EHang Holdings Limited

Good day, ladies and gentlemen. Thank you for standing by and welcome to Yihang's fourth quarter and full year 2020 earnings conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will follow at that time. As a reminder, we are recording today's conference. If you have any objections, you may disconnect at this time. Now I'll turn the call over to Julia Qian, Managing Director of the Blue Shirt Group Asia. Ms. Qian, please proceed.

Hello, everyone. Thank you all for joining us on today's conference call to discuss the company's financial results for the fourth quarter and the full year of 2020. We released the results early today. The press release is available on the company's website as well as from Newswire Services. On the call with me today are Mr. Hu Huazi, Chief Executive Officer, Mr. Edward Xu, Chief Strategy Officer, and Mr. Richard Liu, Chief Financial Officer. Before we continue, please note that today's discussion will contain forward-looking statements made on the safe harbor provision of the U.S. Private Security 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 these and other risks and uncertainties is included in the company's public filing with the SEC. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please note that today's call, management will also discuss certain non-GAAP financial measurements for comparison purposes only. Our gap results and the reconciliation of gaps to non-gap measures can be found in our earnings press release. Also, please note that unless otherwise stated, all the figures mentioned during the conference call are in Chinese RMB. With that, let me now turn the call over to our CEO, Mr. Hu Huazi. Mr. Hu was speaking in Chinese, and then our CSO Edward Xu will translate his comments to English. Please go ahead, Mr. Hu.

