EHang underlined its urban air mobility (UAM) ambitions last week by filing for a US$100 million initial public offering (IPO) on Nasdaq.
The Chinese autonomous aerial vehicle (AAV) developer plans to offer Class A ordinary shares before the end of 2019 and secure a Nasdaq listing under the symbol “EH.”
The Form F-1 lodged with the U.S. Securities and Exchange Commission (SEC) on Oct. 30 says EHang has delivered 38 “passenger-grade” AAVs to customers “for testing, training, and demonstration purposes and developed two command-and-control centers for smart city management.”
The delivered aircraft comprise 37 two-seat EHang 216s and one single-seat EHang 116 (an enhanced version of the EHang 184) for customers in Asia, Europe, and North America for tourism, organ delivery, and general transport applications, the prospectus says.
EHang points out its “primary focus” is its home territory of China, which it predicts could be “the world’s largest AAV market in the foreseeable future.”
EHang is seeking regulatory approvals to begin commercial operations in China. It plans to launch an autonomous air taxi service in its home city of Guangzhou by the end of 2019 after the Civil Aviation Administration of China (CAAC) earlier this year approved a pilot service. Similar routes are planned in other major Chinese cities, the document says.
EHang has additionally applied to the CAAC for operations with “non-passenger-grade AAV models” designed for commercial applications including logistics and aerial media. The company has an unmanned delivery service contract with DHL-Sinotrans, and undertook the first urban UAV delivery in China with the Yonghui Group in June 2018.
EHang says there is “significant growth potential in the AAV market” worldwide, quoting a Frost & Sullivan forecast about the UAM market growing in value from US$300 million in 2018 to US$3 billion in 2023.
The SEC filing lists several factors to encourage investors. The company says its technology development since it was founded in 2014 means its products provide “a compelling combination of safety, ease of use, and performance.”
The document says other strengths of EHang are its management team and in-house R&D capabilities, and large-fleet operations through its command-and-control system, demonstrated by “fleet formation performances” where LED light-equipped AAVs create choreographed 2D or 3D light shows.
EHang plans to expand its manufacturing capabilities, extend its portfolio with new models, continue to promote commercialization and adoption of eVTOL systems, and explore new monetization opportunities, the filing states.
The company also intends to pursue partnerships to improve its technological and production capabilities, such as the agreement announced last month with Vodafone, which will provide 5G connectivity to EHang AAVs operating in Europe.
The EHang IPO document does caution investors. It points out what it calls “challenges, risks, and uncertainties” affecting the company and the market overall.
It highlights current restrictions from the Chinese regulator on passenger-grade AAV operations and notes a “complex” regulatory environment for autonomous aircraft operations in the U.S. and Europe.
Developers’ ability to comply with, and help formulate, legal and regulatory requirements and industrial and safety standards is another issue, the company says.
“In China, the United States, and other jurisdictions, the commercial use of passenger-grade AAVs, and in some cases non-passenger grade AAVs, is subject to an uncertain or lengthy approval process,” the filing states.
“We are unable to estimate the average length of time required to obtain the applicable regulatory approvals due to the nascent nature of AAV-related regulations and the lack of relevant precedents.”
The filing continues: “Nor can we predict when these regulations will change, and any new regulations may impose onerous requirements and restrictions.”
In addition to “navigating a new and evolving regulatory environment,” EHang says further challenges are encouraging take-up in AAVs, and ensuring “safe, high-quality, and cost-effective AAVs on an ongoing basis.”
Developers will also need to mitigate delays and interruptions to commercialization plans, make timely product deliveries, and sell aircraft “that perform in line with customer expectations.”