EHang Holdings Limited (NASDAQ:EH) Q1 2025 Earnings Call Transcript

EHang Holdings Limited (NASDAQ:EH) Q1 2025 Earnings Call Transcript May 26, 2025

EHang Holdings Limited beats earnings expectations. Reported EPS is $-0.06, expectations were $-1.06.

Anne Ji: Good day. Hello, everyone. Thank you all for joining us on today’s conference call to discuss the company’s financial results for the first quarter of 2025. The earnings release is available on the company’s IR website. Please note the conference call is being recorded and the audio replay will be posted on the company’s IR website. On the call today, we have Mr. Huazhi Hu, our Founder, Chairman and Chief Executive Officer; Mr. Zhao Wang, Chief Operating Officer; and Mr. Conor Yang, Chief Financial Officer. Before we continue, please note that today’s discussion will contain forward-looking statements may pursuant to the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties.

As such, the company’s actual results may be materially different from the expectations expressed today. Further information regarding this and other risks and uncertainties is included in the company’s public filings with the SEC. The company does not assume any obligation to update any forward-looking statements, except as required under replicable law. Also, please note that all numbers presented are in RMB and are for the first quarter of 2025 unless stated otherwise. With that, let me now turn the call over to our CEO Mr. Huazhi Hu. Please go ahead Mr. Hu.

Huazhi Hu: Hello, everyone, and thank you for joining our earnings conference call today. We started the 2025 with another major regulatory breakthrough. In the end of March, EHang General Aviation, our wholly owned subsidiary, and Heyi Aviation, an operator of our client in Hefei, were granted the first batch of Air Operator Certificates for human-carrying pilotless aerial vehicles by the Civil Aviation Administration of China. This approval officially takes us from product certification into the era of commercial flight operations. It marks the beginning of a commercial eVTOL services in China’s low-altitude economy, allowing the general public to experience eVTOL flights for the first time. The issuance of the OC signifies that EHang has achieved full lifecycle capabilities of eVTOL, from design and R&D to manufacturing, airworthiness certification and now operational readiness.

This completes a fully integrated and commercial loop. At the same time, we are gradually contributing to the development of industry innovation standards in areas like infrastructure, personal training and operational safety. Step by step, we are advancing toward our long-term strategic goal, evolving from manufacture of autonomous aerial vehicle into a comprehensive Urban Air Mobility platform operator, delivering a one-stop solution to our clients that covering aircraft hardware, software, operational services and standard systems. The first OC represents the most critical milestone for enabling commercial operations. With this issuance, EHang has officially entered the commercialization phase, a stage that brings both opportunity and great responsibility.

Aviation has always progressed with caution and discipline. And as a pioneer in this emerging field, EHang remains deeply committed to the principle of safety first. We’re taking a deliberate and phased approach. On one hand, we continue to accumulate flight test data and provide strong support to our operator partners, such as safe operation, guidance and maintenance. On the other hand, we’re adopting a phased strategy. First isolation and then integration, first tourism then transportation and first pilot projects then expansion. We’re not rushing to scale or chasing short-term gains. Instead, our early efforts are focused on pilot cities where our clients are to accumulate operational experience and build rackable models to gradually lift OC operational restrictions.

Q&A Session

For example, we started with clearly defined low risk scenarios such as sightseeing flights before expanding into more complex Urban Air Mobility services like Urban Air Commuting. This will pave the way for the gradual realization and scaling of commercial operations for autonomous human-carrying aircraft. We believe this is the right path forward for our customers, for our partners and for the healthy development of the entire Urban Air Mobility industry. Turning to the product development. Our next generation long range pilotless human-carrying eVTOL, the VT35 has completed the final assembly of its first unit based on the VT30 prototype. The VT35 features significant upgrades, including the industry’s most stable and safe autonomous flight control and propulsion systems.

With our proprietary autonomous platform and a command and control system technologies, the VT35 deliveries disruptive innovations in both the design and reliability. We believe it will become an outstanding model among medium and long range eVTOL products. It is now undergoing full scale flight testing. The CAAC has officially accepted our type certification application for the VT35 and the aircraft is already being used for airworthiness validation test. Leveraging our EH216-S certification experience, we expect it helps accelerate the VT35 certification process. We plan to unveil the VT35 in the third quarter of this year. In the international market, we believe the VT35 backed by China’s industrial strength and advanced manufacturing will offer a clear cost and competitive advantage over other long range eVTOL products globally.

