<p>Charles Alcock is managing editor of the AIN Media Group, having rejoined the company in 2019. He has been an aviation journalist since 1986, and previously worked for AIN from 1990 to 2017, most recently as editor-in-chief. His main focus is on covering new aviation technology and business models, as well as international news.</p>
<p>Having been raised in the London area, Alcock studied at the University of Manchester in the UK and earned an honors degree in Politics and Modern History. He speaks English and French, and some German.</p>


Managing Editor

<p><span><span><span>Last month EHang won the race to be the first eVTOL aircraft manufacturer to achieve<a href="https://www.futureflight.aero/news-article/2023-10-13/china-issues-worlds-first-evtol-aircraft-type-certificate-ehangs-eh216-s"> type certification</a> when the Civil Aviation Administration of China (CAAC) signed off on the airworthiness of its two-seat autonomous EH216-S vehicle. The company has now embarked on what looks to be a more gradual climb to achieve sustained profitability as it incrementally expands deliveries and the rollout of commercial operations with early customers and partners.</span></span></span></p>
<p><span><span><span>Announcing financial results for the third quarter of 2023 on November 22, EHang demonstrated that it is making headway in reversing the inevitable losses as its trickle of revenues starts to flow more freely. In a November 22 briefing on its third quarter results for analysts, the Nasdaq-listed company’s CFO Conor Yang said it expects to be generating profits by the end of 2024.</span></span></span></p>
<p><span><span><span>The predictably modest revenues for the quarter of RMB 28.6 ($3.9 million) are not inherently surprising at this stage of a new market entrant like EHang. Arguably of greater significance is the positive direction of travel in terms of driving down its operating loss by 7 percent to RMB 70 million ($7.4 million) in the third quarter from RMB 75.3 million in the second quarter.</span></span></span></p>
<p><span><span><span>Also notable are EHang’s meager­—by Western standards—cash reserves amounting to around $40.5 million. The company says these funds, combined with anticipated cash flow from aircraft deliveries and operations, are sufficient to cover its expenses for the next 12 months, but it has not ruled out a need for further fundraising.</span></span></span></p>
<h3 class="subheading"><strong>Production Rampup Will be Gradual</strong></h3>
<p><span><span><span>With its CAAC type certificate in hand, the Guangzhou-based company is now working to earn the production certificate it needs to start series production for the 455 EH216-S aircraft it says now constitute its backlog of orders. Of these, 245 are from customers in China, and 210 are from overseas (mainly within Asia). The company says it aims to achieve its first foreign type certificate within the next 12 months, stating that Brazilian regulators have been in talks with their Chinese counterparts.</span></span></span></p>
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            <div class="field field--name-field-media-image field--type-image field--label-hidden field__item">  <img loading="lazy" src="/sites/default/files/futureflight/import/EH216-S%20passenger-carrying%20unmanned%20aerial%20vehicle%20at%20the%20TC%20ceremony.jpg" width="3259" height="2172" alt="EHang's EH216-S eVTOL aircraft" title="EHang plans to gradually increase deliveries of its EH216-S two-seat, autonomous eVTOL aircraft. (Image: EHang)">

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            <div class="field field--name-field-caption field--type-string-long field--label-hidden field__item">EHang plans to gradually increase deliveries of its EH216-S two-seat, autonomous eVTOL aircraft. (Image: EHang)</div>
      
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<figcaption>EHang plans to gradually increase deliveries of its EH216-S two-seat, autonomous eVTOL aircraft. (Image: EHang)</figcaption>
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<p><span><span><span>EHang’s Yunfu assembly line is already producing small volumes of the EH216-S and will expand the number of deliveries, which started prior to the type certificate being issued. Initial annual capacity at the facility is around 600 units, and this will include cargo-carrying and firefighting examples of the vehicle, which currently account for no more than 10 percent of sales agreements. </span></span></span></p>
<p><span><span><span>The manufacturer has an ongoing partnership with express delivery group DHL-Sinotrans through which it is exploring the possible use of the EH216. DHL-Sinotrans managing director Dongming Wu is an independent director on the EHang board.</span></span></span></p>
<p><span><span><span>During the third quarter, EHang delivered 13 aircraft, compared with five units in the second quarter and four&nbsp;in the third quarter of 2022. CAAC permitted some deliveries to be made prior to issuing the type certificate to support early trial operations. More early deliveries are anticipated during the fourth quarter of this year.</span></span></span></p>
<h3 class="subheading"><strong>Commercial Flights Will Start Slowly</strong></h3>
<p><span><span><span>The other factor driving a need for a gradual approach to commercialization is that CAAC has imposed interim restrictions on early EH216-S operations. For now, it is only permitting trial operations in specific locations, away from dense urban areas, with first sightseeing flights carrying fare-paying passengers expected soon, EHang's founder, chairman, and CEO Huazhi Hu told analysts. Temporary altitude and speed restrictions remain in place, and initially EHang itself will act as the operator, during a transition period with early customers, using its now-approved command and control system for the pilotless flights.</span></span></span></p>
<p><span><span><span>Like other eVTOL aircraft developers, EHang has been accumulating provisional sales commitments that it defines as pre-orders. The company told analysts that in some cases it is collecting non-refundable deposit payments covering 30 percent of the undisclosed purchase price, with the balance due on delivery.</span></span></span></p>
<p><span><span><span>Among the customers now confirmed as holding firm orders are <a href="https://www.futureflight.aero/news-article/2023-09-29/ehang-delivers-five-evtol-aircraft-chinese-tourism-company">Shenzhen Boling Holding Group</a>, which has already taken delivery of five&nbsp;aircraft and is committed to receiving another 95. Others include Fengshan Sanmenhei 4A Scenic Area in Guangxi province, Xiyu Tourism, and the Tianxingjian Cultural Tourism Investment Company (owned by the Jishou city government in Hunan province).</span></span></span></p>
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            <div class="field field--name-field-media-image field--type-image field--label-hidden field__item">  <img loading="lazy" src="/sites/default/files/futureflight/import/Airframe%20Static%20Test%201.jpg" width="3840" height="2160" alt="EHang's EH216-S eVTOL aircraft" title="The type certification process for EHang's EH216-S eVTOL aircraft was backed up by more than 40,000 test flights, but also extensive ground testing under the auspices of China's CAAC agency. (Image: EHang)">

