EHang Holdings Limited (NASDAQ:EH) Q3 2023 Earnings Call Transcript

Undoubtedly, prioritizing flight safety is of a paramount importance in aviation industry as it directly impacts the personal safety of every passenger. Throughout the past few years, we have conducted over 42,000 autonomous flights across 14 countries, establishing an outstanding track record. As we enter a new phase of commercial operations, we will continue to uphold our commitment to safe flights for healthy and sustainable development of this industry. At the production level, we maintain strict control over the quality standards of our aircraft. Based on obtaining AS9100D, International Aerospace and Aviation Quality Management System certification, we are now actively cooperating with the CAAC to finalize the processing of our production certificate.

This ensures that every aircraft producing mass quantities adheres to the airworthiness standards and will be issued an airworthiness certificate and efficiently delivered to our customers. Regarding operations, we are advancing towards commercial operations of EHang 216-S in an orderly manner. We are undertaking comprehensive preparations such as enhancing safety operational regulations, conducting personnel training, constructing [verti-ports] (ph), establishing maintenance and service systems, and obtaining operational licenses and insurance. Furthermore, in August of this year, our Unmanned Aircraft Cloud System received the approval for trial operations from the CAAC, which serves a significant foundation for our upcoming commercial operations.

It also plays a vital role in ensuring the safety and management of large-scale operations of our unmanned eVTOL aircraft. At the commercial operations stage, we will take a proper pace and approach of our development with a responsible mindset by prioritizing the public safety and fostering industry development. Initially, we have set restrictions on the usage and operational conditions of EHang 216-S, primarily focusing on sightseeing and short-distance passenger flights. Adhering to the principle of progressive risks and a conducted trial operation while advancing certification, we plan to gradually lift the restrictions, expanding operations narrows into a broader range of urban and mobility applications, including airport shuttles and fully autonomous urban air taxis, et cetera.

Throughout this process, EHang remains dedicated to enhancing our product, advancing fundamental research and development and achieving milestones such as the test flights with high energy density batteries and test flight our lift-and-cruise eVTOLs such as the VT-30, alongside its airworthiness certification. These efforts will be geared towards achieving significant advancement in our flight performance. To achieve safe, autonomous and ecofriendly e-mobility, it’s not only a long-standing commitment for EHang, but also a shared goal for humankind. Facing a long journey ahead, we are aware of the significant responsibilities and the mission as a pioneer of innovations. Our dedication remains unwavering, guided by the core principles of the Chinese civil aviation industry, a reverence for life, regulations and duties.

We are resolute in our pursuit of strategic goals, unwaveringly contributing towards a high-quality development of the civil unmanned aviation industry, thereby making meaningful progress in advancing this innovative sector. Now, I will hand over the call to our Chief Operating Officer, Mr. Xin Fang. Thank you.

Xin Fang: [Foreign Language] [Interpreted] This is the English translation of Mr. Fang’s remarks. Thank you, Mr. Hu, and hello, everyone. The achievement of the EHang 216-S TC in October this year makes EHang’s transition from the product certification phase to the next stage of commercial operations. Aligned with our strategic positioning as an urban air mobility platform operator, the company is set to implement an integrated business model, driven by both product sales and operational services. Therefore, production, sales and operations are the three key drivers to our business growth. I will now share the latest updates and plans of our company in these three areas. Regarding sales, we successfully delivered 13 units of EHang 216 series products in the third quarter, marking a notable year-over-year and quarter-over-quarter growth.

With the EHang 216-S receiving its TC, we’re seeing a significant increase in business collaborations and product purchase demand from customers around the globe, especially from China. For instance, Shenzhen Boling intends to purchase 100 units of EHang 216-S, and we have delivered an initial five units for operational preparations. Moreover, in accordance with our strategic partnership with the Hefei Municipal Government is set to facilitate orders for at least 100 units of EHang 216 series products. As of now, the total sales pipeline for the EHang 216 series in China have more than 245 units, which will be delivered in phases as per customers’ requirements. Regarding production, guided by the CAAC Central and Southern Regional Administration, we are steadily moving towards producing EHang 216-S according to its TC at our Yunfu factory.