On the innovation front, R&D has always been at the driving force behind EHang. We currently hold over 700 issued and pending patent assets worldwide. Nearly half of our team is dedicated to R&D and many of our top engineers and technical leads like me come from Tsinghua University. Their strong academic foundation in aerospace, automation and intelligent manufacturing, along with the nearly 10 years’ experience at EHang have positioned us as a global leader in autonomous flight systems and technologies. In February this year, the Aerospace and Intelligent Manufacturing Committee of the Tsinghua Alumni Association was officially launched at EHang’s headquarters in Guangzhou. We’re honored to serve as the Chair Member and myself as the Chairman.

Through this committee, we aim to build an innovative ecosystem for the low-altitude economy in the Greater Bay Area, combining EHang’s leadership in autonomous aviation with Tsinghua University’s deep strengths in research and talent. Our shared goal is to drive continuous R&D and achieve breakthroughs in next-generation pilotless aerial vehicle technologies. In March, we also signed an MoU with the University of Zaragoza in Spain and Guangzhou University to establish a joint low-altitude flight safety lab. With their support, we are deepening our cooperation with the European Union Aviation Safety Agency and advancing joint R&D and talent development in Europe. With continuous innovation and differentiated core competitiveness, we will remain a global leader in the pilotless eVTOL industry and continue to shape the future of Urban Air Mobility.

With that, I’ll hand it over to our Chief Operating Officer, Mr. Wang, to walk through our operational highlights. Thank you.

Zhao Wang: Thank you, Mr. Hu. In the first quarter, we delivered 11 units of our EH216-S and generated revenues of RMB26.1 million. The low delivery volume was primarily due to three factors. First, seasonal slowdown. The winter months and the Chinese New Year holiday typically make Q1 an off season for product deliveries. Second, after the holiday, many clients, especially those involving government procurement, required time for their internal budgeting and approval process. Third, as the issuance of an OC was approaching, some customers chose to place their orders after the OC was granted, meaning those orders were not reflected in Q1 results. At the same time, in Q1 2025, we kicked off the expansion and upgrade of our Yunfu production base.

The size of our main factory has now doubled. And once fully operational, it will support an annual production capacity of up to 1,000 units. In parallel, we’re also building additional assembly facilities in Hefei, Anhui Province and Weihai, Shandong Province. These multiple sites will ensure we have ample production capacity to fulfill orders in the future, while also providing supply of spare parts and consumables for the aircraft in operations. On March 28th, two operators of the EH216-S and relevant services were officially granted their OCs. This marks a significant milestone for both EHang and the industry as it formally allows autonomous human-carrying aircraft to begin commercial operations in China. It also demonstrates strong recognition and validation of our EH216-S from both the CAAC and the market.

With the commercial operations now underway, we expect the flight activities to ramp-up significantly since the second quarter. The decline in Q1 performance was only temporary. Underlying demand remains robust with procurement and deliveries were simply deferred to later quarters. We are pleased to see that following the issuance of the OCs, consumer inquiries and order volumes have picked up significantly. We could expect a strong rebound in the second quarter. Several major orders were discussed in Q1 with the customers from provinces such as Jilin, Jiangxi, Guizhou, Hainan, Anhui and Guangdong in China are now moving forward and will begin to convert into deliveries starting in the second quarter in phased batches. On the operations side, following the CAAC’s principle of safety first, EHang and our operator partners are implementing enhanced standards to ensure safe and compliant flight operations.

The two certified operators, Heyi Aviation and EHang General Aviation, are taking a phased three-step rollout starting with [indiscernible] only trial operations followed by human-carrying trial operations and automatically transitioning into routine human-carrying commercial services. This approach ensures a safe, stable and seamless progression toward full scale commercial operations. Currently, both operators have entered the human-carrying trial phase at designated eVTOL cities in Guangzhou’s Suigang Pier and Hefei’s Luogang Park. These flights are being offered initially to internal staff and a selected group of invited passengers via ticketing platforms. Once sufficient experience and safety data have been accumulated, the operators will begin offering flight tickets sales to the public.

