EHang Q1 2025 Earnings Call Transcript

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May 26, 2025
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Anne Ji
Anne Ji
Senior Director of Investor Relations at EHang

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 twenty twenty five. 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.

Anne Ji
Anne Ji
Senior Director of Investor Relations at EHang

Huang Zhihu, our Founder, Chairman and Chief Executive Officer Mr. Zhao Wang, Chief Operating Officer and Mr. Connor Yang, Chief Financial Officer. Before we continue, please note that today's discussion will contain forward looking statements made pursuant to the Safe Harbor provisions of The U. S.

Anne Ji
Anne Ji
Senior Director of Investor Relations at EHang

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 applicable law.

Anne Ji
Anne Ji
Senior Director of Investor Relations at EHang

Also, note that all numbers presented are in RMB and are for the first quarter of twenty twenty five, unless stated otherwise. With that, let me now turn the call over to our CEO, Mr. Huazhu Hu. Please go ahead, Mr. Hu.

Moderator

Hello, everyone, and thank you for joining our earnings conference call today. We started the 2025 with another major regulatory breakthrough. In the March, Ehan General Aviation, our wholly owned subsidiary, and Hei 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 commercial in vitro services in China's low altitude economy, allowing the general public to experience in vitro flights for the first time.

Moderator

The issuance of the OC signifies that Ehon has achieved full life cycle capabilities of EVDO, from design and R and D to manufacturing, airworthiness, certification, and now operational readiness. This completes a fully integrated 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 vehicles into a comprehensive urban air mobility platform operator, delivering a one stop solution to our clients that cover aircraft hardware, software, operational services, and standard systems. The first OC represents the most critical milestone for enabling commercial operations.

Moderator

With this issuance, Ehon 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 the pioneer in this emerging field, EHON remains deeply committed to the principle of safety first. We are 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 are adopting a phased strategy, first isolation and then integration, first tourism, then transportation, and first pilot projects, then expansion.

Moderator

We are 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 replicable models to gradually lift OSC operational restrictions. 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 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.

Moderator

Turning to 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 VT-thirty five features significant upgrades, including the industry's most stable and safe autonomous flight control and propulsion systems. With our proprietary autonomous platform and command and control system technologies, the VT35 delivers disruptive innovations in both the design and reliability. We believe it will become an outstanding model among medium and long range video products. It is now undergoing full scale flight testing.

Moderator

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 H216 S certification experience, we expect it helps accelerate the VT35 certification process. We plan to unveil the VTE35 in the third quarter of this year. In the international market, we believe the VTE-thirty five, backed by China's industrial strength and advanced manufacturing, will offer a clear cost and competitive advantage over other long range fetal products globally. On the innovation front, R and D has always been the driving force behind EHAN.

Moderator

We currently hold over 700 issued and pending patent assets worldwide. Nearly half of our team is dedicated to R and 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 nearly ten years experience at EHON, have positioned us as a global leader in autonomous flight systems and technologies. In February, the Aerospace and Intelligent Manufacturing Committee of the Qinghua Alumni Association was officially launched at Ehans headquarters in Guangzhou. We are honored to serve as the chairmember and myself as the chairman.

Moderator

Through this committee, we aim to build an innovative ecosystem for the low altitude economy in the Greater Bay Area, combining EHAN's leadership in autonomous aviation with Tsinghua University's deep strengths in research and talent. Our shared goal is to drive continuous R and 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 and D and talent development in Europe. With continuous innovation and differentiated core competitiveness, we will remain a global leader in the pilotless video industry and continue to shape the future of urban air mobility.

Moderator

With that, I will hand it over to our Chief Operating Officer, Mr. Wang, to walk through our operational highlights. Thank you, Mr. Hu. In the first quarter, we delivered 11 units of our EH216S and generated revenues of RMB26.1 million.

Moderator

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 twenty twenty five, we kicked off the expansion and upgrade of our Yunfu production base.

Moderator

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 are 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 28, '2 operators of the EH216s and relevant services were officially granted their OCs. This marks a significant milestone for both EHAN and the industry, as it formally allows autonomous human carrying aircraft to begin commercial operations in China.

Moderator

It also demonstrates strong recognition and validation of our EH216s from both the CAAC and the market. With commercial operations now underway, we expect 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 VOCs, consumer inquiries and order volumes have picked up significantly.

