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spk04: Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Ehang 4-Quarter and Fiscal Year of 2023 Earnings Conference Call. As a reminder, we are recording today's call. Now I will turn the conference over to Anne Gee, Ehang Senior Director of Investor Relations. Ms.
spk05: Anne, please proceed. Hello, everyone.
spk08: Thank you for joining us on today's conference call to discuss the company's financial results for the fourth quarter and the fiscal year of 2023. The earnings release is available on the company's RR website. Please note the conference call is being recorded, and the audio replay will be posted on the company's RR website. On the call today, we have Mr. Hua Zhihu, our founder, chairman, and the chief executive officer. and Mr. Kong Yang, Chief Financial Officer and the Director of the Board. The management team will successfully give prepared remarks. Remarks delivered in Chinese will follow by English translations. All translation is for convenience purpose only. In case of any discrepancy, the management statement in the original language will prevail. A Q&A session will follow afterwards. 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. 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. For the 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 to enter equitable law. Also, please note that all numbers presented are in RMB and are for the fourth quarter and fiscal year of 2023, unless stated otherwise. With that, let me now turn the call over to our CEO, Mr. Hua Zhihu. Please go ahead, Mr. Hu.
spk01: Thank you, Annie. Hello, everyone. Thank you for attending the phone conference of E-Hang Intelligence. In the fourth quarter of 2023, we achieved remarkable results in many aspects. In October last year, E-Hang itself developed a innovative product, EH216S, an unmanned carrier aircraft system, which received a certificate of license issued by the Chinese Civil Aviation Bureau. This is the first model and certification of the world's first unmanned aerial aircraft. We have also officially opened the commercial application of unmanned aerial aircraft. In December, the first EH216-S test flight was launched. It also obtained the world's first E-VTOL standard test flight certification and officially began to deliver the test flight version of EH216-S aircraft. After obtaining TC and AC, we are very happy to see that the demand for our EH216 unmanned carrier aircraft has increased significantly, and helps us to achieve sales growth in the fourth quarter and deliver 23 EH216 series products in total. The unit delivery volume is the highest in the past three years. The fourth quarter received more than 56 million yuan, which is twice as much as the increase, which is nearly double the increase. and realize the transformation of the business cash flow, the demand for products is strong, and the company operation continues to be stable. Our strong growth is due to the active promotion of high-quality development policies and support by local governments in China. Since December 2023, the Central Economic Union, hosted by President Xi Jinping, has proposed strategic new industries such as low-altitude economy. There are nearly 20 provinces in China that have written the low-efficiency economy into the 2024 government work report. During the two meetings just held in China, the low-efficiency economy also wrote into the central government work report for the first time. The low-efficiency economy is expected to become China's new growth engine. It is the new industrial direction of the world. It is also an important field to cultivate the development of new production power. According to the estimates of the research institutions, in 2023, China's low-altitude economy has exceeded 5 trillion yuan. In 2030, it is expected to reach 20 trillion yuan. This is a huge new market. The unmanned carrier aircraft such as EH216-S will undoubtedly lead the entire industry forward. Under the guidance of the policy spring wind, the market will be able to meet the needs and enthusiasm were ignited. In the fourth quarter of last year, we continuously received hundreds of large-scale pre-ordered orders from China, Guangzhou, Hefei, Wuhan, and A Lianqiu, and other domestic and foreign customers. Recently, we also cooperated with the Wuxi City Government of Jiangsu to sign hundreds of EH216 pre-ordered orders. Achieving low-emission economic demonstration scenarios, strong market demand from customers, and increasing our future performance increased our strong confidence. We also announced that the EH216S unmanned aerial aircraft system is priced in China and overseas for 2.39 million yuan and 410,000 US dollars respectively. We believe that this price has strong competitiveness in the global EVATO products, which satisfies the needs of the market and promotes the development of low-altitude economy. In order to prepare for the next stage of scale production, Our production license PC audit work has also entered the final stage. At present, the Chinese Civil Aviation Bureau inspection team has completed all the live inspection. All quality system documents required have been submitted to the Civil Aviation Bureau for final summary. The production license PC is expected to be obtained in the near future. Based on the system supervised by the Civil Aviation Bureau, it provides strong security for the quality of new products. In the fourth quarter, we built a low-cost economy demonstration operation point in Shenzhen, Guangzhou and Hefei, and completed the commercial first flight display in Guangzhou Huangpu District, Jiulong Lake Park and Guangzhou Huangpu Central Park in Shenzhen. At the same time, the Hefei City Government and Yihang reached a low-cost economic strategic cooperation and planned to provide 100 million US dollars of support. The Guangzhou City Government also launched a low-cost economic ten-step promotion policy, At present, we are actively implementing business operation preparation work such as training operators, building operating systems, and so on. Combined with the unique leading advantage and practical experience of unmanned aircraft operation, Yihang continues to strengthen cooperation