China-based aircraft and drone maker company EHang Holding has been flying under the radar in the race to launch urban air taxis and customized firefighting drones. EHang touts itself as the world's leading autonomous aerial vehicle (AAV) technology platform company and achieved some major regulatory milestones this year. Meanwhile, EH stock soared nearly 95% in 2023.
EHang produces autonomous electric vertical takeoff and landing (eVTOL) aircraft for urban environments. The company's EH216-S is a two-passenger, autopiloted eVTOL that appears similar to a large drone. The aircraft has a 22 mile range, 21 minute flight time and 62 mile per hour cruise speed.
The 216F firefighting eVTOL is a first-responder drone, equipped with cameras, laser-guided window breakers, foam launchers and extinguisher bombs. The aircraft's max altitude of nearly 2,000 feet allows it to combat fires in all but the tallest skyscrapers in China.
EHang also manufactures the EH116, which is the one-passenger version of the EH216. The company's Unmanned Aircraft Cloud System (UACS) is an airspace management, flight plan and logistics system to run commercial operations.
Drone Maker Prepares For Takeoff
EHang completed all planned test flights for the EH216-S and is in the last phase for demonstrations and compliance verification, the company reported during its Q2 results on Aug. 17. EHang said it expects to obtain type certification from the Civil Aviation Administration of China (CAAC) "soon" in the release.
On Aug. 21, the CAAC approved EHang's UACS to begin trial operations. EHang noted that receiving type certification is a major step toward large-scale commercial operations.
Over the last two years, EHang conducted over 9,300 successful low-altitude flight trials across 20 locations in China, including 18 major cities. The company will roll out operations in the Bao'an District Government of Shenzhen once type certification is completed. EHang signed a memorandum of understanding with the municipality on a comprehensive strategic partnership in mid-July.
In July, EHang secured $23 million in funding from a private placement round led by South Korean music magnate Lee Soo-Man, founder of one of the world's largest K-Pop labels SM Entertainment. The total number of shares sold in the private placement was not disclosed. EHang said it plans to use the proceeds for working capital, general corporate purposes and accelerating technology, business development and its post-certification operations.
In addition, Soo-Man will collaborate with EHang to drive urban air mobility business development in Asia-Pacific regions.
EHang Finances, Urban Air Outlook
EHang has yet to turn a profit. Its sales ranged between $1.2 million and $3.2 million the past four quarters. The company averaged 60% revenue gains during that period, skewed by a 255% jump in Q1. For the most recent report, sales fell 37% to $1.4 million.
However, EHang believes it's well-positioned to capture a major portion of the growing urban air mobility market. It optimistically estimates that market will hit $1 trillion by 2040 and grow to $9 trillion by 2050.
Custom Market Insights estimated the market at a slightly less rosy $8.2 billion for 2022, set to grow at a compounder annual growth rate of 35% through 3032.
EHang expects China to account for nearly 30% of the worldwide market, according to its August investor presentation.
Elsewhere, California-based Archer Aviation received approval to begin test flights for its eVTOL in August. ARK Invest snapped up shares as it makes progress in the U.S. UAM market.
Drone Maker Trades As An ADR
EHang trades in American depositary receipts (ADRs) under the ticker EH on the Nasdaq. Shares rallied nearly 94.8% this year as the company moves its products toward the market.
EH stock rocketed as high as 23.24 on Aug. 10 before sliding below its 10-day moving average. Shares trended downward the past few weeks after unsuccessful attempts to reclaim their technical lines at the turn of the month.
EHang swung 3.3% higher Thursday.
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