Moderator

We could expect a strong rebound in the second quarter. Several major orders were discussed in Q1 with 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, EHAN and our operator partners are implementing enhanced standards to ensure safe and compliant flight operations. The two certified operators, Hei Aviation and EHON General Aviation, are taking a phased three step rollout, starting with lead only trial operations, followed by human carrying trial operations, and ultimately transitioning into routine human carrying commercial services. This approach ensures a safe, stable, and seamless progression toward full scale commercial operations.

Moderator

Currently, both operators have entered the human caring trial phase at designated Ifido cities in Guangzhou's Suigang Pier and Hefei's Lugang 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 ticket sales to the public. At the same time, we're actively laying groundwork for 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.

Moderator

These efforts are aimed at helping more customers prepare for their OC applications. In Q1, we supported a customer in Shanghai in establishing Evita Operations Center at LongHua Airport on the Xuhui Riverside, and successfully completed the first EH216s flight in the city. This also marked the start of routine sightseeing flights along the Huangpu River in Shanghai. In Wencheng, Zhejiang Province, the world's largest UAM center for in vitro expression sales and operations, was established. Meanwhile, in Shenzhen's Lohu District, our client has launched a UEM demonstration and experience center.

Moderator

This facility features the world's first fully automated multi level smart eVito 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 multi level urban transportation hub in Nalati 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 strategic partnership with JAC Motors and Guoxian Holdings to jointly develop a next generation EVDO manufacturing base in Hefei. More recently, we expanded our partnership with CCIT to include CCCCFHDI Engineering Company, forming a trilateral collaboration on three key areas.

Moderator

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 multi dimensional infrastructure network, covering airspace management, flight route planning, and deployment of digital based 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.

Moderator

At the same time, we are 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 standardized infrastructure, and promoting the growth of low altitude economy. Currently, the construction is already underway. In addition, we are also actively expanding our businesses into other applications such as logistics and emergency rescue.

Moderator

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. Ehon has developed a new generation of specialized UAVs tailored for these use cases.

Moderator

These aircraft have already been used in multiple emergency drills and have drawn strong interest from China's Ministry of Emergency Management and National Fire Fighting 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, EHAN is exploring our collaborations with the general aviation sector. We've launched pilot initiatives through different approaches for integrated trial operations of low altitude air crafting general aviation airports in Guangxi, Hezhou, Beijing, Pinggu, and Fangshan, Hainan, Wanning.

Moderator

We are also planning additional projects in Yanhui, Hefei, Guangdong, Guangzhou and Hainan, Linggao. 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, EHAN, 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, Yihan was featured in over 19,000 domestic media reports, including coverage from the CCTV Spring Festival Gala, national television networks, newspapers, major online platforms, reaching an estimated 80,000,000,000 views.

Moderator

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 1,690,000,000 views. E Health 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 has successfully completed demo flights in Benidorm, Spain and in Mexico.

Moderator

In Thailand, our local partners have started working with the National Air Traffic Control Authority to conduct preliminary route and site assessments in Phuket. An 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 million. Now I'll turn it over to our CFO, Connor, to walk us through the financial results.

Moderator

Thank you. Hello everyone, this is Connor. 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 million in Q1 twenty twenty five, a decrease compared with Q1 last year and Q4 twenty twenty four.

Moderator

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 sixty point seven percent in Q4 twenty twenty four. The increase in gross profit was mainly benefited from the higher average selling price of EH216 series products, indicating that our products have strong marketing competitiveness and pricing power.

Moderator

Turning to expenses, total operating expenses in Q1 were 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 and D to maintain our technological leadership. The quarter on quarter decrease reflects our achievements in cost control and efficiency optimization.

Moderator

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 million last quarter. We believe the impact is only temporary. As 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.

Moderator

As of 03/31/2025, cash, restricted deposits, and short term investments totaled RMB1.11 billion, giving us solid flexibility to support upcoming R and D investment, production scale up and commercial deployments. With the achievement of the important OC milestone in Q1 and the EVITO commercial operations to be gradually launched going forward, we are confident in our business growth throughout the year. As such, we are maintaining our annual revenue guidance of million for the full year 2025. We believe that the market increasingly recognizes EHAN'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.

Moderator

Thank you.

Moderator

Full year revenue guidance of RMB900 million unchanged. I was wondering, could you please give us an outlook on which in which quarter we could probably see a significant growth in both the sales and as well as the deliveries? So just to give us a look on that. So that's the first question. Q1 performance declined due to several factors.

