Months
	Ended			Ended
	September 30,			September 30,			September 30,			December 31,
Major Suppliers	2017			2016			2017			2016
Dongguan Chuangming Battery Technology Co., Ltd.		37	%		56	%		22	%		22	%
Zhejiang Tianneng Energy Technology Co., Ltd.		13	%		-			13	%		15	%

For the nine-month periods ended September 30, 2017 and September 30, 2016, the Company’s material suppliers, each of whom accounted for more than 10% of the Company’s total purchases, were as follows:

	Purchases						Accounts Payable
	Nine Months			Nine Months
	Ended			Ended
	September 30,			September 30,			September 30,			December 31,
Major Suppliers	2017			2016			2017			2016
Dongguan Chuangming Battery Technology Co., Ltd.		31	%		48	%		22	%		22	%
Zhejiang Tianneng Energy Technology Co., Ltd.		15	%		19	%		13	%		15	%

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Earnings Per Share

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 9 – EARNINGS PER SHARE

The Company calculates earnings per share in accordance with ASC 260, Earnings per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the reporting period. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding stock options, warrants and convertible notes (using the if-converted method). For the three months ended September 30, 2017 and September 30, 2016, the average number of potentially dilutive common shares was 0 and 0, respectively. For the nine months ended September 30, 2017 and September 30, 2016, the average number of potentially dilutive common shares was 0 and 0, respectively. The potential dilutive common shares as at the nine months ended September 30, 2017 and September 30, 2016, were 4,400,000 and 4,900,000 shares respectively.

The following is the calculation of earnings per share for the three-month periods ended September 30, 2017 and 2016:

	For Three Months Ended
	September 30,
	2017		2016
Net income (loss)	$	1,918,076	$	(565,941	)
Weighted average shares used in basic computation		48,028,467		47,695,290
Dilutive shares		-		-
Weighted average shares used in diluted computation		48,028,467		47,695,290
Earnings per share:
Basic	$	0.04	$	(0.01	)
Diluted	$	0.04	$	(0.01	)

The following is the calculation of earnings per share for the nine-month periods ended September 30, 2017 and 2016:

	For Nine Months Ended
	September 30,
	2017			2016
Net (loss) income	$	(33,793,376	)	$	2,315,659
Weighted average shares used in basic computation		47,913,028			47,436,418
Dilutive shares		-			-
Weighted average shares used in diluted computation		47,913,028			47,436,418
Earnings per share:
Basic	$	(0.71	)	$	0.05
Diluted	$	(0.71	)	$	0.05

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Accounts Receivable

9 Months Ended

Sep. 30, 2017

Accounts Receivable [Abstract]

ACCOUNTS RECEIVABLE

NOTE 10 – ACCOUNTS RECEIVABLE

Accounts receivable are summarized as follows:

	September 30,		December 31,
	2017		2016
Accounts receivable	$	41,774,453	$	32,394,613
Less: Provision for doubtful debts		-		-
Accounts receivable, net	$	41,774,453	$	32,394,613

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Inventories

9 Months Ended

Sep. 30, 2017

Inventories [Abstract]

INVENTORIES

NOTE 11 – INVENTORIES

Inventories are summarized as follows:

	September 30,			December 31,
	2017			2016
Raw material	$	5,612,594		$	2,529,149
Work-in-progress		6,651,788			1,786,087
Finished goods		3,486,361			8,014,671
Total inventories		15,750,743			12,329,907
Less: provision for slowing moving inventories		(574,165	)		(415,797	)
Inventories, net	$	15,176,578		$	11,914,110

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Notes Receivable

9 Months Ended

Sep. 30, 2017

Accounts Receivable/Notes Receivable [Abstract]

NOTES RECEIVABLE

NOTE 12 – NOTES RECEIVABLE

Notes receivable from the JV Company and related parties as of September 30, 2017, and December 31, 2016, are summarized as follows:

	September 30,		December 31,
	2017		2016
Notes receivable as below:
Bank acceptance notes		1,542,147		400,239
Notes receivable	$	1,542,147	$	400,239

Details of notes receivable from the JV Company and related parties as of September 30, 2017, are as set forth below:

Index	Amount ($)		Counter party	Relationship	Nature	Manner of settlement
1		1,542,147	Kandi Electric Vehicles Group Co., Ltd.	Joint Venture of the Company	Payments for sales	Not due

Details of notes receivable from the JV Company and related parties as of December 31, 2016, are as set forth below:

Index	Amount ($)		Counter party	Relationship	Nature	Manner of settlement
1		400,239	Kandi Shanghai	Subsidiary of the JV Company	Payments for sales	Not due

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Plants and Equipment

9 Months Ended

Sep. 30, 2017

Plants and Equipment [Abstract]

PLANTS AND EQUIPMENT

NOTE 13 – PLANTS AND EQUIPMENT

Plants and equipment as of September 30, 2017 and December 31, 2016, consisted of the following:

	September 30, 2017			December 31, 2016
At cost:
Buildings	$	13,547,482		$	12,977,465
Machinery and equipment		7,740,522			8,585,666
Office equipment		518,412			475,162
Motor vehicles		374,413			321,207
Moulds		27,693,283			26,463,472
		49,874,112			48,822,972
Less : Accumulated depreciation
Buildings	$	(4,465,344	)	$	(3,948,909	)
Machinery and equipment		(7,035,228	)		(8,107,884	)
Office equipment		(280,296	)		(216,226	)
Motor vehicles		(296,387	)		(274,197	)
Moulds		(24,781,790	)		(21,031,086	)
		(36,859,045	)		(33,578,302	)
Less: provision for impairment for fixed assets		(52,435	)		(50,228	)
Plant and equipment, net	$	12,962,632		$	15,194,442

As of September 30, 2017 and December 31, 2016, the net book value of plants and equipment pledged as collateral for bank loans was $8,931,851 and $8,875,111, respectively.

Depreciation expenses for the three months ended September 30, 2017 and September 30, 2016 were $1,119,307 and $1,106,755, respectively. Depreciation expenses for the nine months ended September 30, 2017 and September 30, 2016 were $3,253,653 and $3,370,032, respectively.

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Land Use Rights

9 Months Ended

Sep. 30, 2017

Land Use Rights [Abstract]

LAND USE RIGHTS

NOTE 14 – LAND USE RIGHTS

The Company’s land use rights as of September 30, 2017 and December 31, 2016, consisted of the following:

	September 30, 2017			December 31, 2016
Cost of land use rights	$	14,907,523		$	14,280,282
Less: Accumulated amortization		(2,861,597	)		(2,504,562	)
Land use rights, net	$	12,045,926		$	11,775,720

As of September 30, 2017, and December 31, 2016, the net book value of land use rights pledged as collateral for the Company’s bank loans was $8,856,627 and $8,660,097, respectively. Also see Note 16.

The amortization expenses for the three months ended September 30, 2017 and September 30, 2016, were $82,054 and $95,906, respectively. The amortization expenses for the nine months ended September 30, 2017 and September 30, 2016, were $241,437 and $249,742, respectively. Amortization expenses for the next five years and thereafter is as follows:

2017(Three Months)	$	120,719
2018		482,874
2019		482,874
2020		482,874
2021		482,874
Thereafter		9,993,712
Total	$	12,045,926

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Construction-in-Progress

9 Months Ended

Sep. 30, 2017

Construction-in-Progress [Abstract]

CONSTRUCTION-IN-PROGRESS

NOTE 15 – CONSTRUCTION-IN-PROGRESS

Hainan Facility

In April 2013, the Company signed an agreement with the Wanning city government in Hainan Province to invest a total of RMB 1 billion to establish a factory in Wanning to manufacture 100,000 EVs annually. Also in 2013, the Company contracted with an unrelated third-party supplier, Nanjing Shangtong, to purchase a production line in connection with the manufacturing facility and to help develop a new EV model. In January 2016, the Hainan Province government implemented a development plan to centralize manufacturing in certain designated industry parks. As a result, the Wanning facility was relocated from Wanning city to the Haikou city high-tech zone. Based on our agreement with the government, all the expenses and lost assets resulting from the relocation were compensated for by the local government. As a result of the relocation, the contracts to build the manufacturing facility had to be revised in terms of total contract amount, technical requirements, completion milestones and others for the new construction site in Haikou. Because of this change, part of the construction-in-progress previously recorded was transferred back to the advances to suppliers in accordance with the revised contract terms and technical requirements. Currently, the Hainan facility has completed the second round of producing the K23 prototype model and plans to send the qualified prototype model to the National Testing Center for inspection in the coming months. Once the prototype passes the inspection, the Company will launch the trial production thereafter.

No depreciation is provided for CIP until such time as the Hainan facility is completed and placed into operation.

The contractual obligations under CIP of the Company as of September 30, 2017 are as follows:

Project	Total in CIP as of September 30, 2017		Estimate to complete		Total contract amount
Kandi Hainan facility	$	47,676,068	$	36,555,128	$	84,231,196
Total	$	47,676,068	$	36,555,128	$	84,231,196

As of September 30, 2017, and December 31, 2016, the Company had CIP amounting to $47,676,068 and $27,054,181, respectively.

$557,460 and $0 of interest expense has been capitalized for CIP for three months ended September 30, 2017 and 2016, respectively. $1,601,472 and $0 of interest expense has been capitalized for CIP for nine months ended September, 2017 and 2016, respectively.

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Short -Term and Long-Term Bank Loans

9 Months Ended

Sep. 30, 2017

Short -Term and Long-Term Bank Loans / Notes payable [Abstract]

SHORT -TERM AND LONG-TERM BANK LOANS

NOTE 16 – SHORT -TERM AND LONG-TERM BANK LOANS

Short-term loans are summarized as follows:

	September 30,		December 31,
	2017		2016
Loans from China Ever-bright Bank
Interest rate 5.22% per annum, due on April 25, 2018, secured by the assets of Kandi Vehicle, guaranteed by Mr. Hu Xiaoming and his wife, also guaranteed by company’s subsidiaries. Also see Note 13 and Note 14.		10,520,621		11,229,727
Loans from Hangzhou Bank
Interest rate 4.35% per annum, due on October 16, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		7,334,375		7,025,778
Interest rate 4.79% per annum, due on July 4, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		10,851,268		10,394,696
Interest rate 4.35% per annum, paid off on March 23, 2017, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		-		5,614,864
Interest rate 4.35% per annum, due March 26, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		3,607,070		-
Loans from Individual Third Parties
Interest rate 12% per annum		300,589		-
	$	32,613,923		34,265,065

Long-term loans are summarized as follows:

	September 30,		December 31,
	2017		2016
Loans from Haikou Rural Credit Cooperative
Interest rate 7% per annum, due on December 12, 2021, guaranteed by Kandi Vehicle and Kandi New Energy.		30,058,915		28,794,172
	$	30,058,915		28,794,172

The interest expense of short-term and long-term bank loans for the three months ended September 30, 2017, and 2016 was $598,523 and $425,152, respectively. The interest expense of short-term and long-term bank loans for the nine months ended September 30, 2017, and 2016 was $1,761,786 and $1,299,549, respectively.

As of September 30, 2017, the aggregate amount of short-term and long-term loans guaranteed by various third parties was $0.

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Notes Payable

9 Months Ended

Sep. 30, 2017

Short -Term and Long-Term Bank Loans / Notes payable [Abstract]

NOTES PAYABLE

NOTE 17 – NOTES PAYABLE

By issuing bank notes payable rather than paying cash to suppliers, the Company can defer payments until the bank notes payable are due. Depending on bank requirements, the Company may need to deposit restricted cash in banks to back up the bank notes payable, while the restricted cash deposited in the banks will generate interest income.

A bank acceptance note is a promised future payment, or time draft, which is accepted and guaranteed by a bank and drawn on a deposit at the bank. The banker’s acceptance specifies the amount of the funds, the date, and the person to which the payment is due.

After acceptance, the draft becomes an unconditional liability of the bank, but the holder of the draft can sell (exchange) it for cash at a discount to a buyer who is willing to wait until the maturity date for the funds in the deposit. $14,724,136 and $3,279,656 were held as collateral for the notes payable as of September 30, 2017, and December 31, 2016, respectively.

As is common business practice in the PRC, the Company issues notes payable to its suppliers as settlement for accounts payable.

The Company’s notes payable also include the borrowing from the third party.

Notes payable for September 30, 2017 and December 31, 2016 were summarized as follows:

	September 30,		December 31,
	2017		2016
Bank acceptance notes:	$		$
Due March 22, 2017		-		400,239
Due March 29, 2017		-		1,439,709
Due June 21, 2017		-		1,439,709
Due October 6, 2017		174,466
Due October 21, 2017		819,105		-
Due November 2, 2017		6,763,256		-
Due November 4, 2017		901,767		-
Due December 6, 2017		901,767		-
Due December 22, 2017		93,465		-
Due January 4, 2018		4,877,059
Due June 21, 2018		367,717		-
Other Notes Payable:
Due May 6, 2017		-		11,517,668
Due May 6, 2019		11,313,967		-
Total	$	26,212,569	$	14,797,325

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Taxes

9 Months Ended

Sep. 30, 2017

Taxes [Abstract]

TAXES

NOTE 18 – TAXES

(a) Corporation Income Tax

Pursuant to the tax laws and regulations of the PRC, the Company’s applicable corporate income tax (“CIT”) rate is 25%. However, Kandi Vehicles qualifies as a High and New Technology Enterprise (“HNTE”) company in the PRC, and is entitled to pay a reduced income tax rate of 15% for the years presented, which reduced rate will expire in 2017. An entity may re-apply for an HNTE certificate when the prior certificate expires. Historically, Kandi Vehicles has successfully re-applied for such certificates when the its prior certificates expired. The applicable CIT rate of each of the Company’s three other subsidiaries, Kandi New Energy, Yongkang Scrou and Kandi Hainan, the JV Company and its subsidiaries, and the Service Company is 25%.

After combining research and development tax credits of 25% on certain qualified research and development expenses, the Company’s final effective tax rate for September 30, 2017, and 2016 was 10.89% and 12.02%, respectively. The effective tax rates for each of the periods mentioned above are disclosed in the summary table of income tax expenses for September 30, 2017 and 2016.

Effective January 1, 2007, the Company adopted the guidance in ASC 740 related to uncertain tax positions. The guidance addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of September 30, 2017, the Company did not have any liability for unrecognized tax benefits. The Company files income tax returns with the U.S. Internal Revenue Services (“IRS”) and those states where the Company has operations. The Company is subject to U.S. federal or state income tax examinations by the IRS and relevant state tax authorities for years after 2006. During the periods open to examination, the Company has net operating loss carry forwards (“NOLs”) for U.S. federal and state tax purposes that have attributes from closed periods. Since these NOLs may be utilized in future periods, they remain subject to examination. The Company also files certain tax returns in the PRC. As of September 30, 2017, the Company was not aware of any pending income tax examinations by U.S. or PRC tax authorities. The Company records interest and penalties on uncertain tax provisions as income tax expense. As of September 30, 2017, the Company has no accrued interest or penalties related to uncertain tax positions. The Company has not recorded a provision for U.S. federal income tax for nine months ended September 30, 2017, due to a net operating loss in 2016 and an accumulated net operating loss carry forward from prior years in the United States.