At the same time, we’re actively laying groundwork for a scaled commercial operations by enhancing our customer service infrastructure. This includes providing standardized and scalable flight route planning, modular and customized vertiport designs and the systematic training program for operational and maintenance personnel. These efforts are aimed at helping more customers prepare for their OC applications. In Q1, we supported a customer in Shanghai in establishing an eVTOL operation center at Longhua Airport on the Xuhui Riverside and successfully completed the first EH216-S flight in the city. This also marked the start of routine sightseeing flights along the Huangpu River in Shanghai. In Wenchang, Zhejiang Province, the world’s largest UAM Center for eVTOL Exploration Sales and Operation was established.

Meanwhile, in Shenzhen’s Luohu District, our client has launched a UAM demonstration and experience center. This facility features the world’s first fully automated multilevel smart eVTOL Vertiports, setting a new benchmark for urban low-altitude infrastructure. Additionally, in collaboration with the China Communications Information and Technology Group, we are building a multilevel urban transportation hub in Nalate, Xinjiang. These are examples of how the low-altitude economy will diversify its operational models and shape a more vibrant future oriented way of lifestyle. On the industrial collaboration front, in February, we entered into a strategic partnership with JAC Motors and Guoxian Holdings to jointly develop a next-generation eVTOL manufacturing base in Hefei.

More recently, we expanded our partnership with CCIT to include CCCC-FHDI Engineering Company, forming a trilateral collaboration on three key areas. First, we’re focusing on delivering specialized low-attitude tourism routes, smart inner city transportation corridors and emergency response networks. This includes creating unique transport systems such as themed low-latitude tourism experiences and aerial canal logistics pathways. Second, we are jointly building a multidimensional infrastructure network covering aerospace management, flight route planning and deployment of digital base stations. Third, we’re jointly expanding into international markets across Southeast Asia, Africa and South Asia to develop integrated land, air, water transportation solutions.

Our goal is to build a globally connected low-altitude economy ecosystem, promote the adoption of Chinese standards worldwide and bring safe intelligent air mobility to more regions across the world. At the same time, we’re establishing low-altitude aircraft testing sites across multiple regions to evaluate performance under extreme conditions, such as high altitude, high temperature, high salinity, low temperature and severe weather conditions. Continuous testing and refinement will help enhance the resilience and safety of our aircraft. In Guangzhou, we are working closely with the government authorities and construction partners to transform the area surrounding our new headquarters into an aerospace industry hub, promoting industrial clustering, accelerating the deployment of a standardized infrastructure and promoting the growth of low-altitude economy.

Currently, the construction is already underway. In addition, we’re also actively expanding our businesses into other applications such as logistics and emergency rescue. Our logistics autonomous aerial vehicle have already completed multi round trip flights between Guangzhou and Zhuhai, covering distances of up to 200 kilometers. With the upcoming launch of our VT35 series, we expect it to further enhance our long range, high efficiency logistics capabilities. Emergency rescue is another major focus area. The growing use of UAVs offers new solutions for high rise firefighting, forest firefighting, search and rescue and medical transport. EHang has developed new generation of specialized UAVs tailored for these use cases. These aircraft have already been used in multiple emergency drills and have drawn strong interest from China’s Ministry of Emergency Management and National Firefighting Authorities.

These products have already received initial purchase interest. As these products near finalization, we expect them to begin generating sales later this year and contributing to our revenues this year. In addition to advancing low-altitude products, EHang is exploring our collaborations with the General Aviation sector. We’ve launched the pilot initiatives through different approaches for integrated trial operations of low-altitude aircraft in General Aviation airports in Guangxi, Hezhou, Beijing Pinggu and Fangshan, Hainan Wanning We’re also planning additional projects in Anhui Hefei, Guangdong Guangzhou and Hainan Lingao. As our operations in airports and the network expands in the future, we expect to unlock greater deployment potential for our full range of aircraft.

As China’s low-altitude economy continues to gain momentum, EHang, as a recognized industry leader is attracting increasing interest from cities and enterprises nationwide. Our products’ operational philosophy and unwavering commitment to safety are gaining broader recognition and acceptance across the market. In the first quarter, EHang was featured in over 19,000 domestic media reports, including coverage from the CCTV Spring Festival Gala, national television networks, newspapers and the major online platforms, reaching an estimated 80 billion views. Internationally, we were mentioned more than 3,600 times across media outlets in the UK, France, Spain, the US, Japan and other countries, generating a global reach of over 1.69 billion views.

