Chinese electric car maker Kandi will open its first U.S. sales facility in Garland, Texas, hoping that Americans are willing to take a chance on the no-fossil fuel vehicles.
Kandi, through its U.S. subsidiary SC Autosports, is planning to open in August to start delivering its low-priced smart cars in the fourth quarter of this year.
The company, known as a battery maker in China, recently expanded into auto manufacturing and has been plotting the move for at least two years by buying the ATV distributor SC Autosports in Garland in 2018.
Kandi is aiming for the low end of the electric auto market, hoping to appeal to buyers that may have been left out of the growth of Tesla, which start at about $35,000. Kandi's two models retail for $19,999 and $29,999. But both could be eligible for $7,500 in federal tax rebates.
"The U.S. market with Tesla has been aimed at the higher-end, luxury cars," said Johnny Tai, CEO of Kandi America. "This is aimed at consumers that are looking for something more affordable."
Chinese automakers have yet to make a significant mark in the U.S., although the Asian country has invested heavily in electric vehicles and subsidies to try to grow the emerging market. Chinese automakers such as BYD and Greely have grown quickly in their home country, but have yet to launch sales in the United States. It's helped that China has extended incentives on electrical vehicles through 2022 to reduce pollution and encourage the burgeoning industry.
A handful are positioning themselves with partnerships to build cars in the U.S. as well.
Acceptance of both electric and Chinese vehicles will eventually come among consumers because of the price advantages each bring, said Don Herring Jr., who runs four Mitsubishi dealerships in North Texas.
"At one time, Americans wouldn't accept Japanese cars, and then Korean cars," Herring said. "The biggest questions for anyone that's in the business is who is going to be the winner and who is going to be a loser."
Kandi said the cars have received approval to be sold in the U.S. Its cars are made and sold in China already. Since the cars are already in production, they'll be ready to be delivered to U.S. consumers in late 2020, Tai said.
The company, which trades publicly in the U.S., had about $123 million in sales last year in China.
Kandi will need the support of auto dealerships, at least in Texas, to sell vehicles. Texas law doesn't allow vehicles to be sold directly consumers, a decades-old law that gives a monopoly on new car sales to dealers and has raised the ire of companies such as Tesla, which say selling directly to the public cuts out the cost of middlemen.
Tesla set up showrooms in the state where consumers can inspect its vehicles, test drive them and place orders online. Tesla, which last week selected Austin for a new $1.1 billion plant to build its new Cybertruck and Model Y SUVs, will have to ship vehicles made in Texas across state lines first so they don't count as in-state sales.
Kandi America is planning to use SC Autosport's background as an ATV distributor to connect with existing dealers, which often have auto dealerships as well, Tai said.
The COVID-19 pandemic has caused some problems with Kandi's plans. They are launching the cars virtually because of anxiety over shoppers looking at cars in person. But Tai said they will be available to test-drive in late August in Garland. A $100 deposit will put one on order for the end of 2020, he said.
"In this business climate, people are looking for something affordable and accessible," Tai said.