Income tax expenses for the three months and nine months ended September 30, 2017 and 2016 are summarized as follows:

	For Three Months Ended  September 30,
	(Unaudited)
	2017			2016
Current:
Provision for CIT	$	957,129		$	(1,483,866	)
Provision for Federal Income Tax		-			-
Deferred:
Provision for CIT		(180,144	)		2,036,714
Income tax expense	$	776,985		$	552,848

	For Nine Months Ended  September 30,
	(Unaudited)
	2017			2016
Current:
Provision for CIT	$	1,465,152		$	2,925,100
Provision for Federal Income Tax		-			-
Deferred:
Provision for CIT		(5,596,103	)		(2,608,701	)
Income tax (benefit) expense	$	(4,130,951	)	$	316,399

The Company’s income tax expenses differ from the “expected” tax expenses for nine months ended September 30, 2017 and 2016 (computed by applying the U.S. Federal Income Tax rate of 34% and the PRC CIT rate of 25%, respectively, to income before income taxes) as follows:

	For Nine Months Ended  September 30,
	(Unaudited)
	2017			2016
Expected taxation at PRC statutory tax rate	$	(9,481,082	)		658,015
Effect of differing tax rates in different jurisdictions		(553,564	)		(611,065	)
Non-taxable income		-			-
Non-deductible expenses (1)		2,021,055			32,122
Research and development super-deduction		(55,439	)		(128,865	)
Under-accrued EIT for previous years		267,574			(2,727,454	)
Effect of PRC preferential tax rates		1,670,185			(100,974	)
Addition to valuation allowance		2,092,000			3,194,621
Other		(91,680	)		-
Income tax  (benefit) expense	$	(4,130,951	)		316,399

(1) It’s mainly due to share of (loss) in JV Company and its subsidiaries.

The tax effects of temporary differences that give rise to the Company’s net deferred tax assets and liabilities as of September 30, 2017 and December 31, 2016 are summarized as follows:

	September 30,			December 31,
	2017			2016
Deferred tax assets:
Expense (2)		554,177			72,742
Depreciation		194,257			230,156
Loss carried forward		33,130,243			27,218,934
less: valuation allowance		(27,740,715	)		(26,820,811	)
Total deferred tax assets, net of valuation allowance		6,137,962			701,021
Deferred tax liabilities:
Expense (3)		1,582,944			1,698,303
Total deferred tax liability		1,582,944			1,698,303
Net deferred tax assets (liabilities)	$	4,555,018		$	(997,282	)

(2) It’s provision for impairment inventory, fixed assets and loss contingency-litigation.

(3) It’s due to the difference of tax basis and GAAP basis of other long term assets.

As of September 30, 2017, the aggregate NOLs incurred in 2013 through 2017 of $81.59 million deriving from entities in the U.S. will expire in varying amount between 2018 and 2022. The aggregate NOLs in 2016 through 2017 of $21.78 million deriving from entities in the PRC will expire in varying amount between 2021 and 2022. As of December 31, 2016, the aggregate NOLs incurred in 2012 through 2016 of $78.88 million deriving from entities in the U.S. will expire in varying amount between 2017 and 2021. The aggregate NOLs incurred in 2016 of $2.12 million deriving from entities in the PRC will expire in 2021. The cumulative net loss in the PRC and U.S. can be carried forward for five years, to offset future net profits for income tax purposes. The cumulative net loss in Hong Kong can be carried forward without an expiration date.

Income (loss) before income taxes from PRC and non-PRC sources for the nine months ended September 30, 2017 and 2016 are summarized as follows:

	For Nine Months Ended
	September 30,
	(Unaudited)
	2017			2016
Income(loss) before income taxes consists of:
PRC	$	(31,709,013	))	$	13,309,481
Non-PRC		(6,215,314	)		(10,677,423	)
Total	$	(37,924,327	)	$	2,632,058

Net change in the valuation allowance of deferred tax assets are summarized as follows:

Net change of valuation allowance of Deferred tax assets
Balance at December 31,2016		26,820,811
Additions-change to tax expense		2,092,000
Deduction-expired of loss carried forward (4)		1,172,096
Balance at September 30,2017		27,740,715

(4) It’s due to the loss carried forward deduction-expired of Kandi Technologies of 2012.

(b) Tax Holiday Effect

For the nine months ended September 30, 2017, and 2016, the PRC CIT rate was 25%. Certain subsidiaries of the Company are entitled to tax exemptions (tax holidays) for the nine months ended September 30, 2017 and 2016.

The combined effects of income tax expense exemptions and reductions available to the Company for the nine months ended September 30, 2017 and 2016 are as follows:

	For Nine Months Ended
	September 30,
	2017		2016
Tax benefit (holiday) credit	$	55,439	$	229,839
Basic net income per share effect	$	0.000	$	0.005

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Stock Options and Warrants

9 Months Ended

Sep. 30, 2017

Stock Options and Warrants [Abstract]

STOCK OPTIONS AND WARRANTS

NOTE 19 – STOCK OPTIONS AND WARRANTS

(a) Stock Options

On May 29, 2015, the Compensation Committee of the Board of Directors of the Company approved the grant of stock options to purchase 4,900,000 shares of the Company’s common stock, at an exercise price of $9.72 per share, to the Company’s directors, officers and senior employees. The stock options will vest ratably over three years and expire on the tenth anniversary of the grant date. The Company valued the stock options at $39,990,540 and will amortize the stock compensation expense using the straight-line method over the service period from May 29, 2015, through May 29, 2018. The value of the stock options was estimated using the Black Scholes Model with an expected volatility of 90%, an expected life of 10 years, a risk-free interest rate of 2.23% and an expected dividend yield of 0.00%. There were $4,126,008 in stock compensation expenses associated with stock options booked for the nine months ended September 30, 2017.

The following is a summary of the stock option activities of the Company:

Outstanding as of January 1, 2016	4,900,000		$	9.72
Granted	–			–
Exercised	–			–
Cancelled	–			–
Forfeited	(333,333	)		9.72
Outstanding as of January 1, 2017	4,566,667			9.72
Granted	–			–
Exercised	–			–
Cancelled	–			–
Forfeited	(166,667	)		9.72
Outstanding as of September 30, 2017	4,400,000		$	9.72

The fair value of each of the options to purchase 4,900,000 shares of common stock issued to the employees and directors on May 29, 2015 is $8.1613 per share.

(b) Warrants

As of September 30, 2017 and December 31, 2016, all the warrants had been exercised and the derivative liability relating to the warrants issued to the investors and a placement agent was $0.

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Stock Award

9 Months Ended

Sep. 30, 2017

Stock Award [Abstract]

STOCK AWARD

NOTE 20 – STOCK AWARD

In connection with the appointment of Mr. Henry Yu as a member of the Board of Directors (the “Board”), and as compensation, the Board authorized the Company to provide Mr. Henry Yu with 5,000 shares of Company’s restricted common stock every six months, beginning in July 2011.

As compensation for Mr. Jerry Lewin’s service as a member of the Board, the Board authorized the Company to provide Mr. Jerry Lewin with 5,000 shares of Company’s restricted common stock every six months, beginning in August 2011.

As compensation for Ms. Kewa Luo’s service as the Company’s investor relation officer, the Board authorized the Company to provide Ms. Kewa Luo with 5,000 shares of Company’s common stock every six months, beginning in September 2013.

In November 2016, the Company entered into a three-year employment agreement with Mr. Mei Bing, who is now the Company’s Chief Financial Officer. Under the agreement, Mr. Mei Bing is entitled to receive an aggregate of 10,000 shares of common stock each year, vested in four equal quarterly installments of 2,500 shares.

The fair value of stock awards based on service is determined based on the closing price of the common stock on the date the shares are approved by the Board for grant. The compensation costs for awards of common stock are recognized over the requisite service period of three or six months.

On December 30, 2013, the Board approved a proposal (as submitted by the Compensation Committee) of an award (the “Board’s Pre-Approved Award Grant Sub-Plan under the 2008 Plan”) for certain executives and other key employees, comprising a total of 335,000 shares of common stock for each fiscal year, beginning with the 2013 fiscal year, under the Company’s 2008 Omnibus Long-Term Incentive Plan (the “2008 Plan”), if the Company’s “Non-GAAP Net Income” for the current fiscal year increased by 10% comparing to that of the prior year. The specific number of shares of common stock to be issued in respect of such award could proportionally increase or decrease if the actual Non-GAAP Net Income increase is more or less than 10%. “Non-GAAP Net Income” means the Company’s net income for a particular year calculated in accordance with GAAP, excluding option-related expenses, stock award expenses, and the effects caused by the change of fair value of financial derivatives. For example, if Non-GAAP Net Income for the 2014 fiscal year increased by 10% compared to the Non-GAAP Net Income for the 2013 fiscal year, the selected executives and other key employees each would be granted his or her target amount of common stock of the Company. If Non-GAAP Net Income in 2014 is less than Non-GAAP Net Income in 2013, then no common stock would be granted. If Non-GAAP Net Income in 2014 increased compared to Non-GAAP Net Income in 2013 but the increase is less than 10%, then the target amount of the common stock grant would be proportionately decreased. If Non-GAAP Net Income in 2014 increased compared to Non- GAAP Net Income in 2013 but the increase is more than 10%, then the target amount of the common stock grant would be proportionately increased up to 200% of the target amount based on the modification to 2013’s proposal in 2014. Any such increase in the grant would be subject to the total number of shares available under the 2008 Plan, and the Company’s Board and shareholders will need to approve any increase in the number of shares reserved under the 2008 Plan if all the shares originally reserved are granted. On May 20, 2015, the shareholders of the Company approved an increase of 9,000,000 shares under the 2008 Plan at its annual meeting. On September 26, 2016, the Board approved to terminate the previous Board’s Pre-Approved Award Grant Sub-Plan under the 2008 Plan and adopted a new plan to reduce the total number of shares of common stock of the stock award for selected executives and key employees from 335,000 shares of common stock to 250,000 shares of common stock for each fiscal year, with the other terms remaining the same. On February 13, 2017, the Board authorized the Company to grant 246,900 shares of common shares to certain management members as compensation for their past services under the 2008 Plan.

The fair value of each award granted under the 2008 Plan is determined based on the closing price of the Company’s stock on the date of grant of such award. Stock-based compensation expenses are calculated based on grant date fair value and number of awards expected to be earned at the end of each quarter and recognized in the quarter. In subsequent periods, stock-based compensation expenses are adjusted based on grant date fair value and the change of number of awards expected to be earned. Final stock-based compensation expenses for the year are calculated based on grant date fair value and number of awards earned for the year and recognized at the end of year.

For the three months ended September 30, 2017 and 2016, the Company recognized $31,675 and $(3,980,325) of employee stock award expenses for stock compensation and annual incentive award under the 2008 Plan paid to Board members, management and consultants under General and Administrative Expenses, respectively. For the nine months ended September 30, 2017 and 2016, the Company recognized $1,396,350 and $68,775 of employee stock award expenses for stock compensation and annual incentive award under the 2008 Plan paid to Board members, management and consultants under General and Administrative Expenses, respectively.

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Intangible Assets

9 Months Ended

Sep. 30, 2017

Intangible Assets [Abstract]

INTANGIBLE ASSETS

NOTE 21 – INTANGIBLE ASSETS

The following table provides the gross carrying value and accumulated amortization for each major class of our intangible assets, other than goodwill:

		September 30,			December 31,
	Remaining useful life	2017			2016
Gross carrying amount:
Trade name	4.25 years	$	492,235		$	492,235
Customer relations	4.25 years		304,086			304,086
			796,321			796,321
Less : Accumulated amortization
Trade name		$	(274,874	)	$	(236,815	)
Customer relations			(169,807	)		(146,295	)
			(444,681	)		(383,110	)
Intangible assets, net		$	351,640		$	413,211

The aggregate amortization expenses for those intangible assets that continue to be amortized is reflected in amortization of intangible assets were $20,524 and $20,524 for the three months ended September 30, 2017 and 2016, $61,571 and $61,571 for the nine months ended September 30, 2017 and 2016, respectively.

Amortization expenses for the next five years and thereafter are as follows:

2017 (Three months)	$	20,524
2018		82,095
2019		82,095
2020		82,095
2021		82,095
Thereafter		2,736
Total	$	351,640

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Summarized Information of Equity Method Investment in the JV Company

9 Months Ended

Sep. 30, 2017

Summarized Information Of Equity Method Investments [Abstract]

SUMMARIZED INFORMATION OF EQUITY METHOD INVESTMENT IN THE JV COMPANY

NOTE 22 – SUMMARIZED INFORMATION OF EQUITY METHOD INVESTMENT IN THE JV COMPANY

The Company’s consolidated net income includes the Company’s proportionate share of the net income or loss of the Company’s equity method investees. When the Company records its proportionate share of net income in such investees, it increases equity income (loss) – net in the Company’s consolidated statements of income and the Company’s carrying value in that investment. Conversely, when the Company records its proportionate share of a net loss in such investees, it decreases equity income (loss) – net in the Company’s consolidated statements of income and the Company’s carrying value in that investment. All intra-entity profits and losses with the Company’s equity method investees have been eliminated.

In March 2013, pursuant to a joint venture agreement (the “JV Agreement”) entered into between Kandi Vehicles and Shanghai Maple Guorun Automobile Co., Ltd. (“Shanghai Guorun”), a 99%-owned subsidiary of Geely Automobile Holdings Ltd. (“Geely”), the parties established Zhejiang Kandi Electric Vehicles Co., Ltd., and the company name was changed to Kandi Electric Vehicles Group Co., Ltd. in March 2014 (the “JV Company”) to develop, manufacture and sell electric vehicles (“EVs”) and related auto parts. Each of Kandi Vehicles and Shanghai Guorun has a 50% ownership interest in the JV Company. In the fourth quarter of 2013, Kandi Vehicles entered into an ownership transfer agreement with the JV Company pursuant to which Kandi Vehicles transferred 100% of its ownership in Kandi Changxing to the JV Company. As a result, the Company now has a 50% indirect economic interest in Kandi Changxing through its 50% ownership interest in the JV Company. In order to improve the JV Company’s development, Zhejiang Geely Holding Group (“Geely Holding”), the parent company of Geely, became a shareholder of the JV Company on October 26, 2016, by purchasing the 50% in the JV Company held by Shanghai Guorun at a purchase price exceeding the cash amount of the aggregate of the original investment and past shared profits. On May 19, 2017, due to business development, Geely Holding entrusted Mr. Hu Xiaoming, Chairman of the Board of the JV Company, to hold 19% equity of the JV Company from its 50% holding of the JV Company on behalf of Geely Holding as a nominal holder. On the same day, Geely Holding transferred its remaining 31% equity in the JV Company to Geely Group (Ningbo) Ltd., a company wholly owned by Li Shufu, Chairman of the Board of Geely Holding. On May 25, 2017, Mr. Hu pledged his 19% equity in the JV Company held on behalf of Geely Holding to Geely Holding. On June 30, 2017, due to the JV Company’s operational needs, Kandi Vehicle pledged its 50% equity in the JV Company to Geely Holding as counter-guarantee, because Geely Holding provides a 100% guarantee on the JV Company’s borrowings. Despite the pledge, the guarantee and the counter-guarantee arrangements stated above, there is no change in control with respect to the 50% ownership held by each shareholder of the JV Company. In order to streamline the equity structure, on October 24, 2017, Mr. Hu transferred the 19% equity of the JV Company to Geely Group (Ningbo) Ltd. Now, Kandi Vehicles and Geely Group (Ningbo) Ltd. each own 50% equity in the JV Company.