Moderator

First, seasonal impacts from winter and Chinese New Year holidays, which typically create slow delivery periods in the first quarter. Second, as we enter the new fiscal year, customers require time to 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 q one. However, after obtaining OC certification, our internal data shows improvements in both q two 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.

Moderator

Therefore, we maintain our full year revenue guidance of RMB 900,000,000 unchanged. Thank you. And 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 your wholly owned subsidy have obtained the Air OC from the CAC enabling commercial operations.

Moderator

I was wondering on average, how long will it take for a EH216 owners to get this 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. That's my second question. Thank you.

Moderator

This is Wang Zhao. I'll also take your second question. Ehong General Aviation and Hefei Hei 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 timelines for future operators. At the moment, many of our customers operating companies are currently in the application process.

Moderator

Thank you.

Operator

Your next question comes from Loya Lee with Deutsche Bank.

Laura Li
Laura Li
Equity Research Associate at Deutsche Bank

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 lakes and cruise. But some of those have applied for TC like one or two years ago ahead of our VT35.

Laura Li
Laura Li
Equity Research Associate at Deutsche Bank

So and they might be granted maybe next year or so. So how should we have stay like competitive going forward, especially beyond our current, like, multi copter design?

Moderator

Urban air mobility and intercity air transport serve different markets with very distinctive requirements. Urban operations need small footprints, high density networks, quick turnarounds, and cost efficiency. While intercity 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 in vitro design, our 216S multi copter configuration has a compact six meter times six meter footprint, making it lightweight with minimal infrastructure requirements for takeoff and landing sites.

Moderator

This enables larger scale deployment in tourist areas and urban environments. In contrast, aircraft with 10 plus meter wingspans like tiltrotors and lift and cruise models would require expensive large scale airport infrastructure, which makes it impractical for dense urban deployment. Our economics are also superior. The EH216s sells for only 2,000,000 domestically, which is significantly below our competitors' large aircraft priced above RMB10 million. Our autonomous flight approach eliminates pilot training and employment costs.

Moderator

As we gather and accumulate more operational data, our continued airworthiness programs enable significant cost reduction, strengthening our competitive position.

Moderator

through continuous technology and product development. For EH216s 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 eVita products. Thank you.

Laura Li
Laura Li
Equity Research Associate at Deutsche Bank

Thank you for the color. That's very helpful.

Operator

Your next question comes from Shen Wei with UBS.

Moderator

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?

Moderator

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 operators commence commercial operation because infrastructure wise, it's almost ready. So these are the three questions.

Moderator

This is Connor.

Moderator

I'll take your question on new order guidance. As I've explained, Q1 sales was impacted, however, due to the seasonal factors as well as the EOC 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 sales 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.

Moderator

So as we 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. So, this is Wang Zhao, I'll take your second question. So actually the operator in Hefei has already started the operation. However, we're taking a phased approach.

Moderator

At the first approach, currently for phase one, it's only limited to internal employees and invited passengers, and employees can already book flight experiences through our ticketing platform. And in phase two, it's we will open ticket sales to the general part public.

Laura Li
Laura Li
Equity Research Associate at Deutsche Bank

This is it.

Moderator

Thank you.

Operator

Your next question comes from Wade Woo with Jefferies.

Analyst

Sorry, I was on mute. A couple of questions. First one is on the timeline 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 is applying OC.

Analyst

Rumor says that around five operators is going to obtain OC certificates by the end of the year. Are there any updates on that?

Moderator

This is Owen Zhao. I'll take your questions. Guangzhou and Hefei Operators are conducting trial operations following the OC certification.

Moderator

But what I want say is that safety remains paramount for a sustainable low altitude economy deployment development. Like I said earlier, we're implementing our phased operational approach, both operators at Guangzhou, Soigang Terminal and Hefei Lugan 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 in all ceremonies aren't necessary. And with regard to the progress on OC applications from others clients, our customers with substantial fleets are right now actively preparing applications.

Moderator

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

Operator

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

Anne Ji
Anne Ji
Senior Director of Investor Relations at EHang

Operator, last question please. Thank you.

Operator

Your next question comes from Yining Wang with China Renaissance.

Moderator

Thank you, management for taking my question. With the current commercialization progress and the operational status after receiving the OEC, I was wondering whether the company has conducted any preliminary assessment or What is the daily revenue and also the passenger flowtraffic is like? And how much revenue does that translate into on a daily basis? 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.

Moderator

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 to 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 Ron Yang Zhu with Cytex.

Moderator

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.