with the Chinese Civil Aviation Bureau, and plans to complete the world's first E-Vito business operation monitoring system standard in the second quarter of this year, providing E-Vito industry with fundamental safety rules and regulations. In 2024, we will cooperate with the local governments to complete the basic infrastructure construction such as E-Veto starting point, to build low-altitude economic model cities, and to launch the commercial operation of key model scenes such as tourist sightseeing, urban air taxi, and other commercial operations. To this end, the scene of the science fiction film will officially enter the public's eyes. In terms of industrial chain, we will cooperate with more excellent suppliers and partners, to increase the scale of the low-emission economy. In January this year, we reached a strategic cooperation with the global leading new energy solution supplier Guoxuan High School to jointly develop an electronic battery group specially designed for unmanned aircraft, storage system, and charging infrastructure. In February, we reached a strategic cooperation with Guangqi Group. Guangqi Group will fully utilize its rich experience and mature industrial chain in the field of intelligent manufacturing, to accelerate the intelligent production, application popularization, and market promotion of unmanned aircraft carriers and aircraft carriers. In terms of product delivery, we will continue to improve the performance of EH26-S in all aspects, making it play a greater application potential. Therefore, last year, we strategically invested in Shenzhen Stainless Steel Battery Company, Xinjie Energy, to set up the E-Vito Stainless Steel Battery Supply Chain. Li-metal Stainless Steel Battery, compared to liquid battery, is safe, energy dense, heat stability, battery life, charging performance, etc. will have significant advantages. The battery life will be doubled. I believe that the future will significantly improve the multiple performance of EH11-S. In addition, this year, we will put more research and development effort into the test and certification work of our other unmanned aerial carrier, the VT30. This is a long-distance aircraft between our city and the city. 我们会对VT30的各项系统 进行严格的测试检查 近期会对VT30的完整飞行 进行大量测试 根据测试结果 我们会充分论证 积极迭代改进 使各项指标达到设计要求 我本人已经在空中体验了 VT30的飞行 感觉很奇妙 同时我们也正在完成 VT30试航审定申请的相关准备工作 This is the English translation of Mr. Hu's remarks. Hello everyone, thank you for joining us on this conference call.
spk08: In the first quarter of 2023, we have achieved remarkable results across various aspects. In October last year, our EHAM 216S pilotless passenger-carrying aircraft system, an innovative product independently developed by EHAM, obtained a Type Certificate from the CAC. This milestone marks the world's first TC for a passenger-carrying EVITO aircraft. signifying our qualification for commercial applications of pilotless passenger-carrying EVATO aircraft. In December last year, our first certified EHAM-216 rolled out of our production line and obtained the world's first EVATO standard airworthiness certificate, which is AC. As a result, we commenced the delivery of the certified EHAM-216S aircraft. Following the TCNAAC, We are delighted to see a substantial surge in market demands for our E-Hunt 216S pilotless passenger carrying event, resulting in significant sales volume growth in the fourth quarter, with a total of 23 units of E-Hunt 216 series products delivered. Notably, this represents the highest number of deliveries in a single quarter in the past three years. The revenue of the fourth quarter surpassed 56 million RMB, marking a year-over-year growth rate of over three times and nearly doubling quarter-over-quarter. Moreover, we generated positive operating cash flow in the fourth quarter as demand for our products is strong and the company's operations continue to steadily improve. Our strong growth was attributed to the proactive policies and supports from local Chinese municipal governments that are actively fostering the high-quality development of the low-altitude economy. Since the Central Economic Work Conference chaired by President Xi in December last year, when the low-altitude economy was elevated to a strategic emerging industry, nearly 20 provinces in China have incorporated the low-altitude economy into their 2024 government work reports. Furthermore, during the two sessions recently held in China, the central government work report included the low altitude economy for the first time. This recognition underscores the expectation that the low altitude economy will serve as a new growth engine for China and a globally competitive emerging industry and a vital sector for nurturing and advancing new high-quality productive forces. According to research institution estimate, the market size for China's low altitude economy surpassed 500 billion RMB in 2023 and expected to reach 2 trillion RMB by 2030. This represents a substantial emerging market, and the panelist passenger-carrying aerial vehicles like the EHAM 216 are poised to play a leading role in propelling the industry forward. Capitalizing our first-mover advantage in obtaining airworthiness certification and benefiting from favorable policies we have witnessed a surge in market demand and enthusiasm for our E-116 series products. In the first quarter, we received hundreds of pre-orders from domestic and overseas customers in China's Guangzhou, Hefei, Wuhan, and the UAE and other regions. Furthermore, we have recently formed a partnership with the government of Wuxi City in Jiangsu Province, resulting in pre-orders for at least 100 units of EH-216S. Through these collaborations, we have actively planning to create low altitude economy demonstration applications in the area. The strong market demands from our customers give us great confidence in our future growth prospects. We have also announced the pricing of the EH-216S pilotless passenger-carrying aircraft system in both the domestic Chinese market and overseas markets. The pricing has been set at 2.39 million RMB for the Chinese market and 410,000 US dollars for international markets. We believe these prices are highly competitive when compared to other in vitro products worldwide. Moreover, this