In November 2013, Kandi Electric Vehicles Jinhua Co., Ltd. (“Kandi Jinhua”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jinhua, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua.

In November 2013, Zhejiang JiHeKang Electric Vehicle Sales Co., Ltd. (“JiHeKang”) was formed by the JV Company. The JV Company has a 100% ownership interest in JiHeKang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang.

In December 2013, the JV Company entered into an ownership transfer agreement with Shanghai Guorun pursuant to which the JV Company acquired 100% of the ownership of Kandi Electric Vehicles (Shanghai) Co., Ltd. (“Kandi Shanghai”). As a result, Kandi Shanghai is now a wholly-owned subsidiary of the JV Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Shanghai.

In January 2014, Kandi Electric Vehicles Jiangsu Co., Ltd. (“Kandi Jiangsu”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jiangsu, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jiangsu.

In July 2013, Zhejiang ZuoZhongYou Electric Vehicle Service Co., Ltd. (the “Service Company”) was formed. The JV Company had a 19% ownership interest in the Service Company. In March 2014, the JV Company changed its name to Kandi Electric Vehicles Group Co., Ltd., and in August 2015, the JV Company transferred its shares of the Service Company to Shanghai Guorun and Kandi Vehicles for 9.5% respectively. As the result, the JV Company no longer has any ownership in the Service Company.

In November 2015, Hangzhou Puma Investment Management Co., Ltd. (“Puma Investment”) was formed by the JV Company. The JV Company has a 50% ownership interest in Puma Investment and the Company, indirectly through its 50% ownership interest in the JV Company, has a 25% economic interest in Puma Investment.

In November 2015, Hangzhou JiHeKang Electric Vehicle Service Co., Ltd. (“JiHeKang Service Company”) was formed by the JV Company. The JV Company has a 100% ownership interest in JiHeKang Service Company and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang Service Company.

In August 2016, Jiangsu JiDian Electric Vehicle Sales Co., Ltd. (“Jiangsu JiDian”) was formed by JiHeKang. Jiangsu JiDian is engaged in the car sales business. Because JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Jiangsu JiDian, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Jiangsu JiDian.

In October 2016, JiHeKang acquired Tianjin BoHaiWan Vehicle Sales Co., Ltd. (“Tianjin BoHaiWan”). Tianjin BoHaiWan is engaged in the car sales business. Because JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Tianjin BoHaiWan, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Tianjin BoHaiWan.

In November 2016, Changxing Kandi Vehicle Maintenance Co., Ltd. (“Changxing Maintenance”) was formed by Kandi Changxing. Changxing Maintenance is engaged in the car repair and maintenance business. Because Kandi Changxing is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Changxing Maintenance, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Changxing Maintenance.

In March 2017, Hangzhou Liuchuang Electric Vehicle Technology Co., Ltd. (“Liuchuang”) was formed by Kandi Jiangsu. Since Kandi Jiangsu is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Liuchuang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Liuchuang.

In April 2017, in order to promote business development, Kandi Jinhua, JiHeKang, and JiHeKang Service Company were reorganized to become subsidiaries of Kandi Jiangsu. Because the JV Company has a 100% ownership interest in Kandi Jiangsu, it has 100% ownership interests in Kandi Jinhua, JiHeKang, and JiHeKang Service Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua, JiHeKang, and JiHeKang Service Company.

As of September 30, 2017, the JV Company consolidated its interests in the following entities on its financial statements: (1) its 100% interest in Kandi Changxing; (2) its 100% interest in Kandi Jinhua; (3) its 100% interest in JiHeKang; (4) its 100% interest in Kandi Shanghai; (5) its 100% interest in Kandi Jiangsu; (6) its 100% interest in JiHeKang Service Company; (7) its 100% interest in Jiangsu JiDian; (8) its 100% interest in Tianjin BoHaiWan; (9) its 100% interest in Changxing Maintenance; and (10) its 100% interest in Liuchuang. The Company accounted for its investments in the JV Company under the equity method of accounting because the Company has a 50% ownership interest in the JV Company. As a result, the Company’s consolidated net income for the three months and nine months ended September 30, 2017, and 2016, included equity income from the JV Company during such periods.

The combined results of operations and financial position of the JV Company are summarized below:

	Three Months Ended
	September 30,
Condensed income statement information:	2017			2016
Net revenues	$	86,181,120		$	11,688,178
Gross income		5,279,283			5,937,134
% of net revenues		6.1	%		50.8	%
Net loss		(480,622	)		(426,797	)
Company’s share in net (loss) income of JV based on 50% ownership	$	(240,311	)	$	(213,399	)

	Nine Months Ended
	September 30,
Condensed income statement information:	2017			2016
Net revenues	$	106,109,272		$	122,959,660
Gross income		3,454,547			19,538,305
% of net revenues		3.3	%		15.9	%
Net (loss) income		(25,665,734	)		131,323
Company’s share in net (loss) income of JV based on 50% ownership	$	(12,832,867	)	$	65,662

	September 30,		December 31,
Condensed balance sheet information:	2017		2016
Current assets	$	578,690,686	$	514,958,008
Noncurrent assets		196,056,068		177,563,801
Total assets	$	774,746,754	$	692,521,809
Current liabilities		597,354,181		505,356,626
Noncurrent liabilities		41,481,303		31,817,560
Equity		135,911,270		155,347,623
Total liabilities and equity	$	774,746,754	$	692,521,809

For the nine months ended September 30, 2017, and 2016, the JV Company’s revenues were derived primarily from the sales of EV products and EV parts in China. Because the Company has a 50% ownership interest in the JV Company and accounted for its investments in the JV Company under the equity method of accounting, the Company did not consolidate the JV Company’s financial results, but rather included equity income from the JV Company during such periods.

Note: The following table illustrates the captions used in the Company’s Income Statements for its equity based investment in the JV Company.

The Company’s equity method investments in the JV Company as of September 30, 2017 and December 31, 2016 are as follows:

	September 30,			December 31,
	2017			2016
Investment in JV Company, beginning of the period,	$	77,453,014		$	90,337,899
Share of loss
Company’s share in net loss of JV Company based on  50% ownership		(12,832,867	)		(7,077,789	)
Intercompany transaction elimination		(848,200	)		(230,787	)
Year 2016 unrealized profit realized		225,281			1,066
Subtotal		(13,455,786	)		(7,307,510	)
Exchange difference		3,090,575			(5,577,375	)
Investment in JV Company, end of the period	$	67,087,803		$	77,453,014

Sales to the Company’s customers, the JV Company and its subsidiaries, for the three months ended September 30, 2017, were $21,749,790 or 77% of the Company’s total revenue, an increase of 1740.6% from the same quarter last year. Sales to the Company’s customers, the JV Company and its subsidiaries, for the nine months ended September 30, 2017, were $49,233,156 or 82% of the Company’s total revenue, a decrease of 20.8% from the same period last year. Sales to the JV Company and its subsidiaries were primarily battery packs, body parts, EV drive motors, EV controllers, air conditioning units and other auto parts.

The breakdown of sales to the JV Company and its subsidiaries is as follows:

	Three Months Ended
	September 30,
	2017		2016
JV Company	$	21,513,825	$	5,915,518
Kandi Changxing		601		(1,570,084	)
Kandi Shanghai		334		(3,300,932	)
Kandi Jinhua		-		(313	)
Kandi Jiangsu		235,030		137,480
Total sales to JV	$	21,749,790	$	1,181,669

	Nine Months Ended
	September 30,
	2017		2016
JV Company	$	48,541,220	$	60,920,788
Kandi Changxing		61,410		247,848
Kandi Shanghai		34,176		623,499
Kandi Jinhua		-		46,753
Kandi Jiangsu		596,350		286,570
Total sales to JV	$	49,233,156	$	62,125,458

As of September 30, 2017 and December 31, 2016, the current and noncurrent amount due from the JV Company and its subsidiaries, was $153,640,932 and $136,536,725, respectively, of which the majority were balances with the JV Company, Kandi Jinhua, Kandi Changxing, Kandi Jiangsu and Kandi Shanghai. The breakdown is as below:

	September 30,		December 31,
	2017		2016
Kandi Shanghai	$	836,805	$	281,657
Kandi Changxing		17,136,881		16,359,721
Kandi Jinhua		5,265,527		5,050,525
Kandi Jiangsu		1,023,686		352,587
JV Company		129,378,033		114,492,235
Consolidated JV	$	153,640,932	$	136,536,725

The current and noncurrent amounts due from the JV Company include seven short-term loans in the total amount of $44,336,900 that Kandi Vehicles lent to the JV Company. Each such loan carries an annual interest rate of 4.35%.

As of September 30, 2017 and December 31, 2016, the current and noncurrent amount due to the JV Company and its subsidiaries, was $1,100,847 and $566, respectively, of which the majority were balances with Kandi Changxing and Kandi Shanghai. The breakdown is as below:

	September 30,		December 31,
	2017		2016
Kandi Shanghai	$	729,044	$	-
Kandi Changxing		235,724		566
Kandi Jinhua		136,079		-
Consolidated JV	$	1,100,847	$	566

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 23 – COMMITMENTS AND CONTINGENCIES

Guarantees and pledged collateral for bank loans to other parties

As of September 30, 2017, and December 31, 2016, the Company provided guarantees for the following parties:

(1) Guarantees for bank loans

	September 30,		December 31,
Guarantee provided to	2017		2016
Zhejiang Shuguang Industrial Co., Ltd.		-		4,175,155
Nanlong Group Co., Ltd.		-		2,879,417
Kandi Electric Vehicles Group Co., Ltd.		37,573,644		46,790,530
Total	$	37,573,644	$	53,845,102

On March 15, 2013, the Company entered into a guarantee contract to serve as the guarantor of Nanlong Group Co., Ltd. (“NGCL”) for NGCL’s loan in the amount of $3,005,892 from Shanghai Pudong Development Bank Jinhua Branch, with a related loan period of March 15, 2013, to March 15, 2016. NGCL is not related to the Company. Under this guarantee contract, the Company agreed to perform all the obligations of NGCL under the loan contract if NGCL fails to perform its obligations as set forth therein. Because NGCL defaulted on the loan principal and interest, Shanghai Pudong Development Bank brought a lawsuit to the People’s Court of Zhejiang Province in Yongkang City against NGCL, the Company and ten other guarantors in April, 2017. A judicial mediation took place at the court in Yongkang City on May 27, 2017 and the plaintiff agreed NGCL would repay the loan principal and interest plus legal expenses in installments, and the Company understands that Shanghai Pudong Development Bank has reached a settlement with NGCL. As of September 30, 2017, according to the enterprise credit report issued by the Credit Center of People’s Bank of China (PBOC) or the central bank of the People’s Republic of China, the Company’s guarantee for NGCL’s loan has been removed. The Company expects the likelihood of incurring losses in connection with this matter to be remote.

On September 29, 2015, the Company entered into a guarantee contract to serve as the guarantor of Zhejiang Shuguang Industrial Co., Ltd. (“ZSICL”) for a bank loan in the amount of $4,358,543 from Ping An Bank, with a related loan period of September 29, 2015, to September 28, 2016. ZSICL is not related to the Company. Under this guarantee contract, the Company agreed to perform all the obligations of ZSICL under the loan contract if ZSICL fails to perform its obligations as set forth therein. Because ZSICL defaulted on the loan interest, Ping An Bank brought a lawsuit against ZSICL, the Company and three other parties, and a court ruling was issued in December 2016 ordering ZSICL to repay the principal and interest of the bank loan to Ping An Bank, with the Company and three other parties assuming joint liability for the default. ZSICL and the Company appealed the ruling results on February 6, 2017, and the court rejected the appeal on March 29, 2017. On July 31, 2017, the Company and Ping An Bank reached an agreement to settle this case. According to the agreement, the Company will pay Ping An Bank RMB 20 million or approximately $3.0 million in four installments before October 31, 2017 to release the Company from the guarantor liability for this default. As of September 30, 2017, the Company has made three out of four installments or RMB 16 million to Ping An Bank and has an accrued remaining liability of RMB 4 million or approximately $0.6 million for the estimated contingent loss in connection with this matter. According to the Company’s agreement with ZSICL, ZSICL agreed to reimburse all the Company’s losses due to ZSICL’s default on the loan principal and interests. As of the date of this report, the four installments in the total of RMB 20 million or approximately $3.0 million were paid to Ping An Bank, and thus, the Company has been released from the guarantor liability for this default. According to the agreement, ZSICL will reimburse the Company for the same amount. The Company expects the likelihood of incurring losses in connection with this matter to be low.

On December 14, 2015, the Company entered into a guarantee contract to serve as the guarantor for the JV Company for bank loans in the aggregate amount of $37,573,644 from China Import & Export Bank with a related loan period of December 14, 2015, to December 13, 2016, which was extended to October 15, 2017. Under this guarantee contract, the Company agreed to perform all the obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein. The loan was paid off on October 15, 2017.

On July 20, 2016, the Company entered into a guarantee contract to serve as the guarantor for the JV Company for bank loans in the aggregate amount of $11,272,093 from Bank of China, with a related loan period of July 20, 2016 to July 19, 2017. Under this guarantee contract, the Company agreed to perform all the obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein. The loan was paid off on July 21, 2017.

All guarantee periods are two years from the date of expiration of the debt performance under the principal loan contracts.

(2) Pledged collateral for bank loans to other parties.

As of September 30, 2017 and December 31, 2016, none of the Company’s land use rights or plants and equipment were pledged as collateral securing bank loans to other parties.

Contingencies

As of September 30, 2017 and December 31, 2016, our loss contingencies are summarized as follow:

	September 30,		December 31,
Loss contingencies – litigation	2017		2016
Zhejiang Shuguang Industrial Co., Ltd.	$	601,178	$	-
Total	$	601,178	$	-

Litigation

Beginning in March 2017, putative shareholder class actions were filed against Kandi Technologies Group, Inc. and certain of its current and former directors and officers in the United States District Court for the Central District of California and the United States District Court for the Southern District of New York. The complaints generally allege violations of the federal securities laws based Kandi’s disclosure in March 2017 that its financial statements for the years 2014, 2015 and the first three quarters of 2016 would need to be restated, and seek damages on behalf of putative classes of shareholders who purchased or acquired Kandi’s securities prior to March 13, 2017. Motions for the appointment of lead plaintiff and lead counsel are pending.

Beginning in May 2017, purported shareholder derivative actions based on the same underlying events described above were filed against certain current and former directors of Kandi in the United States District Court for the Southern District of New York. A motion for the appointment of lead plaintiff and lead counsel is pending.

In October 2017, a purported shareholder filed a books and records action against Kandi in Delaware state court seeking the production of certain documents generally relating to the same underlying events described above as well as attorney’s fees.

The Company believes that the claims referenced above are without merit and intend to defend against these lawsuits vigorously. The Company is unable to estimate the possible loss, if any, associated with these lawsuits. 

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Segment Reporting

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE 24 – SEGMENT REPORTING

The Company has one operating segment. The Company’s revenue and long-lived assets are primarily derived from and located in China. The Company only has manufacturing operations in China.