EHang’s products have been featured at a wide range of low-attitude economy expressions and forums, both in China and internationally. Our brand has earned strong recognition at home and abroad. Internationally, our global flight footprint continues to expand in the first quarter. Our EH216-S has successfully completed the demo flights in Benidorm, Spain and in Mexico. In Thailand, our local partners have started working with the National Air Traffic Control Authority to conduct preliminary route and site assessments in Phuket. And operational team is already in place aiming to launch commercial trial flights within Thailand’s designated regulatory Sandbox in the near future. Looking ahead to the rest of 2025, we will continue advancing both operations and product sales with a clear focus on building diversified revenue streams.

We are confident in our growth momentum over the next few quarters and remain fully committed to achieving our full year revenue target of RMB900 million. Now I’ll turn it over to our CFO, Conor, to walk us through the financial results. Thank you.

Conor Chia-hung Yang: Hello, everyone. This is Conor. Before I go into the details, please note that all numbers presented are in RMB unless otherwise stated. A detailed analysis is available in our earnings press release on the IR site. Total revenues were RMB26.1 million in Q1 2025, a decrease compared with Q1 last year and Q4 2025. This change is primarily driven by decreased sales volume of EH216 series products. As our COO mentioned earlier, although there was a short-term decline in performance in the first quarter, this doesn’t affect the company’s long-term growth trend. In fact, we have observed a significant improvement and growth in potential orders and deliveries in Q2, which keeps us confident in the company’s future performance.

Gross profit was RMB16.3 million in Q1 and gross margin improved to 62.4% compared with 61.9% in the same period of 2024 and 60.7% in Q4 2024. The increase in gross profit was mainly benefited from the higher average selling price of EH216 series product, indicating that our products have strong market competitiveness and pricing power. Turning to expenses. Total operating expenses in Q1 were RMB110 million, a quarter-on-quarter decrease of 31.6%, mainly due to a significant reduction in employee compensation and share based compensation expenses. Adjusted operating expenses, which exclude share based compensation expenses, were RMB63.6 million in Q1, up 16.8% year-over-year and down 19.3% from the previous quarter. The year-on-year growth is due to the company’s continuous expansion of key positions and recruitment of talents to support sustained business growth, leading to an increase in overall employee compensation expenses.

Meanwhile, we continue to invest in R&D to maintain our technological leadership. The quarter-on-quarter decrease reflects our achievements in cost control and efficiency optimization. Adjusted net loss was RMB31.1 million in Q1, primarily driven by a decline in deliveries in the quarter. While this represents a decline compared with an adjusted net income of RMB36.4 million last quarter. We believe the impact is only temporary. As the deliveries recover and continue to grow in the coming quarters, we expect the financial performance to gradually improve accordingly. The company still has sufficient capital reserves. As of March 31st, 2025, cash restricted deposits and short-term investments totaled RMB1.11 billion, giving us solid flexibility to support upcoming R&D investment, production scale-up and commercial deployments.

With the achievement of the important OC milestone in Q1 and the eVTOL commercial operations to be gradually launched going forward, we’re confident in our business growth throughout the year. As such, we are maintaining our annual revenue guidance of RMB900 million for the full year 2025. We believe that the market increasingly recognize EHang’s commercialization capabilities and the low-altitude economy industry continues to gain momentum. We are able to continuously create value for our shareholders over the long-term. Thank you.

Q – Unidentified Analyst: Full year revenue guidance of RMB900 million unchanged. I was wondering, could you please give us an outlook in which quarter we could probably see a significant growth in both the sales as well as the deliveries? So just to give us an outlook on that. So that’s the first question.

Zhao Wang: [Foreign Language] Q1 performance declined due to several factors. First, seasonal impact from winter and Chinese New Year holidays, which typically creates slow delivery periods in the first quarter. Second, as we enter the new fiscal year, customers require time to finalize their annual budgets, especially for government procurement, which involves longer approval cycles. Third, anticipating OC certification, some customers delayed their orders until after certification was granted, which pushed these sales beyond Q1. [Foreign Language] However, after obtaining OC certification, our internal data shows improvements in both Q2 delivery volumes and sales. Large orders from customers in Jilin, Jiangxi, Guizhou, Hainan, Anhui and Guangdong that were negotiated in Q1 will begin converting into contracts and deliveries in batches starting from Q2. Therefore, we maintain our full year revenue guidance of RMB900 million unchanged. Thank you.