Hello, everyone. I am Huazhi Hu, founder of Yihang. Thank you for attending our telephone meeting today. 2020 is an extraordinary year. I and the entire management team would like to thank all the employees of the company for their hard work. We would also like to thank all our partners and investors for their support. Today, I would like to take this opportunity to tell you about Yihang. First of all, I would like to tell you about our vision. Since the first day of our business, many people have asked me what Yihang's vision is. Today, I would like to systematically explain Yihang's mission, vision, and strategy, so that everyone can understand Yihang more clearly, understand Yihang's dream, understand Yihang's value, and our future. In my heart, Yihang will provide complete personal door-to-door air travel products for humans and become service providers for air travel. Yihang is a technology-innovative air smart transportation transportation service provider that will strive to become the leader of the next generation of automated air traffic. Our mission is to make everyone enjoy the convenience and pleasure of mid-to-long-term air traffic. In the future, we will make Yihang into a We believe that under the trend of automatic driving and rapid development, Service will become the core of the transportation industry and will become the price of the entire industry chain. From a long-term perspective, manufacturers will be integrated by the service industry. For example, the innovative enterprise of transportation transportation, Waymo and Nura, are implementing a integrated integration of software hardware and services. Re-define the transportation transportation industry. The market of urban air transportation services is big and growing fast. One industry has a chance to become the definition of the industry. According to Morgan Stanley's research report, by 2040, the market size of global urban air traffic will reach $1.5 trillion. We believe that Yihang can become the leader of UAM transportation services and take up a considerable part of its market share. In the past 10 years of technological accumulation and product innovation, we have been fully confident and capable of achieving this goal. Next, I will follow the technology 1. No driver 2. Full backup 3. Total control So far, E-Hang 184 and E-Hang 216 have completed from battery system, transmission system, power system, power management system, Chia-Hung Yang, Zhao Wang, Shuai Feng, Xiaona Li, Anne Ji At this point, I would like to thank the partners who accompanied us along the way. They helped us complete a lot of early work and received a lot of support. We completed the first step of Yihang's vision in 2017. At the same time, from the first day of Yihang's establishment, we firmly invested in and optimized the construction of the system system. We believe that Yihang's products are an innovative new type of transportation tool, not exclusive to pilots. It's a product for every ordinary person. It must have a complete system support. Non-human intelligent driving is the soul of a product. We know that planes cannot fly around without rules. This will cause impact on the future air traffic system. In 2017, we established our own, and the world's first, non-human driving pilot command and control center. We continue to optimize group control and management technology. We believe that group control and management is also an important barrier for future flight operations. Without the group management of the command and control center, autonomous driving will no longer be safe and reliable. The management between the aircraft will produce huge difficulties. Group control and management technology will set a good foundation for us as a drone factory and for the entire system. At the same time, it will also generate extremely valuable drone team performance services and drone air logistics port. More importantly, are the earliest and most widely used companies in the world's UAM field. Together with our partners in China, South Korea, the Netherlands, the United States, Canada, Dubai, Qatar, and many other countries, we have carried out numerous UAMs. Every time, our aircraft can attract countless people to see the convenience of future transportation. In addition, In 2017, we started a series of cooperation with the Chinese Civil Aviation Bureau to set up unmanned air traffic standards. From the pilot flight permit issued by us in the earliest year of 2018 to the pilot flight permit issued by Yihang 216, and then to the official approval of Yihang 216's pilot test flight approval last year, the Civil Aviation Bureau has been closely accompanying our growth from the General Bureau to the Local Bureau. Just a few days ago, we held an expert group test flight approval meeting of the Civil Aviation Bureau have officially entered the audit phase. We are steadily advancing the process of E-Hang 216 obtaining the license. This is also the second step for us to gradually complete our vision from 2018. Remember Elon Musk once said, if Tesla completes automatic driving, Tesla will no longer sell cars, but provide automatic air travel services. For E-Hang, E-Hang has long understood that the best way to drive in the air In 2020, we felt that our future transportation was getting closer and closer to us. Yihang has achieved many breakthroughs and achievements in products, systems, and production. Based on the Yihang 216 manned self-driving aircraft, we have launched Yihang 216F and Yihang 216L models to actively explore the application scenarios of self-driving aircraft in the field of aerial fire, large-capacity logistics, and aerial transportation. In terms of the layout of the city's aerial traffic network, our Yihang 216 manned aircraft and its light and agile capability already have the ability to communicate within the city. In order to meet the demand for a longer range, we are about to launch a new aircraft with a range of more than 300 kilometers, as an addition to the network between cities and cities. Combined with the existing 216, it will complete the communication between cities and cities, making the future city air traffic network stronger and better. In terms of products, I will report to you three breakthroughs. First of all, I am very happy to introduce It is also the first time to announce the development progress of our VT series of long-range smart aircraft. Two years ago, we set up a VT series of product development, from size to size, VT-10, VT-20, and VT-30. The VT series uses a composite design of pure electric multi-selector and fixed-selector. VT-30 is a product designed for people in the VT series. In terms of safety and efficiency choices, we chose safety. VT30 products have high-level error detection capabilities to ensure that errors occur when the aircraft is flying horizontally and can be automatically switched to vertical take-off status and can bring passengers safely to the ground as soon as possible. After a considerable period of verification and exploration, we did not choose the design when the aircraft was turned around. In the end, we decided to use this structure as our long-distance aircraft design. In other types of aircraft, whether the propeller is turned around or the wings are turned around, are not able to have complete flight backup in all flight modes, while the Fuhayi design can ensure complete flight backup in all flight modes. The importance of flight backup for unmanned aircraft must be the first priority. Light turns and other designs will certainly bring complexity to the operating system, leading to an increase in error rate. In order to ensure that flight efficiency is not lost on the basis of this design, we have made the overall design of the aircraft lightweight. made the aircraft's overall weight under 700 kg, allowing the aircraft to have good back-end aerobatics and good long-distance flight capability. We noticed that there was a media announcement that we are about to release a new product with a flight distance of up to 400 km. I believe it refers to our VT30, and it has a picture. This picture is a patent application picture of our VT2.5 transition product, not a real VT30 design picture. Recently, the product will fly in the northwest of China in a wide area. We look forward to the official release of the VT-30 with the appearance and related parameters of the specific aircraft. VT-20 and VT-10 are small aircraft of our same type with two other multi-purpose aircraft. In the early stage, VT-20 participated in the flight verification work of the vertical take-off and landing flight system. It has also formed a perfect and mature product and entered the stage of small batch production. Its loading flight time is more than three hours, will fly at a speed of 70 to 120 kilometers per hour. In the future, it will be responsible for the route inspection and planning tasks of VT30's fully automatic flight. It is an indispensable product in the future UAM's basic planning process, and it can also be used in the unmanned aircraft application of our smart city command center. In addition, we will also release the M series product of Yihang 216. This is a product that can be manually driven. It is expected that within this year's May, Chia-Hung Yang, Zhao Wang, Shuai Feng, Xiaona Li We plan to establish a flight experience paradise with our partners in the future, using the electronic fence to close, so that everyone can enjoy the pleasure of flying manually and fulfill everyone's dream of flying. In addition, we have achieved significant progress in the drone logistics port in Hezhou. A series of all-automobile logistics stabilizers of the Yihang Flying Shark series have completed a series of large-scale flight tests there. have completed a large-scale full-automation flight from take-off to landing. Hezhou Holdings Limited will also become the first unmanned airport. In addition to the system maintenance personnel, there is no operational personnel in the entire system operation. All aircraft are automatically operated by the command and control system. In terms of production and development, we have also achieved considerable progress. First of all, The production base we established in Guangdong Yunfu will be officially invested in June this year. The products of Yihang are all in line with the materials as the main structure materials. The production of its subsidiary products is traditionally more of a full-fledged production. Yihang Yunfu base will continue to invest in the next two years and gradually upgrade to an all-automatic production model with an automated production line to further improve the quality and consistency of the products. We will expand the construction in Guangzhou We believe that more innovative products will be born here. In the next part, I will share with you the development path of Yihang in the future. We will achieve our strategic goals through the following four strategic paths. First, focus on the research and development of cargo and logistics products. The core is the research and development of Yihang 216 short-range flagship aircraft and VT long-range aircraft. The first is to serve the operation as a guide to strengthen the barriers between the technology and products of the industry Focus on the safety, battery life, and delivery capacity of the products Second, build a first-class talent team based on the principle of the operator According to the strategic positioning of the city air traffic platform operator Start to gradually realize the upgrade from the manufacturer to the operator And for this, recruit top-level traffic transportation operation professionals Thirdly, focus on the small-scale business that is related to the goal of completing the stage-based goal, and focus on the small-scale business related to people and logistics services such as air media and smart city management. Let the entire company focus on the core business level, but our efforts to upgrade to operating service providers need to go through a period of smooth transition. At the same time, these businesses will gradually be handed over to our partners in the future. We expect that the company's income in this regard will not change significantly. Fourth, to accelerate the expansion and regularization of the city air traffic operation-related test sites and regulations, and to actively expand the operation services such as tourism, transportation, logistics, and other related test sites. To build and operate test sites in China and abroad, to carry out operation services, and many more. In 2021, we will focus more on the development of aircraft carriers and logistics smart aircraft. With the continuous completion and production of our new production bases, we expect that in 2021, Yihang will also achieve a greater number of production and manufacturing of smart aircraft carriers and logistics aircraft. This year, we will gradually develop air aircraft carriers and logistics pilot services, In addition to delivering new aircraft to our former customers and partners, we will also invest a part of the aircraft into test operation services. At the same time, we will actively run test operation services in more cities around the world. Based on this, we will also announce the relevant data of our operation services to the market, such as the order volume of operation services, the number of active users, the process of service, and income, etc. Thank you Mr. Hu Now I'm glad to translate Mr. Hu's remarks into English Hello everyone