The following table sets forth revenues by geographic area:

	Three Months Ended September 30,
	2017					2016
	Sales Revenue		Percentage			Sales Revenue		Percentage
Overseas	$	1,218,901		4	%	$	1,520,367		24	%
China		27,134,998		96	%		4,846,013		76	%
Total	$	28,353,899		100	%	$	6,366,380		100	%

	Nine Months Ended September 30,
	2017					2016
	Sales Revenue		Percentage			Sales Revenue		Percentage
Overseas	$	3,621,439		6	%		3,134,750		3	%
China		56,332,312		94	%		109,106,891		97	%
Total	$	59,953,751		100	%		112,241,641		100	%

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Related Party Transactions

9 Months Ended

Sep. 30, 2017

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 25 – Related Party Transactions

The Board must approve all related party transactions. All material related party transactions will be made or entered into on terms that are no less favorable to the Company than can be obtained from unaffiliated third parties.

The following table lists sales to related parties (other than the JV Company and its subsidiaries) for the three months ended September 30, 2017 and 2016:

	Three Months ended
	September 30,
	2017		2016
Service Company		-		(26,490	)
Total	$	-		(26,490	)

The following table lists sales to related parties (other than the JV Company and its subsidiaries) for the nine months ended September 30, 2017 and 2016:

	Nine Months ended
	September 30,
	2017		2016
Service Company		-		3,951,078
Total	$	-		3,951,078

The details for amounts due from related parties (other than the JV Company and its subsidiaries) as of September 30, 2017 and December 31, 2016 were as below:

	September 30,		December 31,
	2017		2016
Service Company		6,437,261		10,484,816
Total due from related party	$	6,437,261		10,484,816

The Company has a 9.5% ownership interest in the Service Company and Mr.Hu, Chairman and CEO of the Company, has a 13% ownership interest in the Service Company. The main transactions between the Company and the Service Company are purchases by the Service Company of batteries and EV parts.

For transactions with the JV Company and its subsidiaries, please refer to Note 22.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

Summary of Significant Accounting Policies [Abstract]

Economic and Political Risks

(a) Economic and Political Risks

The Company’s operations are conducted in China. As a result, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in China, and by the general state of the Chinese economy. In addition, the Company’s earnings are subject to movements in foreign currency exchange rates when transactions are denominated in Renminbi (“RMB”), which is the Company’s functional currency. Accordingly, the Company’s operating results are affected by changes in the exchange rate between the U.S. dollar and the RMB.

The Company’s operations in China are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s performance may be adversely affected by changes in the political and social conditions in China, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

Fair Value of Financial Instruments

(b) Fair Value of Financial Instruments

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

These tiers include:

Level 1—defined as observable inputs such as quoted prices in active markets;

Level 2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3—defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company’s financial instruments primarily consist of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, other receivables, accounts payable, other payables and accrued liabilities, short-term bank loans, notes payable, and warrants.

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, other receivables, accounts payable, other payables and accrued liabilities, and notes payable approximate fair value because of the short-term nature of these items. The estimated fair values of short-term bank loans were not materially different from their carrying value as presented due to the brief maturities and because the interest rates on these borrowings approximate those that would have been available for loans of similar remaining maturities and risk profiles. As the carrying amounts are reasonable estimates of fair value, these financial instruments are classified within Level 1 of the fair value hierarchy. The Company identified notes payable as Level 2 instruments due to the fact that the inputs to valuation are primarily based upon readily observable pricing information. The balance of notes payable, which was measured and disclosed at fair value, was $26,212,569 and $14,797,325 at September 30, 2017 and December 31, 2016, respectively.

Warrants, which are accounted for as liabilities, are treated as derivative instruments, and are measured at each reporting date for their fair value using Level 3 inputs. The fair value of warrants was $0 at September 30, 2017 and December 31, 2016, respectively. Also see Note 6(t).

Cash and Cash Equivalents

(c) Cash and Cash Equivalents

The Company considers highly-liquid investments purchased with original maturities of three months or less to be cash equivalents.

Restricted cash, as of September 30, 2017, and December 31, 2016, includes time deposits on account for earning interest income. As of September 30, 2017, and December 31, 2016, the Company’s restricted cash was $20,735,921 and $12,957,377, which includes a one-year Certificate of Time Deposit (CD) of $6,011,783 with Hangzhou Bank Jinhua Branch, which matured on October 9, 2017.

Inventories

(d) Inventories

Inventories are stated at the lower of cost or net realizable value (market value). The cost of raw materials is determined on the basis of weighted average. The cost of finished goods is determined on the basis of weighted average and comprises direct materials, direct labor and an appropriate proportion of overhead.

Net realizable value is based on estimated selling prices less selling expenses and any further costs expected to be incurred for completion. Adjustments to reduce the cost of inventory to net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances.

Accounts Receivable and Due from the JV Company and Related Parties

(e) Accounts Receivable and Due from the JV Company and Related Parties

Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts is recorded for periods in which the Company determines a loss is probable, based on its assessment of specific factors, such as troubled collections, historical experience, accounts aging, ongoing business relations and other factors. Accounts are written off after exhaustive collection efforts. If accounts receivable are to be provided for, or written off, they are recognized in the consolidated statement of operations within the operating expenses line item.

As of September 30, 2017, and December 31, 2016, credit terms with the Company’s customers were typically 210 to 720 days after delivery. The Company extended credit terms with certain customers, mainly the JV Company whose outstanding balance has already exceeded the originally granted credit terms to a much longer period because of delayed subsidy payments for EVs sold by the JV Company from the Chinese government. Because of the industry-wide subsidy review, the Chinese government temporarily delayed issuance of subsidy payments for the EVs sold in 2015 and 2016, which negatively impacted the JV Company’s cash flow position and caused its delay in repaying the Company. By extending the credit term to maximum 720 days, it allows the JV Company sufficient time to repay the Company when the government resumes the subsidy payments. According to the government’s subsidy policies, the EVs sold in 2015 and 2016 by the JV Company are eligible for receiving subsidies and the Chinese government has a good record of paying subsidies. Therefore, the Company believes the issues associated with the outstanding receivables due from the JV Company is timing rather than collectability. Since the collectability is reasonably assured, as of September 30, 2017, and December 31, 2016, the Company had no allowance for doubtful accounts, as per the Company management’s judgment based on their best knowledge. The Company conducts quarterly assessments of the state of the Company’s outstanding receivables and reserves any allowance for doubtful accounts if it becomes necessary. As of September 30, 2017, based on the Company management’s collection experience, approximately $15.9 million of amount due from the JV Company in the current assets was reclassified to amount due from the JV Company in the long-term assets due to the reason mentioned above.

Notes Receivable

(f) Notes Receivable

Notes receivable represent short-term loans to third parties with maximum terms of six months. Interest income is recognized according to each agreement between a borrower and the Company on an accrual basis. For notes receivable with banks, the interest rates are determined by banks. For notes receivable with other parties, the interest rates are based on agreements between the parties. If notes receivable are paid back, that transaction will be recognized in the relevant year. If notes receivable are not paid back, or are written off, that transaction will be recognized in the relevant year if default is probable, reasonably assured, and the loss can be reasonably estimated. The Company will recognize income if the written-off loan is recovered at a future date. In case of any foreclosure proceedings or legal actions, the Company provides an accrual for the related foreclosure and litigation expenses. The Company also receives notes receivable from the JV Company and other parties to settle accounts receivable. If the Company decides to discount notes receivable for the purpose of receiving immediate cash, the current discount rate is approximately in the range of 4.80% to 5.00% annually. As of September 30, 2017 and December 31, 2016, the Company had notes receivable from JV Company and other related parties of $1,542,147 and $400,239, respectively, which notes receivable typically mature within six months.

Advances to Suppliers

(g) Advances to Suppliers

Advances to suppliers represent cash paid in advance to suppliers, and include advances to raw material suppliers, mold manufacturers, and equipment suppliers.

As of September 30, 2017, the Company had made a total advance payments of RMB744 million (approximately $110 million) to Nanjing Shangtong Auto Technologies Co., Ltd. (“Nanjing Shangtong”) as an advance to purchase a production line and develop a new EV model for Kandi Hainan. Nanjing Shangtong is a total solution contractor for Kandi Hainan and provides all the equipment and EV product design and research services used by Kandi Hainan. After transferred to construction in progress and expensed for R&D purposes, the Company had $14,469,823 left in Advance to Suppliers in current assets and $16,212,788 left in Advance to Suppliers in long-term assets related to the purchases from Nanjing Shangtong as of September 30, 2017.

Advances for raw material purchases are typically settled within two months of the Company’s receipt of the raw materials. Prepayment is offset against the purchase price after the equipment or materials are delivered.

Property, Plants and Equipment

(h) Property, Plants and Equipment

Property, plants and equipment are carried at cost less accumulated depreciation. Depreciation is calculated over the asset’s estimated useful life using the straight-line method. Leasehold improvements are amortized over the life of the asset or the term of the lease, whichever is shorter. Estimated useful lives are as follows:

Buildings	30 years
Machinery and equipment	10 years
Office equipment	5 years
Motor vehicles	5 years
Molds	5 years

The costs and related accumulated depreciation of assets sold or otherwise retired are eliminated from the Company’s accounts and any gain or loss is included in the statements of income. The cost of maintenance and repairs is charged to expenses as incurred, whereas significant renewals and betterments are capitalized.

Construction in Progress

(i) Construction in Progress

Construction in progress (“CIP”) represents the direct costs of construction and the acquisition costs of buildings or machinery. Capitalization of these costs ceases, and construction in progress is transferred to plants and equipment, when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided for until the assets are completed and ready for their intended use. $1,601,472 of interest expenses have been capitalized for CIP as of September 30, 2017.

Land Use Rights

(j) Land Use Rights

According to Chinese law, land in China is owned by the government and land ownership rights cannot be sold to an individual or to a private company. However, the Chinese government grants the user a “land use right” to use the land. The land use rights granted to the Company are amortized using the straight-line method over a term of fifty years.

Accounting for the Impairment of Long-Lived Assets

(k) Accounting for the Impairment of Long-Lived Assets

The Company periodically evaluates the carrying value of long-lived assets to be held and used, including intangible assets subject to amortization, when events and circumstances warrant such a review, pursuant to the guidelines established in Statement of Financial Accounting Standards (“SFAS”) No. 144 (now known as “ASC 360”). The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for disposal costs.

The Company recognized no impairment loss during the reporting period.

Revenue Recognition

(l) Revenue Recognition

Revenue represents the invoiced value of goods sold. Revenue is recognized when the Company ships the goods to its customers and all of the following criteria are met:

● Persuasive evidence of an arrangement exists;

● Delivery has occurred or services have been rendered;

● The seller’s price to the buyer is fixed or determinable; and

● Collectability is reasonably assured.

The Company recognized revenue when the products and the risks they carry are transferred to the other party.

Research and Development

(m) Research and Development

Expenditures relating to the development of new products and processes, including improvements to existing products, are expensed as incurred. Research and development expenses were $657,851 and $522,806 for the three months ended September 30, 2017 and 2016, respectively. Research and development expenses were $26,569,624 and $1,222,967 for the nine months ended September 30, 2017 and 2016, respectively.

Government Grants

(n) Government Grants

Grants and subsidies received from the Chinese government are recognized when the proceeds are received or collectible and related milestones have been reached and all contingencies have been resolved.

For the three months ended September 30, 2017 and 2016, respectively, the Company’s subsidiaries recognized $474,950 and $594,323 in grants from the Chinese government. For the nine months ended September 30, 2017 and 2016, respectively, the Company’s subsidiaries recognized $5,804,561 and $2,292,180 in grants from the Chinese government.

Income Taxes

(o) Income Taxes

The Company accounts for income tax using an asset and liability approach, which allows for the recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The accounting for deferred tax calculation represents the Company management’s best estimate of the most likely future tax consequences of events that have been recognized in our financial statements or tax returns and related future anticipation. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future realization will be uncertain.

Foreign Currency Translation

(p) Foreign Currency Translation

The accompanying consolidated financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). Capital accounts of the consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred.

Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the reporting period, which rates are obtained from the website: http:// www.ofx.com

	September 30,		December 31,		September 30,
	2017		2016		2016
Period end RMB : USD exchange rate		6.6536		6.94585		6.67106
Average RMB : USD exchange rate		6.807608		6.64520		6.58121

Comprehensive Income

(q) Comprehensive Income

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. Comprehensive income includes net income and the foreign currency translation changes.

Segments

(r) Segments

In accordance with ASC 280-10, Segment Reporting, the Company’s chief operating decision makers rely upon the consolidated results of operations when making decisions about allocating resources and assessing the performance of the Company. As a result of the assessment made by the Company’s chief operating decision makers, the Company has only one operating segment. The Company does not distinguish between markets or segments for the purpose of internal reporting.

Stock Option Expenses

(s) Stock Option Expenses

The Company’s stock option expenses are recorded in accordance with ASC 718 and ASC 505.

The fair value of stock options is estimated using the Black-Scholes-Merton model. The Company’s expected volatility assumption is based on the historical volatility of the Company’s common stock. The expected life assumption is primarily based on the expiration date of the option. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The recognition of stock option expenses is based on awards expected to vest. ASC standards require forfeitures to be estimated at the time of grant and revised in subsequent periods, if necessary, if actual forfeitures differ from those estimates.

The stock-based option expenses for the three months ended September 30, 2017 and September 30, 2016, were $997,496 and $2,777,121, respectively. The stock-based option expenses for the nine months ended September 30, 2017 and September 30, 2016, were $4,126,008 and $13,885,604, respectively. See Note 19. There were no forfeitures estimated during the reporting period.

Goodwill

(t) Goodwill

The Company allocates goodwill from business combinations to reporting units based on the expectation that the reporting unit is to benefit from the business combination. The Company evaluates its reporting units on an annual basis and, if necessary, reassigns goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

Application of the goodwill impairment test requires judgments, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of each reporting unit. The Company first assesses qualitative factors to determine whether it is more likely than not that goodwill is impaired. If the more likely than not threshold is met, the Company performs a quantitative impairment test.

As of September 30, 2017 and September 30, 2016, the Company determined that its goodwill was not impaired.

Intangible Assets

(u) Intangible Assets

Intangible assets consist of trade names and customer relations associated with the purchase price from the allocation of Yongkang Scrou. Such assets are being amortized over their estimated useful lives of 9.7 years. Intangible assets are amortized as of September 30, 2017. The amortization expenses for intangible assets were $20,524 and $20,524 for the three months ended September 30, 2017 and September 30, 2016, respectively. The amortization expenses for intangible assets were $61,571 and $61,571 for the nine months ended September 30, 2017 and September 30, 2016, respectively.

Accounting for Sale of Common Stock and Warrants

(v) Accounting for Sale of Common Stock and Warrants

Gross proceeds are first allocated according to the initial fair value of the freestanding derivative instruments (i.e. the warrants issued to the Company’s investors in its previous offerings, or the “Investor Warrants”). The remaining proceeds are allocated to common stock. The related issuance expenses, including the placement agent cash fees, legal fees, the initial fair value of the warrants issued to the placement agent and others were allocated between the common stock and the Investor Warrants based on how the proceeds are allocated to these instruments. Expenses related to the issuance of common stock were charged to paid-in capital. Expenses related to the issuance of derivative instruments were expensed upon issuance.

