EHang Holdings Ltd. Q3 FY2024 earnings call

Key Points

• Record order deliveries and financial performance in Q3 2024 with 63 units of EH216-S delivered and revenues of RMB128 million.
• Progress in Air Operator Certificate application: CAAC accepted OC applications for Guangdong EHang General Aviation and Hefei Heyi Aviation, with first OC expected by end of 2024; assisting multiple cities in preparing OC applications.
• Partnerships for technology development: Jointly developing electric motors and controllers with Enpower, and strategic investment in Inx for solid-state battery technology, achieving over 48 minutes of continuous flight with EH216-S.
• Infrastructure and talent training: Established second UAM hub in Hefei, formed partnership with Civil Aviation Flight University of China for talent training, and signed agreements with infrastructure service providers.
• Overseas market expansion: Conducted demo flights in Brazil, Japan, Thailand; EH216 series completed flights in 18 countries; granted experimental flight authorization in Brazil.

Operational Progress

• Strengthened industrial cooperation, visited manufacturing facilities for potential partnerships to improve production lines and reduce costs.
• Trained 47 operators and 22 maintenance personnel for customers, and signed strategic cooperation agreements for low-altitude infrastructure construction.

In the third quarter of 2024, EHang's total revenues were RMB128.1 million, a 347.8% year-over-year increase. The company delivered 63 units of the EH216-S series, achieving a record high for quarterly deliveries. The revenue contribution is primarily from the EH216-S series products, which drove the significant year-over-year growth in revenues.

Forward-Looking Statements

• Expected Q4 2024 revenue of RMB135 million, representing a year-on-year increase of 138.5%.
• Full-year 2024 revenue expected to reach RMB427 million, a year-on-year increase of 263.5%.
• Plan to continue investing in next-generation digital technology and products, scale production capacity, expand team, and establish new headquarters and operating sites.
• Aim to improve EH216-S flight endurance to 60 minutes by next year and develop long-range product VT-35.

Risks Identified

• Forward-looking statements involve inherent risks and uncertainties, with actual results possibly differing from expectations.
• Regulatory approval timelines for Air Operator Certificates and overseas airworthiness certifications could impact commercialization timelines.
• Market uncertainties and competition in the eVTOL industry may affect growth and market share.

Q: Could management share more details on solid state battery development with Inx? And what's the key hurdle for solid-state battery to commercialize now, and when do we expect to mass-produce it?

A: Joint battery development with Inx is complex, involving technological breakthroughs in capacity density, cycle life, etc. It typically takes 2-4 years for solid-state batteries to mature. We've increased EH216-S flight endurance to 48 minutes and expect to reach 60 minutes next year. Currently in small batch testing, aiming for mass production by end of 2025.

Q: As we enter into more in-depth review phase of operator certificate, can we expect that EHang still can receive OC by the end of this year?

A: The OC approval process is a process of setting up standards. Most work on the OC review is completed, and with quick responses and adjustments, the first OC is expected to be issued within this year, though it requires rigorous safety work.

Q: Does the additional 1,000 units per year capacity include third-party manufacturers or partners, and any update on CapEx?

A: CapEx this year is around $15 million, next year $20 million. Will start technical upgrades in Yunfu factory in Q4, and construct new factories in Guangzhou, Hefei, Guangxi, possibly with joint ventures.

Q: What are we expecting our breakeven would be at what kind of scale or at what kind of time period?

A: As we ramp up production, battery and component prices will come down. While iterating models may push up costs, gross profit margin is healthy, and with positive adjusted net profit in recent quarters, operational efficiency is improving, leading to better profitability over time.

Q: Could you provide more insights about the progress of VTC certification in overseas market?

A: EHang has flown in 18 countries, engaged with regulators. In Brazil, granted experimental flight permit for EH216-S; in Thailand, exploring sandbox pilot model, aiming for commercial flight operations in selected regions next year