Unidentified Analyst: [Foreign Language] Thank you for your answer. And a follow-up question. I’ve noticed that in the reporting period, two EH216-S operators, including one of yours, wholly owned subsidy have obtained the Air OC from the CAAC enabling commercial operations. I was wondering, on average, how long will it take for a EH216-S owners to get the certificate? And how many more operators may get the approval of commercial operations this year, hopefully, that will translate into more deliveries and scaled operation fleet in the second half of the year? So that’s my second question. Thank you.

Zhao Wang: [Foreign Language] This is Wang Zhao. I’ll also take your second question. EHang General Aviation and Hefei Heyi are the first two operators nationwide to receive operating certificates for the unmanned civilian aircraft. The OC issuance actually clarifies the regulatory standard and framework, which should reduce application time line for future operators. At the moment, many of our customers’ operating companies are currently in the application process. Thank you.

Operator: Your next question comes from Laura Li with Deutsche Bank.

Laura Li: Hi. Thank you for taking my question and congrats on the OC award. So my question is about the competition. So we have seen some of your peers start to win orders recently. Most of them are with different designs like tiltrotor or like lift and cruise. But some of those have applied for TC like one or three years ago ahead of our VT35. And they might be granted maybe next year or so. So how should EHang stay like competitive going forward, especially beyond the current like multi-copter design?

Huazhi Hu: [Foreign Language] Urban Air Mobility and intracity air transport serve different markets with very distinctive requirements. Urban operations need small footprints, high-density networks, quick turnarounds and cost efficiency, while intracity requires long range. These markets aren’t directly competitive with each other. The real competition comes from traditional ground transportation say cars from urban travel and high-speed for intercity routes. Compared to other eVTOL design, our EH216-S multi-copter configuration has a compact six-meter time to six-meter footprint, making it lightweight with minimal infrastructure requirements for takeoff and landing sites. This enables large-scale deployment in tourist areas and urban environments.

In contrast, aircraft with 10-plus meter wingspans like tilt rotors and lift and cruise models would require expensive large-scale airport infrastructure, which makes it impractical for dense urban deployment. [Foreign Language] Our economics are also superior. The EH216-S sells for only RMB2.39million domestically, which is significantly below our competitors’ large aircraft priced above RMB10 million. Our autonomous flight approach eliminates pilot training and employment costs. As we gather and accumulate more operational data, our continued airworthiness programs enable significant cost reduction, strengthening our competitive position. [Foreign Language] Last but not least, we are leveraging our first-mover advantage through continuous technology and product development.

For EH216-S upgrades, we are developing more efficient motors, fast charging batteries and solid-state battery solutions. For long range products, our VT35 is progressing through PC certification. When it is launched, it will offer superior pricing and competitiveness compared to other long range eVTOL products. Thank you.

Laura Li: Huazhi Hu, Thank you for the color. That’s very helpful.

Operator: Your next question comes from Shen Wei with UBS.

Wei Shen: [Foreign Language] Thank you, management, for taking my question. I’ve got three questions. First one is on your delivery. When are we expecting to see sales growth? Are we able to achieve growth in the first half of the year? Second question is with regard to the order guidance. Can you please share some color on the order guidance as of May? And last question is on when are we able to see the operator commence commercial operations because infrastructure wise, it’s almost ready? So these are the three questions.

Conor Chia-hung Yang: [Foreign Language] This is Conor. I’ll take your question on new order guidance. As I’ve explained, Q1, the sales was impacted. However, due to the seasonal factors as well as OC certification progress. However, we believe it is temporary and we have already seen our orders and the number of clients have picked up in Q2, which the service is quite strong. Therefore, we maintain our full year revenue guidance of RMB900 million unchanged. Additionally, many large orders are progressing at the same time. So as we are near or finalize those contracts with our clients, we will disclose them as we previously do. So that’s on your first question on your new order guidance.