Consolidation of variable interest entities

(w) Consolidation of variable interest entities

In accordance with accounting standards regarding consolidation of variable interest entities, or VIEs, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The Company has concluded, based on the contractual arrangements, that Kandi New Energy is a VIE and that the Company’s wholly-owned subsidiary, Kandi Vehicles, absorbs a majority of the risk of loss from the activities of this company, thereby enabling the Company, through Kandi Vehicles, to receive a majority of its respective expected residual returns.

Additionally, because Kandi New Energy is under common control with other entities, the consolidated financial statements have been prepared as if the transactions had occurred retroactively as to the beginning of the reporting period of these consolidated financial statements.

Control and common control are defined under the accounting standards as “an individual, enterprise, or immediate family members who hold more than 50 percent of the voting ownership interest of each entity.” Because the owners collectively own 100% of Kandi New Energy, and have agreed to vote their interests in concert since the establishment of each of these three companies as memorialized the Voting Rights Proxy Agreement, the Company believes that the owners collectively have control and common control of Kandi New Energy. Accordingly, the Company believes that Kandi New Energy was constructively held under common control by Kandi Vehicles as of the time the contractual agreements were entered into, establishing Kandi Vehicles as their primary beneficiary. Kandi Vehicles, in turn, is owned by Continental, which is owned by the Company.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2017

Summary of Significant Accounting Policies [Abstract]

Summary of estimated useful lives

Buildings	30 years
Machinery and equipment	10 years
Office equipment	5 years
Motor vehicles	5 years
Molds	5 years

Schedule of average foreign currency exchange rate

	September 30,		December 31,		September 30,
	2017		2016		2016
Period end RMB : USD exchange rate		6.6536		6.94585		6.67106
Average RMB : USD exchange rate		6.807608		6.64520		6.58121

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Concentrations (Tables)

9 Months Ended

Sep. 30, 2017

Customers [Member]

Concentration Risk [Line Items]

Schedule of concentration percentage

	Sales						Trade Receivable
	Three Months			Three Months
	Ended			Ended
	September 30,			September 30,			September 30,			December 31,
Major Customers	2017			2016			2017			2016
Kandi Electric Vehicles Group Co., Ltd. and its subsidiaries		77	%		19	%		69	%		71	%
Jinhua Chaoneng Automobile Sales Co., Ltd.		19	%		56	%		24	%		19	%

	Sales						Trade Receivable
	Nine Months			Nine Months
	Ended			Ended
	September 30,			September 30,			September 30,			December 31,
Major Customers	2017			2016			2017			2016
Kandi Electric Vehicles Group Co., Ltd. and its subsidiaries		82	%		55	%		69	%		71	%
Jinhua Chaoneng Automobile Sales Co. Ltd.		11	%		35	%		24	%		19	%

Suppliers [Member]

Concentration Risk [Line Items]

Schedule of concentration percentage

	Purchases						Accounts Payable
	Three Months			Three Months
	Ended			Ended
	September 30,			September 30,			September 30,			December 31,
Major Suppliers	2017			2016			2017			2016
Dongguan Chuangming Battery Technology Co., Ltd.		37	%		56	%		22	%		22	%
Zhejiang Tianneng Energy Technology Co., Ltd.		13	%		-			13	%		15	%

	Purchases						Accounts Payable
	Nine Months			Nine Months
	Ended			Ended
	September 30,			September 30,			September 30,			December 31,
Major Suppliers	2017			2016			2017			2016
Dongguan Chuangming Battery Technology Co., Ltd.		31	%		48	%		22	%		22	%
Zhejiang Tianneng Energy Technology Co., Ltd.		15	%		19	%		13	%		15	%

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Schedule of earnings per share

	For Three Months Ended
	September 30,
	2017		2016
Net income (loss)	$	1,918,076	$	(565,941	)
Weighted average shares used in basic computation		48,028,467		47,695,290
Dilutive shares		-		-
Weighted average shares used in diluted computation		48,028,467		47,695,290
Earnings per share:
Basic	$	0.04	$	(0.01	)
Diluted	$	0.04	$	(0.01	)

	For Nine Months Ended
	September 30,
	2017			2016
Net (loss) income	$	(33,793,376	)	$	2,315,659
Weighted average shares used in basic computation		47,913,028			47,436,418
Dilutive shares		-			-
Weighted average shares used in diluted computation		47,913,028			47,436,418
Earnings per share:
Basic	$	(0.71	)	$	0.05
Diluted	$	(0.71	)	$	0.05

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Accounts Receivable (Tables)

9 Months Ended

Sep. 30, 2017

Accounts Receivable/Notes Receivable [Abstract]

Schedule of accounts receivable

	September 30,		December 31,
	2017		2016
Accounts receivable	$	41,774,453	$	32,394,613
Less: Provision for doubtful debts		-		-
Accounts receivable, net	$	41,774,453	$	32,394,613

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Inventories (Tables)

9 Months Ended

Sep. 30, 2017

Inventories [Abstract]

Summary of Inventories

	September 30,			December 31,
	2017			2016
Raw material	$	5,612,594		$	2,529,149
Work-in-progress		6,651,788			1,786,087
Finished goods		3,486,361			8,014,671
Total inventories		15,750,743			12,329,907
Less: provision for slowing moving inventories		(574,165	)		(415,797	)
Inventories, net	$	15,176,578		$	11,914,110

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Notes Receivable (Tables)

9 Months Ended

Sep. 30, 2017

Accounts Receivable/Notes Receivable [Abstract]

Schedule of notes receivable

	September 30,		December 31,
	2017		2016
Notes receivable as below:
Bank acceptance notes		1,542,147		400,239
Notes receivable	$	1,542,147	$	400,239

Schedule of details of notes receivable

Index	Amount ($)		Counter party	Relationship	Nature	Manner of settlement
1		1,542,147	Kandi Electric Vehicles Group Co., Ltd.	Joint Venture of the Company	Payments for sales	Not due

Index	Amount ($)		Counter party	Relationship	Nature	Manner of settlement
1		400,239	Kandi Shanghai	Subsidiary of the JV Company	Payments for sales	Not due

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Plants and Equipment (Tables)

9 Months Ended

Sep. 30, 2017

Plants and Equipment [Abstract]

Schedule of plants and equipment

	September 30, 2017			December 31, 2016
At cost:
Buildings	$	13,547,482		$	12,977,465
Machinery and equipment		7,740,522			8,585,666
Office equipment		518,412			475,162
Motor vehicles		374,413			321,207
Moulds		27,693,283			26,463,472
		49,874,112			48,822,972
Less : Accumulated depreciation
Buildings	$	(4,465,344	)	$	(3,948,909	)
Machinery and equipment		(7,035,228	)		(8,107,884	)
Office equipment		(280,296	)		(216,226	)
Motor vehicles		(296,387	)		(274,197	)
Moulds		(24,781,790	)		(21,031,086	)
		(36,859,045	)		(33,578,302	)
Less: provision for impairment for fixed assets		(52,435	)		(50,228	)
Plant and equipment, net	$	12,962,632		$	15,194,442

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Land Use Rights (Tables)

9 Months Ended

Sep. 30, 2017

Land Use Rights [Abstract]

Schedule of land use rights

	September 30, 2017			December 31, 2016
Cost of land use rights	$	14,907,523		$	14,280,282
Less: Accumulated amortization		(2,861,597	)		(2,504,562	)
Land use rights, net	$	12,045,926		$	11,775,720

Schedule of amortization expense

2017(Three Months)	$	120,719
2018		482,874
2019		482,874
2020		482,874
2021		482,874
Thereafter		9,993,712
Total	$	12,045,926

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Construction-in-Progress (Tables)

9 Months Ended

Sep. 30, 2017

Construction-in-Progress [Abstract]

Schedule of contractual obligations under CIP

Project	Total in CIP as of September 30, 2017		Estimate to complete		Total contract amount
Kandi Hainan facility	$	47,676,068	$	36,555,128	$	84,231,196
Total	$	47,676,068	$	36,555,128	$	84,231,196

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Short -Term and Long-Term Bank Loans (Tables)

9 Months Ended

Sep. 30, 2017

Short -Term and Long-Term Bank Loans / Notes payable [Abstract]

Schedule of short-term debt

	September 30,		December 31,
	2017		2016
Loans from China Ever-bright Bank
Interest rate 5.22% per annum, due on April 25, 2018, secured by the assets of Kandi Vehicle, guaranteed by Mr. Hu Xiaoming and his wife, also guaranteed by company’s subsidiaries. Also see Note 13 and Note 14.		10,520,621		11,229,727
Loans from Hangzhou Bank
Interest rate 4.35% per annum, due on October 16, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		7,334,375		7,025,778
Interest rate 4.79% per annum, due on July 4, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		10,851,268		10,394,696
Interest rate 4.35% per annum, paid off on March 23, 2017, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		-		5,614,864
Interest rate 4.35% per annum, due March 26, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		3,607,070		-
Loans from Individual Third Parties
Interest rate 12% per annum		300,589		-
	$	32,613,923		34,265,065

Schedule of long-term debt

	September 30,		December 31,
	2017		2016
Loans from Haikou Rural Credit Cooperative
Interest rate 7% per annum, due on December 12, 2021, guaranteed by Kandi Vehicle and Kandi New Energy.		30,058,915		28,794,172
	$	30,058,915		28,794,172

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Notes Payable (Tables)

9 Months Ended

Sep. 30, 2017

Short -Term and Long-Term Bank Loans / Notes payable [Abstract]

Summary of notes payable

	September 30,		December 31,
	2017		2016
Bank acceptance notes:	$		$
Due March 22, 2017		-		400,239
Due March 29, 2017		-		1,439,709
Due June 21, 2017		-		1,439,709
Due October 6, 2017		174,466
Due October 21, 2017		819,105		-
Due November 2, 2017		6,763,256		-
Due November 4, 2017		901,767		-
Due December 6, 2017		901,767		-
Due December 22, 2017		93,465		-
Due January 4, 2018		4,877,059
Due June 21, 2018		367,717		-
Other Notes Payable:
Due May 6, 2017		-		11,517,668
Due May 6, 2019		11,313,967		-
Total	$	26,212,569	$	14,797,325

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Taxes (Tables)

9 Months Ended

Sep. 30, 2017

Taxes [Abstract]

Summary of income tax expenses

	For Three Months Ended  September 30,
	(Unaudited)
	2017			2016
Current:
Provision for CIT	$	957,129		$	(1,483,866	)
Provision for Federal Income Tax		-			-
Deferred:
Provision for CIT		(180,144	)		2,036,714
Income tax expense	$	776,985		$	552,848

	For Nine Months Ended  September 30,
	(Unaudited)
	2017			2016
Current:
Provision for CIT	$	1,465,152		$	2,925,100
Provision for Federal Income Tax		-			-
Deferred:
Provision for CIT		(5,596,103	)		(2,608,701	)
Income tax (benefit) expense	$	(4,130,951	)	$	316,399

Schedue of income tax expenses differ from ''expected'' tax expense

	For Nine Months Ended  September 30,
	(Unaudited)
	2017			2016
Expected taxation at PRC statutory tax rate	$	(9,481,082	)		658,015
Effect of differing tax rates in different jurisdictions		(553,564	)		(611,065	)
Non-taxable income		-			-
Non-deductible expenses (1)		2,021,055			32,122
Research and development super-deduction		(55,439	)		(128,865	)
Under-accrued EIT for previous years		267,574			(2,727,454	)
Effect of PRC preferential tax rates		1,670,185			(100,974	)
Addition to valuation allowance		2,092,000			3,194,621
Other		(91,680	)		-
Income tax  (benefit) expense	$	(4,130,951	)		316,399

(1) It’s mainly due to share of (loss) in JV Company and its subsidiaries.

Schedule of deferred tax assets and liabilities

	September 30,			December 31,
	2017			2016
Deferred tax assets:
Expense (2)		554,177			72,742
Depreciation		194,257			230,156
Loss carried forward		33,130,243			27,218,934
less: valuation allowance		(27,740,715	)		(26,820,811	)
Total deferred tax assets, net of valuation allowance		6,137,962			701,021
Deferred tax liabilities:
Expense (3)		1,582,944			1,698,303
Total deferred tax liability		1,582,944			1,698,303
Net deferred tax assets (liabilities)	$	4,555,018		$	(997,282	)

(2) It’s provision for impairment inventory, fixed assets and loss contingency-litigation.

(3) It’s due to the difference of tax basis and GAAP basis of other long term assets.

Schedule of income (loss) before income taxes

	For Nine Months Ended
	September 30,
	(Unaudited)
	2017			2016
Income(loss) before income taxes consists of:
PRC	$	(31,709,013	))	$	13,309,481
Non-PRC		(6,215,314	)		(10,677,423	)
Total	$	(37,924,327	)	$	2,632,058

Schedule of valuation allowance of deferred tax assets

Net change of valuation allowance of Deferred tax assets
Balance at December 31,2016		26,820,811
Additions-change to tax expense		2,092,000
Deduction-expired of loss carried forward (4)		1,172,096
Balance at September 30,2017		27,740,715

(4) It’s due to the loss carried forward deduction-expired of Kandi Technologies of 2012.

Schedule of income tax expense exemptions and reductions

	For Nine Months Ended
	September 30,
	2017		2016
Tax benefit (holiday) credit	$	55,439	$	229,839
Basic net income per share effect	$	0.000	$	0.005

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Stock Options and Warrants (Tables)

9 Months Ended

Sep. 30, 2017

Stock Options and Warrants [Abstract]

Summary of stock option activities

Outstanding as of January 1, 2016	4,900,000		$	9.72
Granted	–			–
Exercised	–			–
Cancelled	–			–
Forfeited	(333,333	)		9.72
Outstanding as of January 1, 2017	4,566,667			9.72
Granted	–			–
Exercised	–			–
Cancelled	–			–
Forfeited	(166,667	)		9.72
Outstanding as of September 30, 2017	4,400,000		$	9.72

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Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2017

Intangible Assets [Abstract]

Schedule of gross carrying value and accumulated amortization for each major class of our intangible assets

		September 30,			December 31,
	Remaining useful life	2017			2016
Gross carrying amount:
Trade name	4.25 years	$	492,235		$	492,235
Customer relations	4.25 years		304,086			304,086
			796,321			796,321
Less : Accumulated amortization
Trade name		$	(274,874	)	$	(236,815	)
Customer relations			(169,807	)		(146,295	)
			(444,681	)		(383,110	)
Intangible assets, net		$	351,640		$	413,211

Schedule of amortization expenses

2017 (Three months)	$	20,524
2018		82,095
2019		82,095
2020		82,095
2021		82,095
Thereafter		2,736
Total	$	351,640

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Summarized Information of Equity Method Investment in the JV Company (Tables)

9 Months Ended

Sep. 30, 2017

Summarized Information Of Equity Method Investments [Abstract]

Schedule of condensed income statement information

	Three Months Ended
	September 30,
Condensed income statement information:	2017			2016
Net revenues	$	86,181,120		$	11,688,178
Gross income		5,279,283			5,937,134
% of net revenues		6.1	%		50.8	%
Net loss		(480,622	)		(426,797	)
Company’s share in net (loss) income of JV based on 50% ownership	$	(240,311	)	$	(213,399	)

	Nine Months Ended
	September 30,
Condensed income statement information:	2017			2016
Net revenues	$	106,109,272		$	122,959,660
Gross income		3,454,547			19,538,305
% of net revenues		3.3	%		15.9	%
Net (loss) income		(25,665,734	)		131,323
Company’s share in net (loss) income of JV based on 50% ownership	$	(12,832,867	)	$	65,662

