The Future of Advanced Air Mobility

EHang Reports Certification Testing Complete for EH216-S eVTOL Aircraft

EHang is expecting to receive a type certificate very soon for its EH216-S autonomous eVTOL aircraft from the Civil Aviation Administration of China (CAAC), after reporting it has now completed all required testing. If confirmed, this would make the Chinese company the first in the world to get approval for an eVTOL vehicle, with leading Western regulators not expected to follow suit until at least the second quarter of 2024.

Reporting second-quarter financial results on August 17, EHang confirmed that it has in fact already been making some pre-certification deliveries in China with 16 of the two-seat vehicles delivered during the first half of 2023. The CAAC has permitted these aircraft to be deployed on a trial basis “in certain tourism locations” for testing, training, and demonstration purposes.

Unaudited results for the three months through June 30 show revenues slipping to RMB 10 million ($1.4 million) from around $3 million in the first quarter of this year. EHang said this was due to delays in making post-certification deliveries, perhaps implying that it had expected to have the approval in hand by now.

In the context of pre-revenue advanced air mobility start-ups, the most relevant figure could be the company's reported cash reserves of just under $45 million. This is markedly less than almost all leading Western eVTOL developers have in their war chests. However, EHang appears to have completed its financial outlay on certification work and says its production line at Yunfu in Guangdong province is fully up and running with an initial throughput capacity of 600 aircraft per year.

$45 Million Is Enough Cash for the Next 12 Months

Last month, the Guangzhou-based company obtained a round of equity investment totaling $23 million, spearheaded by South Korean record producer and SM Entertainment founder Lee Soo Man. According to EHang, the company’s cash reserves and anticipated operational cash flows will meet working-capital and significant cash needs for the next 12 months.

During the second quarter, EHang delivered five EH216-S vehicles to Xiyu Tourism, a Shenzhen-based tour operator focused on developing low-altitude tourism, particularly around Urumqi’s Heavenly Lake of Tianshan in northwestern China. During the first quarter, the company made 11 deliveries, which explains the higher revenues for that period.

Along with our customers and partners, EHang has developed a total of 20 trial operation sites across 18 cities in China, including Guangzhou, Hezhou, Shenzhen, Zhaoqing, and Sanya, over two years, up until the end of this July,” an EHang spokeswoman told AIN. “More than 9,300 safety-secured operational trial flights for low-altitude tourism and aerial sightseeing have been conducted by EH216-S at these sites, which will pave the way for our commercial operations after the certification.”

EHang's EH216-S eVTOL aircraft
EHang says it has completed all testing for the type certification of its EH216-S autonomous eVTOL aircraft. (Image: EHang)

Meanwhile, EHang’s gross margin remained strong at 60.2 percent in the second quarter, representing a slight decrease of 3.7 percent from the previous quarter. Excluding share-based compensation expenses, operating expenses rose to nearly $8 million in comparison with approximately $6.9 million in the previous quarter, driven by heightened spending associated with EH216-S compliance testing and final demonstration, verification, and certification activities.

Increased marketing activities also had an impact, leading to a second-quarter adjusted operating loss of around $7 million, up from $4.7 million in the previous quarter, alongside an adjusted net loss of $7.1 million compared with $4.6 million in the prior quarter.

EHang reported its EH216-S order backlog in China alone now exceeds 100 units, with the recently agreed Bao'an district partnership in Shenzhen set to generate additional sales. Xiyu Tourism is also expected to add a minimum of 120 more EH216-S aircraft within the next five years.

Tourist Flights First, with Air Taxis To Follow

“Following EH216-S type certification, our first priority will be focused on the low-altitude tourism market. EHang will continue to team up with tourism operators and partners for operations to provide aerial sightseeing, flight experiences, and other activities. Initial locations include Jishou Aizhai Scenic Area, Hechi Fengshan Scenic Area, Lake of Heaven of Tianshan, and Shenzhen OH Bay Area, to name a few,” the EHang spokeswoman said, adding that the initial set of Chinese cities earmarked for commercial air taxi services will be revealed once the company attains airworthiness approval.

Another key next step for EHang will be to secure type certification in export markets. It has reported provisional orders from customers in other Asian countries, including Korea, Japan, Malaysia, Indonesia, and Thailand.

As of the end of July 2023, the EH216-S series had conducted over 39,000 demonstration and trial flights, reaching 14 countries across Asia, Europe, and the Americas. Recent exercises outside China have included flights in Spain and Belgium.

The anticipated completion of a type certification test process spanning 31 months reinforces the impression that Chinese authorities have prioritized progress in advanced air mobility. EHang acknowledged "a range of policies regarding the low-altitude economy" put in place since the start of 2023 as being instrumental in fast-tracking the domestic industry.

For instance, based on a report by the National Low-altitude Economy Integration and Innovation Research Center, 16 provincial governments in China have included specific provisions for eVTOL vehicles and uncrewed aircraft in their "Government Work Report" plans for this year. Policies to stimulate growth in these activities are being focused on 20 experimental zones around the country.

In June, China's State Council and the Central Military Commission issued interim legislative measures covering requirements for the flight management of uncrewed air vehicles that will take effect on Jan. 1, 2024. Other China-based companies developing eVTOL vehicles include AutoFlight, TCab Tech, and AerofugiaAccording to EHang, this is the first special administrative regulation of its kind in China and it will lay "a foundation for safe flight operations of UAVs in China, including passenger-carrying autonomous aerial vehicles."