Zhao Wang: [Foreign Language] So this is Wang Zhao. I’ll take your second question. So actually the operator in Hefei has already started the operation. However, we are taking a phased approach. At the first approach currently for Phase 1, it’s only limited to internal employees and invited passengers and employees can already book flight experiences through our ticketing platform. And in Phase 2, we will open ticket sales to the general public.

Wei Shen: Thank you.

Operator: Your next question comes from Wade Wu with Jefferies.

Unidentified Analyst: [Foreign Language] Sorry. I was on mute. A couple of questions. First one is on the time line for inaugural flight ceremonies. When are we expecting the formal commercial operation at the Guangzhou and Hefei? My second question is on the end customers who are supplying OC. Rumors says that around five operators is going to obtain OC certificates by the end of the year. Are there any updates on that?

Zhao Wang: [Foreign Language] This is Wang Zhao. I’ll take your questions. Guangzhou and Hefei operators are conducting trial operations following the OC certification. But what I’d say is that safety remains paramount for a sustainable low-altitude economy development. Like I said earlier, we are implementing our phased operational approach, both operators at Guangzhou Suigang Terminal and Hefei Luogang Park have entered manned trial operations, initially serving internal employees and invited passengers through our booking platform. Once we accumulate sufficient operational experience, operators will open public sales. Since operations are already underway, so inaugural ceremonies aren’t necessary. [Foreign Language] And with regard to the progress on OC applications from other clients, our customers with substantial fleets are right now actively preparing OC applications.

For instance, our Wenchang customer has assembled a professional team with our guidance and submitted to their application, which the East China Regional Administration has accepted for a review. Thank you.

Operator: Your next question comes from Fiona Liang with Bank of America.

Fiona Liang: [Foreign Language]

Anne Ji: Hi, operator. Next question please. Thank you.

Operator: Your next question comes from Yiming Wang with China Renaissance.

Yiming Wang: [Foreign Language] Thank you management for taking my question. With the current commercialization progress and the operational status after receiving the OC. I was wondering whether the company has conducted any preliminary assessment or survey? What is the daily revenue and also the passenger flow/traffic is like? And how much revenue does that translate into on a daily basis?

Zhao Wang: [Foreign Language] This is Wang Zhao. I’ll take your question. The two certified operators have begun trial operations, maintaining regular daily flights to accumulate operational experience and data while testing our booking platform. And as we — more customers obtain OC in a second, starting from Q2, we are going to see a larger fleet and more operators will begin their trial operations. We expect the number of trial operations to grow to even 1,000 flights. And we are expecting that number to grow even further as more customers obtained their OCs into the rest of the year. Thank you.

Operator: Your next question comes from Rongyan Zhou with CITIC.

Rongyan Zhou: [Foreign Language] Thank you management for taking my question. I got two questions. One is on the lift and cruise product. What’s the progress is like on the product airworthiness certification? Second question is on the overseas market expansion. What’s the progress is like? Is it okay for the management to share some color on that?

Zhao Wang: [Foreign Language] This is Wang Zhao. VT35 assembly is complete. Building on the VT30, we have upgraded key components, including configuration, flight control and propulsion systems, achieving far superior design, more reliable flight performance and reduced size. We will officially launch the EHang VT35 series in Q3 this year. As for VT35, it is currently undergoing comprehensive flight testing and CAAC, China Aviation and Administration of China has formally accepted our type certificate application. Built on our successful EH216-S certification experience, we expect an accelerated VT35 certification progress. [Foreign Language] With regard to your question on international market expansion progress. Actually, in Q1, we have conducted successful demos in Benidorm Spain and Mexico.

EHang has now operated in 20 countries globally. With our progress in Southeast Asia, we plan to launch commercial operations in Thailand first. Our partner in Thailand is collaborating with the National Air Traffic company on route and site surveys in Phuket. The operational team is established and we are working to begin operations in Thailand’s Sandbox pilot zone.

Operator: Your next question is with Fiona Liang with Bank of America.

Fiona Liang: [Foreign Language] Thank you management for taking my question. You briefly talked — you talked about that — you’re expecting a significant growth in sales in Q2 as well as the deliveries in Q2. So the way I understand it, as you deliver more, as you ship more to clients, which will translate into revenues. So I assume there is going to be a significant revenue increase in the second half of the year. So is that so? And my second question is on the gross profit margin. The Q1 gross margin improvement was partly due to the ASP gains. So can management share the reasons or give us breakdown on the delivery volumes by the models shipped? Thank you.