Schedule of condensed balance sheet information

	September 30,		December 31,
Condensed balance sheet information:	2017		2016
Current assets	$	578,690,686	$	514,958,008
Noncurrent assets		196,056,068		177,563,801
Total assets	$	774,746,754	$	692,521,809
Current liabilities		597,354,181		505,356,626
Noncurrent liabilities		41,481,303		31,817,560
Equity		135,911,270		155,347,623
Total liabilities and equity	$	774,746,754	$	692,521,809

Schedule of equity method investments

	September 30,			December 31,
	2017			2016
Investment in JV Company, beginning of the period,	$	77,453,014		$	90,337,899
Share of loss
Company’s share in net loss of JV Company based on  50% ownership		(12,832,867	)		(7,077,789	)
Intercompany transaction elimination		(848,200	)		(230,787	)
Year 2016 unrealized profit realized		225,281			1,066
Subtotal		(13,455,786	)		(7,307,510	)
Exchange difference		3,090,575			(5,577,375	)
Investment in JV Company, end of the period	$	67,087,803		$	77,453,014

Schedule of breakdown of sales

	Three Months Ended
	September 30,
	2017		2016
JV Company	$	21,513,825	$	5,915,518
Kandi Changxing		601		(1,570,084	)
Kandi Shanghai		334		(3,300,932	)
Kandi Jinhua		-		(313	)
Kandi Jiangsu		235,030		137,480
Total sales to JV	$	21,749,790	$	1,181,669

	Nine Months Ended
	September 30,
	2017		2016
JV Company	$	48,541,220	$	60,920,788
Kandi Changxing		61,410		247,848
Kandi Shanghai		34,176		623,499
Kandi Jinhua		-		46,753
Kandi Jiangsu		596,350		286,570
Total sales to JV	$	49,233,156	$	62,125,458

Summary of amount due from the JV company

	September 30,		December 31,
	2017		2016
Kandi Shanghai	$	836,805	$	281,657
Kandi Changxing		17,136,881		16,359,721
Kandi Jinhua		5,265,527		5,050,525
Kandi Jiangsu		1,023,686		352,587
JV Company		129,378,033		114,492,235
Consolidated JV	$	153,640,932	$	136,536,725

Summary of amount due to the JV company

	September 30,		December 31,
	2017		2016
Kandi Shanghai	$	729,044	$	-
Kandi Changxing		235,724		566
Kandi Jinhua		136,079		-
Consolidated JV	$	1,100,847	$	566

XML

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies [Abstract]

Schedule of guarantees for bank loans

	September 30,		December 31,
Guarantee provided to	2017		2016
Zhejiang Shuguang Industrial Co., Ltd.		-		4,175,155
Nanlong Group Co., Ltd.		-		2,879,417
Kandi Electric Vehicles Group Co., Ltd.		37,573,644		46,790,530
Total	$	37,573,644	$	53,845,102

Schedule of loss contingencies

	September 30,		December 31,
Loss contingencies – litigation	2017		2016
Zhejiang Shuguang Industrial Co., Ltd.	$	601,178	$	-
Total	$	601,178	$	-

XML

Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Schedule of revenues by geographic area

	Three Months Ended September 30,
	2017					2016
	Sales Revenue		Percentage			Sales Revenue		Percentage
Overseas	$	1,218,901		4	%	$	1,520,367		24	%
China		27,134,998		96	%		4,846,013		76	%
Total	$	28,353,899		100	%	$	6,366,380		100	%

	Nine Months Ended September 30,
	2017					2016
	Sales Revenue		Percentage			Sales Revenue		Percentage
Overseas	$	3,621,439		6	%		3,134,750		3	%
China		56,332,312		94	%		109,106,891		97	%
Total	$	59,953,751		100	%		112,241,641		100	%

XML

Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2017

Related Party Transactions [Abstract]

Schedule of sales to related parties

	Three Months ended
	September 30,
	2017		2016
Service Company		-		(26,490	)
Total	$	-		(26,490	)

	Nine Months ended
	September 30,
	2017		2016
Service Company		-		3,951,078
Total	$	-		3,951,078

Schedule of due from related parties

	September 30,		December 31,
	2017		2016
Service Company		6,437,261		10,484,816
Total due from related party	$	6,437,261		10,484,816

XML

Organization and Principal Activities (Details)							1 Months Ended				9 Months Ended
	Nov. 30, 2016	Oct. 31, 2016	Aug. 31, 2016	Dec. 31, 2013	Dec. 21, 2012	Aug. 13, 2007	Apr. 30, 2017	Mar. 31, 2017	Nov. 30, 2015	Nov. 30, 2013	Sep. 30, 2017	Oct. 24, 2017	Jun. 30, 2017	May 25, 2017	May 19, 2017	Oct. 26, 2016	Sep. 30, 2016	Jan. 31, 2016	Aug. 31, 2015	Jan. 31, 2014	Jul. 31, 2013	Mar. 31, 2013	Apr. 30, 2012	Jan. 31, 2011
Kandi Technologies [Member]
Organization and Principal Activities (Textual)
Entity Incorporation, Date of Incorporation											Mar. 31, 2004
Change of name of entity					Kandi Technologies changed its name to Kandi Technologies Group, Inc.	Kandi Technologies changed its name from Stone Mountain Resources, Inc. to Kandi Technologies, Corp.
Kandi Vehicles [Member]
Organization and Principal Activities (Textual)
Economic benefits percentage																								100.00%
Voting rights and residual interests, percentage																								100.00%
Ownership interest percentage owned by JV company											50.00%
Ownership interest, percentage																			9.50%
Kandi Vehicles [Member] | Subsequent Event [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company												50.00%
Shanghai Guorun [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage																50.00%			9.50%
Geely [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company											100.00%				31.00%
Geely [Member] | Subsequent Event [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company												50.00%
JV Company [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company													100.00%
Ownership interest, percentage							50.00%				50.00%		50.00%		50.00%		50.00%
Economic interest, percentage															19.00%
Indirect ownership interest percentage in JV company							50.00%
Service Company [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage									50.00%		13.00%										9.50%
Kandi Jinhua [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company							100.00%
Ownership interest, percentage							100.00%			100.00%
Economic interest, percentage							50.00%			50.00%
Indirect ownership interest percentage in JV company										50.00%
JiHeKang Service Company [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage							100.00%		100.00%	100.00%
Economic interest, percentage							50.00%		50.00%	50.00%
Indirect ownership interest percentage in JV company									50.00%	50.00%
Indirect ownership interest percentage in Kandi Jinhua							50.00%
Kandi Jiangsu [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company																				50.00%
Ownership interest, percentage							100.00%													100.00%
Economic interest, percentage																				50.00%
Puma Investment [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage									50.00%
Economic interest, percentage									25.00%
Indirect ownership interest percentage in JV company									50.00%
Hangzhou [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage									50.00%
Kandi Hainan [Member]
Organization and Principal Activities (Textual)
Economic benefits percentage																		100.00%
Voting rights and residual interests, percentage																		100.00%
Ownership interest, percentage																		90.00%
Kandi New Energy [Member]
Organization and Principal Activities (Textual)
Economic benefits percentage																		100.00%
Ownership interest, percentage																		10.00%
Jiangsu JiDian [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company			100.00%
Ownership interest, percentage			100.00%
Economic interest, percentage			50.00%
Indirect ownership interest percentage in JV company			50.00%
Tianjin BoHaiWan [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company		100.00%
Ownership interest, percentage		100.00%
Economic interest, percentage		50.00%
Indirect ownership interest percentage in JV company		50.00%
Changxing Maintenance [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company	100.00%
Ownership interest, percentage	100.00%
Economic interest, percentage	50.00%
Indirect ownership interest percentage in JV company	50.00%
Liuchuang [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company								100.00%
Ownership interest, percentage								100.00%
Economic interest, percentage								50.00%
Indirect ownership interest percentage in JV company								50.00%
Mr.Hu (Member)
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company														19.00%
Mr.Hu (Member) | Subsequent Event [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company												19.00%
Share Exchange Agreement [Member] | Yongkang Scrou [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage																							100.00%
JV Agreement [Member] | Kandi Vehicles [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage																						50.00%
JV Agreement [Member] | Shanghai Guorun [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage																						50.00%
JV Agreement [Member] | Geely [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage																						99.00%
JV Agreement [Member] | JV Company [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage																						50.00%
JV Agreement [Member] | JiHeKang Service Company [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage									100.00%
Ownership Transfer Agreement [Member] | Kandi Changxing [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company				50.00%
Ownership interest, percentage				100.00%
Economic interest, percentage				50.00%
Ownership Transfer Agreement [Member] | Kandi Shanghai [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage				100.00%
Economic interest, percentage				50.00%
Indirect ownership interest percentage in JV company				50.00%

XML

Liquidity (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Sep. 30, 2017
Liquidity (Textual)
Working capital surplus		$ 45,296,072
Commercial bank loans		$ 32,313,334
Minimum [Member]
Liquidity (Textual)
Decrease in working capital surplus	$ 41,051,953
Maximum [Member]
Liquidity (Textual)
Decrease in working capital surplus	$ 86,348,025

XML

Principles of Consolidation (Details)	9 Months Ended
	Sep. 30, 2017
Kandi New Energy [Member]
Principles of Consolidation (Textual)
Ownership interest, percentage	50.00%
Kandi New Energy [Member] | Kandi Hainan [Member]
Principles of Consolidation (Textual)
Ownership interest, percentage	10.00%
Kandi Vehicles [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	100.00%
Economic interest	100% of the economic benefits
Kandi Vehicles [Member] | Kandi Hainan [Member]
Principles of Consolidation (Textual)
Ownership interest, percentage	90.00%
Kandi Vehicles [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Ownership interest, percentage	50.00%
Mr. Hu Xiaoming [Member]
Principles of Consolidation (Textual)
Ownership interest, percentage	50.00%
Kandi Changxing [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Kandi Jinhua [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
JiHeKang [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Kandi Shanghai [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Kandi Jiangsu [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
JiHeKang Service [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Tianjin BoHaiWan [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Changxing [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Liuchuang [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Jiangsu Jidian [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%

XML

Summary of Significant Accounting Policies (Details)	9 Months Ended
	Sep. 30, 2017
Buildings [Member]
Property, Plant and Equipment [Line Items]
Property, plants and equipment, Estimated useful lives	30 years
Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plants and equipment, Estimated useful lives	10 years
Office equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plants and equipment, Estimated useful lives	5 years
Motor vehicles [Member]
Property, Plant and Equipment [Line Items]
Property, plants and equipment, Estimated useful lives	5 years
Molds [Member]
Property, Plant and Equipment [Line Items]
Property, plants and equipment, Estimated useful lives	5 years

XML

Summary of Significant Accounting Policies (Details 1)	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016
Period end RMB : USD exchange rate [Member]
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items]
Exchange rate	6.6536	6.94585	6.67106
Average RMB : USD exchange rate [Member]
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items]
Exchange rate	6.807608	6.64520	6.58121

XML

Summary of Significant Accounting Policies (Details Textual) ¥ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)	Sep. 30, 2017 CNY (¥)
Summary of Significant Accounting Policies (Textual)
Restricted cash	$ 20,735,921		$ 20,735,921		$ 12,957,377
Time deposit	6,011,783		$ 6,011,783
Maturities of time deposit, Description			Certificate of Time Deposit (CD) of $6,011,783 with Hangzhou Bank Jinhua Branch, which matured on October 9, 2017.
Notes receivable from JV Company and related parties	1,542,147		$ 1,542,147		400,239
Total advance payments	110,000,000		110,000,000			¥ 744
Interest expenses capitalized for CIP	557,460	$ 0	1,601,472	$ 0
Research and development expenses	657,851	522,806	26,569,624	1,222,967
Grants and subsidies received	474,950	594,323	5,804,561	2,292,180
Stock-based option expenses	997,496	2,777,121	$ 4,126,008	13,885,604
Remaining useful lives			9 years 8 months 12 days
Amortization expenses	20,524	$ 20,524	$ 61,571	$ 61,571
Ownership interest			100.00%
Land use rights, Description			The land use rights granted to the Company are amortized using the straight-line method over a term of fifty years.
Advances to suppliers, current assets	14,469,823		$ 14,469,823
Advances to suppliers, long term assets			16,212,788
Amount due from JV Company, net	15,907,183		$ 15,907,183
Maximum [Member]
Summary of Significant Accounting Policies (Textual)
Current discount rate			5.00%
Minimum [Member]
Summary of Significant Accounting Policies (Textual)
Current discount rate			4.80%
Level 2 [Member]
Summary of Significant Accounting Policies (Textual)
Notes payable, fair value	$ 26,212,569		$ 26,212,569		14,797,325
Level 3 [Member]
Summary of Significant Accounting Policies (Textual)
Fair value of warrants			$ 0		$ 0

XML

Concentrations (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Sales [Member] | Jinhua Chaoneng Automobile Sales Co Ltd [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	19.00%	56.00%	11.00%	35.00%
Sales [Member] | Kandi Electric Vehicles Group Co., Ltd. [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	77.00%	19.00%	82.00%	55.00%
Trade Receivable [Member] | Jinhua Chaoneng Automobile Sales Co Ltd [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	24.00%		24.00%		19.00%
Trade Receivable [Member] | Kandi Electric Vehicles Group Co., Ltd. [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	69.00%		69.00%		71.00%

XML

Concentrations (Details 1)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Dongguan Chuangming Battery Technology Co., Ltd. [Member] | Accounts Payable [Member]
Concentration Risk [Line Items]
Concentration percentage	22.00%		22.00%		22.00%
Dongguan Chuangming Battery Technology Co., Ltd. [Member] | Purchases [Member]
Concentration Risk [Line Items]
Concentration percentage	37.00%	56.00%	31.00%	48.00%
Zhejiang Tianneng Energy Technology Co., Ltd. [Member] | Accounts Payable [Member]
Concentration Risk [Line Items]
Concentration percentage	13.00%		13.00%		15.00%
Zhejiang Tianneng Energy Technology Co., Ltd. [Member] | Purchases [Member]
Concentration Risk [Line Items]
Concentration percentage	13.00%		15.00%	19.00%

XML

Earnings Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Earnings Per Share [Abstract]
Net income (loss)	$ 1,918,076	$ (565,941)	$ (33,793,376)	$ 2,315,659
Weighted average shares used in basic computation	48,028,467	47,695,290	47,913,028	47,436,418
Dilutive shares
Weighted average shares used in diluted computation	48,028,467	47,695,290	47,913,028	47,436,418
Earnings per share:
Basic	$ 0.04	$ (0.01)	$ (0.71)	$ 0.05
Diluted	$ 0.04	$ (0.01)	$ (0.71)	$ 0.05

XML

Earnings Per Share (Details Textual) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Earnings Per Share (Textual)
Average number of potentially dilutive common shares
Potential dilutive common shares			4,400,000	4,900,000

XML

Accounts Receivable (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Accounts Receivable/Notes Receivable [Abstract]
Accounts receivable	$ 41,774,453	$ 32,394,613
Less: Provision for doubtful debts
Accounts receivable, net	$ 41,774,453	$ 32,394,613

