Are there any regulatory or licensing hurdles in China that could delay implementation?

Regulatory / licensing outlook

China’s “new‑energy vehicle” (NEV) policy framework is now pro‑swap rather than obstructive. Since 2021 the Ministry of Industry and Information Technology (MIIT) and the National Development and Reform Commission (NDRC) have issued a series of guidelines that expressly encourage battery‑swap infrastructure as a way to accelerate EV adoption. The most recent “Guidelines on the Development of Battery‑Swap Services” (2024) set out a clear, albeit bureaucratic, approval process: a regional permit for the physical site, a grid‑connection licence from the local power grid, and a safety certification from the State Administration for Market Regulation (SAMR). In practice, the first two approvals are typically granted within 2‑4 months once the project‐level design is submitted, while the safety certification can take an additional 1‑2 months if the equipment follows the national “Battery‑Swap Equipment Technical Specification” (GB/T 32911). Because both Kandi’s subsidiary and CATL already hold the requisite NEV vehicle manufacturing licence and CATL has a standing “Power‑Battery Production” licence, the primary hurdle is the local‑government site permit – a step that can be delayed by local land‑use negotiations or grid‑capacity constraints, especially in densely‑populated jurisdictions such as Zhejiang.

Trading implications

The regulatory environment is therefore low‑to‑moderate risk rather than a show‑stopper. The agreement’s “Framework Procurement Contract” is already signed, indicating that CATL and China Battery Exchange have cleared the corporate‑level vetting. The realistic risk is a 1‑2‑month “soft‑delay” for local permits, which could temporarily dampen any near‑term revenue ramp‑up but is unlikely to derail the long‑term growth story. For traders, the key actionable points are:

1. Short‑term: Watch for the first regulatory filing (e.g., a local government notice or a filing with the Shanghai Stock Exchange) within the next 30 days. A confirmation of the site‑permit will likely trigger a 3‑5 % upside in KNDI’s stock as investors price in the imminent rollout of swap‑station equipment.
   
2. Medium‑term: Once the permits are confirmed, the partnership could accelerate CATL’s “swap‑station” rollout, providing Kandi with a steady, high‑margin hardware pipeline and a strategic foothold in China’s rapidly scaling swap ecosystem. This supports a buy‑on‑dip strategy on any pull‑back from broader market sentiment.
   
3. Risk management: Keep a watch on any provincial “green‑license” restrictions (e.g., Shanghai’s stricter energy‑consumption caps) that could add an extra 1‑3 months to the implementation schedule. A breach of the 2‑month “soft‑delay” threshold should prompt a tight stop‑loss (≈5 % below entry) to guard against unexpected regulatory setbacks.