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EHang works through type certification despite a ‘volatile and uncertain’ start to the year

Recent COVID restrictions in China have made the start of the year “more volatile and uncertain” for Chinese eVTOL developer EHang, according to the company’s founder, chair and CEO Huazhi Hu.

EHang
During the company’s first quarter earnings call, EHang said the resurgence of COVID-19 in China has resulted in a “more volatile and uncertain” start to the year. EHang Image

Though the pandemic isn’t completely to blame — with macroeconomics and geopolitical tensions also factoring into the pressures EHang has faced over the last few months — the virus did impact the company’s certification program, executives told shareholders during the company’s first quarter earnings call on May 31.   

“Since the first quarter of this year, like most Chinese companies, we have been facing pressures, challenges and uncertainties due to the resurgence of COVID-19 in China and the stricter travel restrictions,” said Xin Fang, EHang’s chief operating officer, in remarks translated to English.

Fang said the company’s type certification process “was affected and has been slowed down,” with the restrictions hampering the company’s ability to engage with the Civil Aviation Administration of China (CAAC). The pandemic also impacted its tourism-related business, as its operational trial flights had to adhere to restrictions in certain tourist areas, Fang said.  

But just how much the pandemic has impacted its certification program is unclear. EHang did not immediately return requests for clarity on its certification timeline, but executives told shareholders they planned to work with Chinese aviation authorities “to complete the certification work as soon as possible.”

“We remain confident in our long-term outlook going forward,” Fang said. The company had previously said it was targeting receiving type certification and launching commercial operations this year.

As for its supply chain, EHang executives reiterated its message to shareholders back in March, asserting that the pandemic hasn’t had an impact on its production plan since most of its suppliers are based in China.

“Due to the changes of the global landscape, we saw some price increase of some raw materials,” Fang said. “So, we did some preparation with some inventory of the key components and materials beforehand.”

The CAAC formally adopted the special conditions for the EH216-S type certification in February, which spells out the conditions that EHang would need to follow in order to get its EH216 autonomous passenger-carrying eVTOL aircraft type certified. The document includes criteria for specific categories, such as flight performance, structures, design and construction, and propulsion systems.

“Our technical team and airworthiness team are tackling challenges step by step and are continuing to explore and refine our means of compliance,” Hu said in his translated remarks.

Last week, the eVTOL developer announced a new partnership with Charoen Pokphand Group — one of the largest conglomerates in Thailand — to introduce autonomous urban air mobility (UAM) to the country.

The companies said they will pool their expertise and resources to build out their UAM platform in the region. This includes carrying out work related to product sales and marketing, regulatory compliance, business development and infrastructure deployment.

The companies will also explore potential uses for EHang’s EH216 eVTOL aircraft in Thailand, such as aerial sightseeing, cargo delivery, passenger services, or city management.

The partnership with C.P. Group is the latest move in the company’s plan to focus its first quarter activities on building its UAM platform.

“Our recent customers and partners in other Asian countries all have extensive resources and experiences in their local markets,” said Edward Huaxiang Xu, EHang’s chief strategy officer. “These strong partners will stimulate the expansion and growth for the company’s overseas business development. Besides China, Asia is one of the significant strategic markets for us.”

Since the beginning of the year, the company has partnered with AirX in Japan in a deal that includes a pre-order for 50 units of the EH216, as well as Aerotree in Malayasia for 50 units of the EH216 and 10 of the VT-30, and Prestige Aviation in Indonesia for 100 units of the EH216.

Xu also hinted at potential partners in Europe and the U.S., telling investors, “Hopefully, you are going to see more partnerships in the future.”

“Today, more than 4,800 operational trial flights have been carried out in practical flight environments and application scenarios,” Fang said. “In addition, we are actively developing and building our online booking platform system, namely our operating system.”

He expects the initial system will be deployed in the third quarter of this year, ready to support commercial operations once the EH216 is type certified.

The company reported RMB5.8 million (US$0.9 million) in total revenues for the first quarter of 2022, compared with RMB8.7 million in the fourth quarter of 2021. EHang experienced a net loss of RMB68.8 million (US$10.9 million), and its cash and cash equivalents sat at RMB236.9 million (US$37.4 million) as of March 31, 2022.

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