XML

Inventories (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Inventories [Abstract]
Raw material	$ 5,612,594	$ 2,529,149
Work-in-progress	6,651,788	1,786,087
Finished goods	3,486,361	8,014,671
Total inventories	15,750,743	12,329,907
Less: provision for slowing moving inventories	(574,165)	(415,797)
Inventories, net	$ 15,176,578	$ 11,914,110

XML

Notes Receivable (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Notes receivable as below:
Bank acceptance notes	$ 1,542,147	$ 400,239
Notes receivable	$ 1,542,147	$ 400,239

XML

Notes Receivable (Details 1) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Accounts Receivable/Notes Receivable [Abstract]
Amount	$ 1,542,147	$ 400,239
Counter party	Kandi Electric Vehicles Group Co., Ltd.	Kandi Shanghai
Relationship	Joint Venture of the Company	Subsidiary of the JV Company
Nature	Payments for sales	Payments for sales
Manner of settlement	Not due	Not due

XML

Plants and Equipment (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	$ 49,874,112	$ 48,822,972
Less : Accumulated depreciation	(36,859,045)	(33,578,302)
Less: provision for impairment for fixed assets	(52,435)	(50,228)
Property, Plant and equipment, net	12,962,632	15,194,442
Buildings [Member]
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	13,547,482	12,977,465
Less : Accumulated depreciation	(7,035,228)	(3,948,909)
Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	7,740,522	8,585,666
Less : Accumulated depreciation	(7,035,228)	(8,107,884)
Office equipment [Member]
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	518,412	475,162
Less : Accumulated depreciation	(280,296)	(216,226)
Motor vehicles [Member]
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	374,413	321,207
Less : Accumulated depreciation	(296,387)	(274,197)
Moulds [Member]
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	27,693,283	26,463,472
Less : Accumulated depreciation	$ (24,781,790)	$ (21,031,086)

XML

Plants and Equipment (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Plants and Equipment (Textual)
Net book value of plant and equipment pledged as collateral for bank loans	$ 8,931,851		$ 8,931,851		$ 8,875,111
Depreciation expenses	$ 1,119,307	$ 1,106,755	$ 3,253,653	$ 3,370,032

XML

Land Use Rights (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Land Use Rights [Abstract]
Cost of land use rights	$ 14,907,523	$ 14,280,282
Less: Accumulated amortization	(2,861,597)	(2,504,562)
Land use rights, net	$ 12,045,926	$ 11,775,720

XML

Land Use Rights (Details 1) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Land Use Rights [Abstract]
2017(Three Months)	$ 120,719
2018	482,874
2019	482,874
2020	482,874
2021	482,874
Thereafter	9,993,712
Total	$ 12,045,926	$ 11,775,720

XML

Land Use Rights (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Land Use Rights (Textual)
Net book value of land use rights pledged as collateral	$ 8,856,627		$ 8,856,627		$ 8,660,097
Amortization expenses of land use rights	$ 82,054	$ 95,906	$ 241,437	$ 249,742

XML

Construction-in-Progress (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Construction In Progress [Line Items]
Total in CIP as of September 30, 2017	$ 47,676,068	$ 27,054,181
Estimate to complete	36,555,128
Total contract amount	84,231,196
Kandi Hainan facility [Member]
Construction In Progress [Line Items]
Total in CIP as of September 30, 2017	47,676,068
Estimate to complete	36,555,128
Total contract amount	$ 84,231,196

XML

Construction-in-Progress (Details Textual) ¥ in Billions	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)	Apr. 30, 2013 CNY (¥) ElectronicValue
Construction-in-Progress (Textual)
Invest to establish a factory | ¥						¥ 1
Number of electronic vehicles | ElectronicValue						100,000
CIP amount	$ 47,676,068		$ 47,676,068		$ 27,054,181
Interest expenses capitalized for CIP	$ 557,460	$ 0	$ 1,601,472	$ 0

XML

Short -Term and Long-Term Bank Loans (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Summary of short-term loans
Short-term loans	$ 32,613,923	$ 34,265,065
Loans from China Ever-bright Bank, Interest rate 5.22% per annum, due on April 25, 2018 [Member]
Summary of short-term loans
Short-term loans	10,520,621	11,229,727
Loans from Hangzhou Bank, Interest rate 4.35% per annum, due on October 16, 2018 [Member]
Summary of short-term loans
Short-term loans	7,334,375	7,025,778
Loans from Hangzhou Bank, Interest rate 4.79% per annum, due on July 4, 2018 [Member]
Summary of short-term loans
Short-term loans	10,851,268	10,394,696
Loans from Hangzhou Bank, Interest rate 4.35% per annum, paid off on March 23, 2017 [Member]
Summary of short-term loans
Short-term loans		5,614,864
Loans from Hangzhou Bank, Interest rate 4.35% per annum, due March 26, 2018 [Member]
Summary of short-term loans
Short-term loans	3,607,070
Loans from Individual Third Parties, Interest rate 12% per annum [Member]
Summary of short-term loans
Short-term loans	$ 300,589

XML

Short -Term and Long-Term Bank Loans (Parenthetical) (Details)	9 Months Ended
	Sep. 30, 2017
Loans from China Ever-bright Bank, Interest rate 5.22% per annum, due on April 25, 2018 [Member]
Summary of short-term loans
Interest rate	5.22%
Due date	Apr. 25, 2018
Loans from Hangzhou Bank, Interest rate 4.35% per annum, due on October 16, 2018 [Member]
Summary of short-term loans
Interest rate	4.35%
Due date	Oct. 16, 2018
Loans from Hangzhou Bank, Interest rate 4.79% per annum, due on July 4, 2018 [Member]
Summary of short-term loans
Interest rate	4.79%
Due date	Jul. 04, 2018
Loans from Hangzhou Bank, Interest rate 4.35% per annum, paid off on March 23, 2017 [Member]
Summary of short-term loans
Interest rate	4.35%
Paid off date	Mar. 23, 2017
Loans from Hangzhou Bank, Interest rate 4.35% per annum, due March 26, 2018 [Member]
Summary of short-term loans
Interest rate	4.35%
Due date	Mar. 26, 2018
Loans from Individual Third Parties, Interest rate 12% per annum [Member]
Summary of short-term loans
Interest rate	12.00%

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Short -Term and Long-Term Bank Loans (Details 1) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Summary of long-term loans
Long-term loans	$ 30,058,915	$ 28,794,172
Loans from Haikou Rural Credit Cooperative [Member]
Summary of long-term loans
Long-term loans	$ 30,058,915	$ 28,794,172

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Short -Term and Long-Term Bank Loans (Parenthetical) (Details 1) - Loans from Haikou Rural Credit Cooperative [Member]	9 Months Ended
	Sep. 30, 2017
Summary of long-term loans
Interest rate	7.00%
Due date	Dec. 12, 2021

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Short -Term and Long-Term Bank Loans (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Short -Term and Long-Term Bank Loans (Textual)
Interest expense of short-term and long-term bank loans	$ 598,523	$ 425,152	$ 1,761,786	$ 1,299,549
Aggregate amount of short-term and long-term loans guaranteed by various third parties	$ 0		$ 0

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Notes Payable (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	$ 26,212,569	$ 14,797,325
Due March 22, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total		400,239
Due March 29, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total		1,439,709
Due June 21, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total		1,439,709
Due October 6, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	174,466
Due October 21, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	819,105
Due November 2, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	6,763,256
Due November 4, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	901,767
Due December 6, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	901,767
Due December 22, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	93,465
Due January 4, 2018 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	4,877,059
Due June 21, 2018 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	367,717
Due May 6, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total		11,517,668
Due May 6, 2019 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	$ 11,313,967

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Notes Payable (Details Textual) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Notes Payable (Textual)
Notes payable collateral, amount	$ 14,724,136	$ 3,279,656

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Taxes (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Current:
Provision for CIT	$ 957,129	$ (1,483,866)	$ 1,465,152	$ 2,925,100
Provision for Federal Income Tax
Deferred:
Provision for CIT	(180,144)	2,036,714	(5,596,103)	(2,608,702)
Income tax expense	$ 776,985	$ 552,848	$ (4,130,951)	$ 316,399

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Taxes (Details 1) - USD ($)		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Taxes [Abstract]
Expected taxation at PRC statutory tax rate				$ (9,481,082)	$ 658,015
Effect of differing tax rates in different jurisdictions				(553,564)	(611,065)
Non-taxable income
Non-deductible expenses	[1]			2,021,055	32,122
Research and development super-deduction				(55,439)	(128,865)
Under-accrued EIT for previous years				267,574	(2,727,454)
Effect of PRC preferential tax rates				1,670,185	(100,974)
Addition to valuation allowance				2,092,000	3,194,621
Other				(91,680)
Income tax expense		$ 776,985	$ 552,848	$ (4,130,951)	$ 316,399

[1] It's mainly due to share of (loss) in JV Company and its subsidiaries.

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Taxes (Details 2) - USD ($)		Sep. 30, 2017	Dec. 31, 2016
Deferred tax assets:
Expense	[1]	$ 554,177	$ 72,742
Depreciation		194,257	230,156
Loss carried forward		33,130,243	27,218,934
less: valuation allowance		(27,740,715)	(26,820,811)
Total deferred tax assets, net of valuation allowance		6,137,962	701,021
Deferred tax liabilities:
Expense	[2]	1,582,944	1,698,303
Total deferred tax liability		1,582,944	1,698,303
Net deferred tax assets (liabilities)		$ 4,555,018	$ (997,282)

[1] It's provision for impairment inventory, fixed assets and loss contingency-litigation.

[2] It's due to the difference of tax basis and GAAP basis of other long term assets.

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Taxes (Details 3) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Operating Loss Carryforwards [Line Items]
Total	$ 2,695,061	$ (13,093)	$ (37,924,327)	$ 2,632,058
PRC [Member]
Operating Loss Carryforwards [Line Items]
Total			(31,709,013)	13,309,481
Non-PRC [Member]
Operating Loss Carryforwards [Line Items]
Total			$ (6,215,314)	$ (10,677,423)

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Taxes (Details 4)	9 Months Ended
	Sep. 30, 2017 USD ($)
Taxes [Abstract]
Balance at December 31,2016	$ 26,820,811
Additions-change to tax expense	2,092,000
Deduction-expired of loss carried forward	1,172,096	[1]
Balance at September 30,2017	$ 27,740,715

[1] It's due to the loss carried forward deduction-expired of Kandi Technologies of 2012.

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Taxes (Details 5) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Taxes [Abstract]
Tax benefit (holiday) credit	$ 55,439	$ 229,839
Basic net income per share effect	$ 0.000	$ 0.005

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Taxes (Details Textual) - USD ($)
$ in Thousands

9 Months Ended

12 Months Ended

Sep. 30, 2017

Sep. 30, 2016

Dec. 31, 2016

Taxes (Textual)

Applicable corporate income tax rate

25.00%

Reduced income tax rate

15.00%

Research and development effective tax rate

10.89%

12.02%

U.S. Federal income tax rate

34.00%

25.00%

Tax exemptions holiday percent

25.00%

25.00%

Net loss carried forward term

5 years

Research Tax Credit Carryforward [Member]

Taxes (Textual)

Research and development effective tax rate

25.00%

UNITED STATES | 2013 through 2017 [Member]

Taxes (Textual)

Cumulative net losses

$ 81,590

Operating loss carryforwards, expire date description

The amount between 2018 and 2022.

UNITED STATES | 2012 through 2016 [Member]

Taxes (Textual)

Cumulative net losses

$ 78,880

Operating loss carryforwards, expire date description

The amount between 2017 and 2021

CHINA

Taxes (Textual)

Cumulative net losses

$ 2,120

Operating loss carryforwards, expiration date

Dec. 31, 2021

CHINA | 2016 through 2017 [Member]

Taxes (Textual)

Cumulative net losses

$ 21,780

Operating loss carryforwards, expire date description

The amount between 2021 and 2022.

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Stock Options and Warrants (Details) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Stock Options and Warrants [Abstract]
Number of Shares Outstanding, Beginning Balance	4,566,667	4,900,000
Number of Shares, Granted
Number of Shares, Exercised
Number of Shares, Cancelled
Number of Shares, Forfeited	(166,667)	(333,333)
Number of Shares Outstanding, Ending Balance	4,400,000	4,566,667
Weighted Average Exercise Price Outstanding, Beginning Balance	$ 9.72	$ 9.72
Weighted Average Exercise Price, Granted
Weighted Average Exercise Price, Exercised
Weighted Average Exercise Price, Cancelled
Weighted Average Exercise Price, Forfeited	9.72	9.72
Weighted Average Exercise Price, Outstanding, Ending Balance	$ 9.72	$ 9.72

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Stock Options and Warrants (Details Textual) - USD ($)	1 Months Ended	9 Months Ended
	May 29, 2015	Sep. 30, 2017	Dec. 31, 2016
Stock Options and Warrants (Textual)
Warrants issued to investors and placement agent		$ 0	$ 0
Stock Options [Member]
Stock Options and Warrants (Textual)
Stock options vesting period, description	The stock options will vest ratably over three years and expire on the tenth anniversary of the grant date.
Company stock options value	$ 39,990,540
Expected volatility rate	90.00%
Expected life	10 years
Risk-free interest rate	2.23%
Expected dividend yield	0.00%
Stock compensation expenses		$ 4,126,008
Directors, officers and senior employees [Member] | Stock Options [Member]
Stock Options and Warrants (Textual)
Purchase shares of common stock	4,900,000
Common stock exercise price per share	$ 9.72
Employees and Directors [Member]
Stock Options and Warrants (Textual)
Fair value of common stock options issued	4,900,000
Options issued , price per share	$ 8.1613

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Stock Award (Details) - USD ($)		1 Months Ended				3 Months Ended		6 Months Ended			9 Months Ended		12 Months Ended
	Dec. 30, 2013	Feb. 13, 2017	Nov. 30, 2016	Sep. 26, 2016	May 20, 2015	Sep. 30, 2017	Sep. 30, 2016	Feb. 28, 2014	Jan. 31, 2012	Dec. 31, 2011	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Stock Award (Textual)
Number of shares, granted
Reduce total number of shares of common stock				250,000
General and administrative expenses						$ 2,196,201	$ 373,411				$ 12,074,147	$ 18,031,487
2008 Plan [Member]
Stock Award (Textual)
Shares of common stock	335,000
Number of shares, granted		246,900
Reduce total number of shares of common stock				335,000
Increase in shares					9,000,000
Employee Stock Award Expenses [Member]
Stock Award (Textual)
General and administrative expenses						$ 31,675	$ 3,980,325				$ 1,396,350	$ 68,775
Mr. Henry Yu [Member]
Stock Award (Textual)
Restricted shares of common stock										5,000
Mr. Jerry Lewin's [Member]
Stock Award (Textual)
Restricted shares of common stock									5,000
Ms. Kewa Luo's [Member]
Stock Award (Textual)
Restricted shares of common stock								5,000
Mr. Mei Bing [Member] | Three Year Employment Agreement [Member]
Stock Award (Textual)
Shares of common stock			10,000
Vested shares of four equal quarterly installments			2,500