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            <div class="field field--name-field-caption field--type-string-long field--label-hidden field__item">The type certification process for EHang's EH216-S eVTOL aircraft was backed up by more than 40,000 test flights, but also extensive ground testing under the auspices of China's CAAC agency. (Image: EHang)</div>
      
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<figcaption>The type certification process for EHang's EH216-S eVTOL aircraft was backed up by more than 40,000 test flights, but also extensive ground testing under the auspices of China's CAAC agency. (Image: EHang)</figcaption>
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<p><span><span><span>In other cases, sales commitments are less firm, with prospective customers having significant latitude as to the timing and extent of the purchases, retaining the right to back out of agreements. In the case of export customers, contracts would not be firmed up until the EH216-S earns type certificates with their respective air safety regulators.</span></span></span></p>
<p><span><span><span>EHang has indicated that this group of prospective clients includes U.S. biotechnology group United Therapeutics, to which it says it had delivered five aircraft by the end of 2022. United Therapeutics itself has not commented on when or how it intends to firm up orders for more eVTOL vehicles. United Therapeutics is also working with&nbsp;U.S. companies Beta Technologies, which is developing the Alia eVTOL, and Tier 1 Engineering, which is developing an electric version of the R44 helicopter.</span></span></span></p>
<p><span><span><span>Other reported pre-orders include 100 units from Indonesian start-up Prestige Aviation and 50 from Japanese helicopter flight booking platform AirX. EHang recently established an urban air mobility development center in Spain as part of efforts to get established in the European market.</span></span></span></p>
<h3 class="subheading"><strong>Chinese eVTOLs Have Friends in High Places</strong></h3>
<p><span><span><span>There is little doubt that EHang’s success in securing the world’s first eVTOL aircraft type certificate has been founded on the Chinese government’s determination that advanced air mobility should be encouraged as a key plank of future transportation policy. The strategic objectives are laid out in the Green Aviation Manufacturing Industry Development Outline covering the period 2023 to 2035 which was jointly issued by multiple government departments in conjunction with the CAAC. This approach is reflected in the latitude the CAAC has granted the company to make early aircraft deliveries and more than 40,000 test flights in multiple locations.&nbsp;</span></span></span></p>
<p><span><span><span>Political support and momentum from the highest levels of the country’s centralized industrial planning hierarchy have clearly trickled down to China’s cities and provinces. This is exemplified by the strategic partnerships EHang has with the <a href="https://www.futureflight.aero/news-article/2023-07-25/shenzhens-baoan-district-bids-become-advanced-air-mobility-hub-china">Bao’an district government </a>of the Shenzhen municipality to develop tourist flights. Authorities there aim to build more than 100 vertiports to support the planned launch of more than 50 eVTOL routes by 2025.</span></span></span></p>
<p><span><span><span>Another example is the agreement made in October with the Hefei municipal government to launch eVTOL services, starting with flights out of the Luogang Central Park. According to EHang, the local government has committed $100 million in support for this early use case, which will be provided, “either through the coordination or facilitation of purchase orders for a minimum of 100 units of the EH216, and/or by providing financing support.”</span></span></span></p>
<p><span><span><span>Meanwhile, some of EHang’s engineering resources have been applied to the development of a larger, longer-range eVTOL called the VT-30. The company hasn’t confirmed a timeline for service entry of this model but says it is undergoing internal testing to take account of lessons learned from the type certification process for its smaller sibling.</span></span></span></p>
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            <div class="field field--name-field-media-image field--type-image field--label-hidden field__item">  <img loading="lazy" src="/sites/default/files/futureflight/import/The%20world_s%20first%20Type%20Certification%20for%20unmanned%20eVTOL%20from%20CAAC.jpg" width="3024" height="4032" alt="EH216-S type certificate" title="The Civil Aviation Administration of China issued the type certificate for EHang's EH216-S eVTOL on October 13 and the manufacturer is now seeking its production certificate. (Image: EHang)">

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            <div class="field field--name-field-caption field--type-string-long field--label-hidden field__item">The Civil Aviation Administration of China issued the type certificate for EHang's EH216-S eVTOL on October 13 and the manufacturer is now seeking its production certificate. (Image: EHang)</div>
      
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<figcaption>The Civil Aviation Administration of China issued the type certificate for EHang's EH216-S eVTOL on October 13 and the manufacturer is now seeking its production certificate. (Image: EHang)</figcaption>
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Charles Alcock

Initial operations with EHang's EH216-S eVTOL aircraft will be outside dense urban environments in China. (Image: EHang)

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