Moderator

What's the progress is like? Is it okay for the management to share some color on that? This is Wang Zhang. VT 35 assembly is complete. Building on the VT 30, we have upgraded key components, including configuration, flight control and propulsion systems, achieving far superior design, more reliable flight performance and reduced size.

Moderator

We will officially launch the EHAN VT 35 series in Q3 this year. As for VT 35, it is currently undergoing comprehensive flight testing and CAAC, China Aviation Administration of China has formally accepted our type certificate application. Built on our successful EH216 as certification experience, we expect an accelerated VT35 certification progress. 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.

Moderator

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. Thank you.

Operator

Your next question is with Fiona Lang with Bank of America.

Moderator

Thank you management for taking my question. You briefly talked about you talked about the 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 significant revenue increase in the second half of the year. So is that so? And my second question is on the gross profit margin.

Moderator

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. This is Connor. I'll take your first question.

Moderator

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're going to expect much stronger year over year revenue growth. And on your second question, for the past two to three quarters, since there were a lot of large orders, which we have, which we give discounts to. However, in Q1, we delivered 11 H216s.

Moderator

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 BOEM 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 Shen with Guangdong Securities.

Moderator

Thank you management for taking my question. This is Chen Yu, a Cheddar Analyst from Guangdong Securities. Actually my questions are pretty echoed 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 to Yunfu and also the Hefei Industrial Park.

Moderator

Can the management give an update on what's the planned production capacity for our Hefei facility as well as the timeline in terms of its progress? And my second question is on the SG and A expenses. In Q1, it showed a decline on adjusted terms. I was wondering if the management or the company is maintaining the SG and A expense ratio at 40% growth guidance unchanged? Thank you.

Moderator

This is Wang Zhou. In Q1, the launched expansion and upgrade at our Yinfu facility, which has doubled the main factory gross floor 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 Kushin 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.

Moderator

Currently, are building a transitional or makeshift facility with completed infrastructure and ongoing equipment installation. Also, want to mention that our factory site selection in Beijing and Weihai is complete with construction now underway. This is Connor. Constant expense management is a key focus this year for the company. We have already seen the results reflected in Q1 financial results.

Moderator

It shows quarter over quarter decrease in the pre adjusted expenses. We will continue maintain stringent control on the SG and A expense growth in the coming quarters. While maintaining our full year revenue guidance of $900,000,000 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 Liu with Gauchang Securities.

Moderator

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. According to the NDRC, recent statement about expanding low altitude economy applications, it should follow cargo for passengers, isolation before integration and suburbs before urban areas principle. So just wondering what's management's view on that statement? EHAN has always prioritized safety since its inception.

Moderator

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, Saigon Terminal and Hefei Lugan Park have entered passenger trial operations. The low altitude economy is developing rapidly with the many new entrants. Well, from Ehon's experience, ensuring aircraft to safety is always paramount. So the NDRC's guidance emphasizes industry wide safety requirements.

Moderator

Thorough research and validation must go ahead before passenger aircraft development and production. In this regard, EHAN has invested over ten years in this development. And additionally, the low altitude office of NDRC has continuously tracks EHA's passenger operations through regular communication meetings. Thank you.

Operator

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

Moderator

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 participate in the following investor events through the calendar information provided on our IR website. We appreciate your interest and look forward to our next earnings

Executives
    • Anne Ji
      Anne Ji
      Senior Director of Investor Relations
Analysts
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Key Takeaways

  • We received the first batch of air operator certificates for human‐carrying pilotless aerial vehicles from the CAAC, officially enabling commercial flight operations in China’s low altitude economy.
  • Our next-generation eVTOL VT35 has completed final assembly, with its type certification application accepted by the CAAC and full-scale flight testing underway ahead of a planned Q3 unveiling.
  • Q1 revenues were RMB26.1 million, down year-on-year due to seasonality and order deferrals, though gross margin improved to 62.4% and cash, restricted deposits, and short-term investments totaled RMB1.11 billion.
  • We have expanded manufacturing capacity by doubling our Yunfu plant to support up to 1,000 annual units and are building additional assembly facilities in Hefei and Weihai to meet future demand.
  • Trial commercial operations have commenced in Guangzhou and Hefei, initially serving internal staff and invited passengers, with plans to open public ticket sales as we accumulate safety data and scale toward routine services.
AI Generated. May Contain Errors.
Earnings Conference Call
EHang Q1 2025
00:00 / 00:00

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