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Intangible Assets (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount:	$ 796,321	$ 796,321
Less : Accumulated amortization	(444,681)	(383,110)
Intangible assets, net	$ 351,640	413,211
Remaining useful lives	9 years 8 months 12 days
Trade name [Member]
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount:	$ 492,235	492,235
Less : Accumulated amortization	$ (274,874)	(236,815)
Remaining useful lives	4 years 2 months 30 days
Customer relations [Member]
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount:	$ 304,086	304,086
Less : Accumulated amortization	$ (169,807)	$ (146,295)
Remaining useful lives	4 years 2 months 30 days

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Intangible Assets (Details 1) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Intangible Assets [Abstract]
2017 (Three months)	$ 20,524
2018	82,095
2019	82,095
2020	82,095
2021	82,095
Thereafter	2,736
Total	$ 351,640	$ 413,211

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Intangible Assets (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Intangible Assets (Textual)
Amortization expenses	$ 20,524	$ 20,524	$ 61,571	$ 61,571

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Summarized Information of Equity Method Investment in the JV Company (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Condensed income statement information:
Net revenues	$ 86,181,120	$ 11,688,178	$ 106,109,272	$ 122,959,660
Gross income	$ 5,279,283	$ 5,937,134	$ 3,454,547	$ 19,538,305
% of net revenues	6.10%	50.80%	3.30%	15.90%
Net (loss) income	$ (480,622)	$ (426,797)	$ (25,665,734)	$ 131,323
Company's share in net (loss) income of JV based on 50% ownership	$ (240,311)	$ (213,399)	$ (12,832,867)	$ 65,662	$ (7,077,789)

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Summarized Information of Equity Method Investment in the JV Company (Details 1) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Condensed balance sheet information:
Current assets	$ 578,690,686	$ 514,958,008
Noncurrent assets	196,056,068	177,563,801
Total assets	774,746,754	692,521,809
Current liabilities	597,354,181	505,356,626
Noncurrent liabilities	41,481,303	31,817,560
Equity	135,911,270	155,347,623
Total liabilities and equity	$ 774,746,754	$ 692,521,809

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Summarized Information of Equity Method Investment in the JV Company (Details 2) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Summarized Information Of Equity Method Investments [Abstract]
Investment in JV Company, beginning of the period,			$ 77,453,014	$ 90,337,899	$ 90,337,899
Share of loss
Company's share in net loss of JV Company based on 50% ownership	$ (240,311)	$ (213,399)	(12,832,867)	65,662	(7,077,789)
Intercompany transaction elimination			(848,200)		(230,787)
Year 2016 unrealized profit realized			225,281		1,066
Subtotal	444,181	$ (299,538)	(13,455,786)	$ (203,375)	(7,307,510)
Exchange difference			3,090,575		(5,577,375)
Investment in JV Company, end of the period	$ 67,087,803		$ 67,087,803		$ 77,453,014

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Summarized Information of Equity Method Investment in the JV Company (Details 3) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Schedule of Equity Method Investments [Line Items]
Total sales to JV	$ 21,749,790	$ 1,155,179	$ 49,233,156	$ 66,076,536
JV Company [Member]
Schedule of Equity Method Investments [Line Items]
Total sales to JV	21,513,825	5,915,518	48,541,220	60,920,788
Kandi Changxing [Member]
Schedule of Equity Method Investments [Line Items]
Total sales to JV	601	(1,570,084)	61,410	247,848
Kandi Shanghai [Member]
Schedule of Equity Method Investments [Line Items]
Total sales to JV	334	(3,300,932)	34,176	623,499
Kandi Jinhua [Member]
Schedule of Equity Method Investments [Line Items]
Total sales to JV		(313)		46,753
Kandi Jiangsu [Member]
Schedule of Equity Method Investments [Line Items]
Total sales to JV	$ 235,030	$ 137,480	$ 596,350	$ 286,570

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Summarized Information of Equity Method Investment in the JV Company (Details 4) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Schedule of Equity Method Investments [Line Items]
Consolidated JV	$ 153,640,932	$ 136,536,725
Kandi Shanghai [Member]
Schedule of Equity Method Investments [Line Items]
Consolidated JV	836,805	281,657
Kandi Changxing [Member]
Schedule of Equity Method Investments [Line Items]
Consolidated JV	17,136,881	16,359,721
Kandi Jinhua [Member]
Schedule of Equity Method Investments [Line Items]
Consolidated JV	5,265,527	5,050,525
Kandi Jiangsu [Member]
Schedule of Equity Method Investments [Line Items]
Consolidated JV	1,023,686	352,587
JV Company [Member]
Schedule of Equity Method Investments [Line Items]
Consolidated JV	$ 129,378,033	$ 114,492,235

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Summarized Information of Equity Method Investment in the JV Company (Details 5) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Schedule of Equity Method Investments [Line Items]
Consolidated JV	$ 1,100,847	$ 566
Kandi Shanghai [Member]
Schedule of Equity Method Investments [Line Items]
Consolidated JV	729,044
Kandi Changxing [Member]
Schedule of Equity Method Investments [Line Items]
Consolidated JV	235,724	566
Kandi Jinhua [Member]
Schedule of Equity Method Investments [Line Items]
Consolidated JV	$ 136,079

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Summarized Information of Equity Method Investment in the JV Company (Details Textual) - USD ($)					1 Months Ended				3 Months Ended		9 Months Ended
	Nov. 30, 2016	Oct. 31, 2016	Aug. 31, 2016	Dec. 31, 2013	Apr. 30, 2017	Mar. 31, 2017	Nov. 30, 2015	Nov. 30, 2013	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Oct. 24, 2017	Jun. 30, 2017	May 25, 2017	May 19, 2017	Dec. 31, 2016	Oct. 26, 2016	Aug. 31, 2015	Jan. 31, 2014	Jul. 31, 2013	Mar. 31, 2013
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Amount due from JV company									$ 153,640,932		$ 153,640,932						$ 136,536,725
Consolidated JV									1,100,847		1,100,847						566
Short-term debt									32,613,923		32,613,923						34,265,065
Revenue from related parties									21,749,790	$ 1,155,179	49,233,156	$ 66,076,536
Kandi Shanghai [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Amount due from JV company									836,805		836,805						281,657
Consolidated JV									729,044		729,044
Revenue from related parties									334	(3,300,932)	34,176	623,499
Kandi Changxing [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Amount due from JV company									17,136,881		17,136,881						16,359,721
Consolidated JV									235,724		235,724						566
Revenue from related parties									601	(1,570,084)	61,410	247,848
Kandi Jinhua [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage					100.00%			100.00%
Amount due from JV company									5,265,527		5,265,527						5,050,525
Consolidated JV									136,079		136,079
Ownership interest percentage owned by JV company					100.00%
Economic interest, percentage					50.00%			50.00%
Indirect ownership interest percentage in JV company								50.00%
Revenue from related parties										(313)		46,753
Kandi Jiangsu [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage					100.00%															100.00%
Amount due from JV company									1,023,686		1,023,686						352,587
Ownership interest percentage owned by JV company																				50.00%
Economic interest, percentage																				50.00%
Revenue from related parties									$ 235,030	$ 137,480	$ 596,350	$ 286,570
JV Company [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage					50.00%				50.00%	50.00%	50.00%	50.00%		50.00%		50.00%
Amount due from JV company									$ 129,378,033		$ 129,378,033						$ 114,492,235
Ownership interest percentage owned by JV company														100.00%
Economic interest, percentage																19.00%
Indirect ownership interest percentage in JV company					50.00%
Short-term debt									44,336,900		44,336,900
Revenue from related parties									$ 21,513,825	$ 5,915,518	$ 48,541,220	$ 60,920,788
Interest rate									4.35%		4.35%
Sales to JV Company and subsidiaries, description											Sales to the Company's customers, the JV Company and its subsidiaries, for the three months ended September 30, 2017, were $21,749,790 or 77% of the Company's total revenue, an increase of 1740.6% from the same quarter last year. Sales to the Company's customers, the JV Company and its subsidiaries, for the nine months ended September 30, 2017, were $49,233,156 or 82% of the Company's total revenue, a decrease of 20.8% from the same period last year. Sales to the JV Company and its subsidiaries were primarily battery packs, body parts, EV drive motors, EV controllers, air conditioning units and other auto parts.
Consolidated interests of financial statements, description											(1) its 100% interest in Kandi Changxing; (2) its 100% interest in Kandi Jinhua; (3) its 100% interest in JiHeKang; (4) its 100% interest in Kandi Shanghai; (5) its 100% interest in Kandi Jiangsu; (6) its 100% interest in JiHeKang Service Company; (7) its 100% interest in Jiangsu JiDian; (8) its 100% interest in Tianjin BoHaiWan; (9) its 100% interest in Changxing Maintenance; and (10) its 100% interest in Liuchuang. The Company accounted for its investments in the JV Company under the equity method of accounting because the Company has a 50% ownership interest in the JV Company.
Shanghai Guorun [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage																		50.00%	9.50%
Geely [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest percentage owned by JV company									100.00%		100.00%					31.00%
Geely [Member] | Subsequent Event [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest percentage owned by JV company													50.00%
JiHeKang [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage					100.00%		100.00%	100.00%
Economic interest, percentage					50.00%		50.00%	50.00%
Indirect ownership interest percentage in JV company							50.00%	50.00%
Puma Investment [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage							50.00%
Economic interest, percentage							25.00%
Indirect ownership interest percentage in JV company							50.00%
Jiangsu JiDian [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage			100.00%
Ownership interest percentage owned by JV company			100.00%
Economic interest, percentage			50.00%
Indirect ownership interest percentage in JV company			50.00%
Changxing Maintenance [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage	100.00%
Ownership interest percentage owned by JV company	100.00%
Economic interest, percentage	50.00%
Indirect ownership interest percentage in JV company	50.00%
Liuchuang [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage						100.00%
Ownership interest percentage owned by JV company						100.00%
Economic interest, percentage						50.00%
Indirect ownership interest percentage in JV company						50.00%
Kandi Vehicles [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage																			9.50%
Ownership interest percentage owned by JV company									50.00%		50.00%
Kandi Vehicles [Member] | Subsequent Event [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest percentage owned by JV company													50.00%
Service Company [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage																					19.00%
JiHeKang Service Company [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage					100.00%		100.00%
Economic interest, percentage					50.00%		50.00%
Indirect ownership interest percentage in JV company							50.00%
Tianjin BoHaiWan [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage		100.00%
Ownership interest percentage owned by JV company		100.00%
Economic interest, percentage		50.00%
Indirect ownership interest percentage in JV company		50.00%
Mr.Hu (Member)
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest percentage owned by JV company															19.00%
Mr.Hu (Member) | Subsequent Event [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest percentage owned by JV company													19.00%
JV Agreement [Member] | JV Company [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage																						50.00%
JV Agreement [Member] | Shanghai Guorun [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage																						50.00%
JV Agreement [Member] | Geely [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage																						99.00%
JV Agreement [Member] | JiHeKang [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage							100.00%
JV Agreement [Member] | Kandi Vehicles [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage																						50.00%
Ownership transfer agreement [Member] | Kandi Shanghai [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage				100.00%
Economic interest, percentage				50.00%
Indirect ownership interest percentage in JV company				50.00%
Ownership transfer agreement [Member] | Kandi Changxing [Member]
Summarized Information of Equity Method Investment in the Jv Company (Textual)
Ownership interest, percentage				100.00%
Ownership interest percentage owned by JV company				50.00%
Economic interest, percentage				50.00%

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Commitments and Contingencies (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Loss Contingencies [Line Items]
Total	$ 37,573,644	$ 53,845,102
Zhejiang Shuguang industrial Co., Ltd. [Member]
Loss Contingencies [Line Items]
Total		4,175,155
Nanlong Group Co., Ltd. [Member]
Loss Contingencies [Line Items]
Total		2,879,417
Kandi Electric Vehicles Group Co., Ltd. [Member]
Loss Contingencies [Line Items]
Total	$ 37,573,644	$ 46,790,530

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Commitments and Contingencies (Details 1) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Loss Contingencies [Line Items]
Total	$ 601,178
Zhejiang Shuguang industrial Co., Ltd. [Member]
Loss Contingencies [Line Items]
Total	$ 601,178

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Commitments and Contingencies (Details Textual) ¥ in Thousands			1 Months Ended		9 Months Ended
	Dec. 14, 2015 USD ($)	Mar. 15, 2013 USD ($)	Jul. 20, 2016 USD ($)	Sep. 29, 2015 USD ($)	Sep. 30, 2017 USD ($) Installments	Sep. 30, 2017 CNY (¥)	Jul. 31, 2017 USD ($)	Jul. 31, 2017 CNY (¥)
Commitments and Contingencies (Textual)
Accrued liability of estimated contingent losses						¥ 16,000	$ 3,000	¥ 20
Number Of Installments | Installments					4
Nanlong Group Co., Ltd. [Member]
Commitments and Contingencies (Textual)
Guarantee for bank loans amount		$ 3,005,892
Description of loans period		Loan period of March 15, 2013, to March 15, 2016.
JV Company [Member]
Commitments and Contingencies (Textual)
Guarantee for bank loans amount	$ 37,573,644		$ 11,272,093
Description of loans period	Loan period of December 14, 2015, to December 13, 2016, which was extended to October 15, 2017.		Loan period of July 20, 2016 to July 19, 2017.
Accrued liability of estimated contingent losses					$ 600,000	4,000
Zhejiang Shuguang industrial Co., Ltd. [Member]
Commitments and Contingencies (Textual)
Guarantee for bank loans amount				$ 4,358,543
Description of loans period				Loan period of September 29, 2015, to September 28, 2016.
Accrued liability of estimated contingent losses					$ 3,000,000	¥ 20,000

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Segment Reporting (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Segment Reporting Information [Line Items]
Total	$ 28,353,899	$ 6,366,380	$ 59,953,751	$ 112,241,641
Geographic Area [Member]
Segment Reporting Information [Line Items]
Total	$ 28,353,899	$ 6,366,380	$ 59,953,751	$ 112,241,641
Percentage	100.00%	100.00%	100.00%	100.00%
China [Member] | Geographic Area [Member]
Segment Reporting Information [Line Items]
Total	$ 27,134,998	$ 4,846,013	$ 56,332,312	$ 109,106,891
Percentage	96.00%	76.00%	94.00%	97.00%
Overseas [Member] | Geographic Area [Member]
Segment Reporting Information [Line Items]
Total	$ 1,218,901	$ 1,520,367	$ 3,621,439	$ 3,134,750
Percentage	4.00%	24.00%	6.00%	3.00%

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Segment Reporting (Details Textual)	9 Months Ended
	Sep. 30, 2017 Segment
Segment Reporting (Textual)
Number of operating segment	1

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Related Party Transactions (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Related Party Transaction [Line Items]
Sales to related parties		$ (26,490)		$ 3,951,078
Service Company [Member]
Related Party Transaction [Line Items]
Sales to related parties		$ (26,490)		$ 3,951,078

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Related Party Transactions (Details 1) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Related Party Transaction [Line Items]
Total due from related party	$ 6,437,261	$ 10,484,816
Service Company [Member]
Related Party Transaction [Line Items]
Total due from related party	$ 6,437,261	$ 10,484,816

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Related Party Transactions (Details Textual) - Service Company [Member]	Sep. 30, 2017	Nov. 30, 2015	Jul. 31, 2013
Related Party Transactions (Textual)
Ownership interest, percentage	13.00%	50.00%	9.50%
Mr.Hu (Member)
Related Party Transactions (Textual)
Ownership interest, percentage	9.50%