Conor Chia-hung Yang: [Foreign Language] This is Conor. I’ll take your first question. You’re absolutely right. Q2 is showing very strong sales growth and we’re expecting very strong year-over-year growth. And as we negotiate and engage more clients and according to their actual needs, we can tell that in the second half of the year, we are going to expect much stronger year-over-year revenue growth. [Foreign Language] And on your second question, for the past two to three quarters, since there were a lot of large orders, which we give discounts to. However, in Q1, we delivered 11 EH216-S. And these are retail customers. So we’re selling them at RMB2.39 million per unit without any discount, pushing up the average selling price. Additionally, since we are having a bigger volume of procurement. So that brings the total boom down on a year-over-year basis in Q1. So these two factors contributed to the improved gross profit margin in Q1. Thank you.

Operator: Your next question comes from Yu Chen with Guangfa Securities.

Yu Chen: [Foreign Language] Thank you management for taking my question. This is Chen Yu, general analyst from Guangfa Securities. Actually my questions are pretty much echo to what other analysts have touched on. I just want to clarify and double check on a few details. First one is on the base capacity at Yunfu and also the Hefei Industrial Park. Can the management give an update on what’s the planned production capacity for our Hefei facility as well as the time line in terms of its progress? And my second question is on the SG&A expenses. In Q1, it showed a decline on adjusted terms. I was wondering if the management or the company is maintaining the SG&A expense ratio at 40% growth guidance unchanged? Thank you.

Zhao Wang: [Foreign Language] This is Wang Zhao. In Q1, the launched expansion and upgrade at our Yunfu facility, which has doubled the main factory growth for area to 48,000 square meters. And with enhanced automation, we plan to increase the total annual production capacity to 1,000 units by the end of the year. And in Hefei we have also announced a strategic partnership with JAC Motors and Guoxian Holdings to establish a modern low-altitude aircraft manufacturing base. According to the government plan, the completion is expected within one to two years from now. Currently, we are building a transitional or mix shift facility with completed infrastructure and ongoing equipment installation. Also, I want to mention that our factory site selection in Beijing and Weihai is complete with construction now underway.

Conor Chia-hung Yang: This is Conor. Cost and expense management is a key focus this year for the company. We have already seen the results reflected in Q1 financial results. It shows quarter-over-quarter decrease in the pre-adjusted expenses. We will continue to maintain stringent control on the SG&A expense growth in the coming quarters. While maintaining our full year revenue guidance of $900 million unchanged, we will keep our 40% operating expense growth guidance for the full year of 2025. Thank you.

Operator: Our next question comes from Ling Lu with Guosheng Securities.

Ling Lu: [Foreign Language] Thank you management for taking the question. I was wondering how the management and the company perceive the recent narrative or statement from the NDRC? Because according to the NDRC recent statement about expanding low-altitude economy applications, it should follow cargo for passengers, isolation for integration and suburbs for urban areas principle. So just wondering what’s management’s view on that statement?

Zhao Wang: [Foreign Language] EHang has always prioritized safety since its inception. For our two OC certified operators, they will follow a three-phase approach. Cargo trial operations, passenger trial operations and then routine passenger operations, ensuring safe stable transition to commercial operations. Both operators at Guangzhou’s Suigang Terminal and Hefei’s Luogang Park have entered passenger trial operations. [Foreign Language] The low-altitude economy is developing rapidly with many new entrants. Well, from EHang’s experience, ensuring aircraft safety is always paramount. So the NDRC’s guidance emphasizes industry-wide safety requirements. Thorough research and validation must go ahead before passenger aircraft development and production.

In this regard, EHang has invested over 10 years in this development. And additionally, the low altitude office of NDRC has continuously tracks EHang’s passenger operations through regular communication meetings. Thank you.

Operator: Thank you. Seeing no more questions in the queue, let me turn it back to Ms. Anne for closing remarks.

Anne Ji: [Foreign Language] Thank you, operator, and thank you all for participating on today’s call. If you have further questions, please contact our IR team by e-mail or participating in the following investor events through the calendar information provided on our IR site. We appreciate your interest and look forward to our next earnings call. Thank you.