pricing strategy aligns with the market demands and contributes to the development of the low altitude economy. In the preparation for the next stage of mass production, our efforts to obtain the production certificate, which is PC, is almost completed. Currently, the CAC review team have conducted all the onsite inspections, and all the required quality system documents have been submitted to the CAC for the final process. The PC is expected to be obtained in the near future, offering a robust assurance and support for the production quality of the newly produced EH-216 under the supervision system of the CAC. During the first quarter, we developed several low altitude economy demonstration sites in Shenzhen, Guangzhou, and Hefei. And our EH-216S completed the first commercial flight demonstrations at the UAM Operations Center in Shenzhen, Hubei, Jiulong Lake Park in Guangzhou Huangpu District, and Luogang Central Park in Hefei. The Hefei Municipal Government has reached a strategic cooperation agreement with Yihang in the low-altitude economy, planning to extend support to Yihang in various forms with a target amount of US$100 million, while the Guangzhou Municipal Government announced 10 major supportive policies to stimulate the low-altitude economy. Currently, we are actively conducting a series of crucial preparations for commercial operations, including operator training and the development of operation systems. By leveraging our distinctive and pioneering expertise in pilotless EVATO operations, EHAM continues to strengthen collaborations with the CDC to establish the world's first regulatory system standards for EVATO commercial operations. by the second quarter of this year. These efforts will set reliable regulations and benchmarks for the safety operations in the EVATO industry. In 2024, we will coordinate with multiple governments to complete the construction of infrastructure, such as the EVATO vertiports, and shape the benchmark cities that exemplify the potential of the low opportunity economy. and launch commercial operation ceremonies in key use cases, such as the aerial tourism and urban air taxes. This will allow decisions from science fiction movies to officially step into the public eyes. In terms of industry chain, we have been actively cooperating with outstanding suppliers and partners, striving to expand opportunities within the low-altitude economy sector. In January, we entered into a strategic partnership with Kaohsiung, a leading global provider of the new energy solutions, to jointly research and develop battery cells, battery packs, energy storage systems, and charging infrastructure, especially designed for pilotless airway vehicles. In February this year, we partnered with Guangzhou Automobile Group, GAC in short, which will capitalize on GAC's extensive experience and a well-established industrial chain in intelligent manufacturing to accelerate the smart production, application, and market expansion of our pilotless airway vehicles. Regarding product development, we will continue to enhance our E-Hunt 1's success performance to unlock its full potential for various applications. To this end, last year we strategically invested in INX a solid-state lithium battery company based in Shenzhen, to strengthen the supply chain for solid-state lithium batteries in the EBITOs. Lithium metal solid batteries offer significant advantage over the liquid batteries in terms of the safety, energy density, thermal stability, cruising range, charging and discharging performance, etc. As a result, We believe that the flight range and many other performance of our EH-216S product will be gracefully enhanced in the future. Furthermore, this year we will develop more R&D efforts toward testing and certification of our VT-30, another pilotless passenger-carrying lift-and-cruise event model. This is a long-range aircraft designed for intercity transportation. We will conduct rigorous testing on all the systems of the VT30 and full transition flights in the near term. Based on the test results, we will thoroughly analyze and actively iterate improvements to ensure that all the performance indicators meet design requirements. Myself have experienced the flight with VT30 in person, and it feels amazing. Meanwhile, we also are doing preparations for the TC application for VT30. And just a few days ago, we convinced another tour of passenger cabin flights across several cities in Japan. I'd like to extend my thanks to our COO, Mr. Xin Fang, who is currently at our Japan events and thus unable to attend this earnings call. Next, I will turn the call over to our CFO, Connor. Thank you.
spk03: Thank you, Mr. Hu. Hello, everyone. This is Connor. Before I go into details, please note that all numbers presented are in RMB and are for the fourth quarter and fiscal year of 2023, unless stated otherwise. Detailed analysis are contained in our earning press release, which is available on our IR website. I will now highlight upon some of the key points here. Having obtained the TC and AC, For our proprietary EH216-S, our total revenues reached 56.6 million in Q4, a significant increase of 260.9% from RMB 15.7 million in the same period last year, and a remarkable increase of 97.8% from 28.6 million in Q3. The increase was primarily attributed to increase in our sales volume of EH216 series products. We delivered 23 units of EH216, up 283% year-over-year and 77% quarter-over-quarter. For the fiscal year 2023, total revenue were $117.4 million, a significant increase of 165% from 44.3 million in 2022, the EH216 series of AAV deliveries in 2023 were 52 units, up 148% from 21 units in 2022. Growth margin remains stable at a high level of 64.7% in Q4, swept from 64.3% 6% in Q3. Growth margin was 64.1% in 2023, despite a slight decrease of 1.8 percentage points from 65.9% in 2022, primarily due to changes in revenue mix. This represents the continued high growth margin level as a result of our competitive strength. and first mover advantage in the global UAM and digital industries. In Q4, our adjusted operating expenses, which are operating expenses excluding share-based compensation expenses, were $64.2 million, down 12.4% from $73.2 million in the same period last year, and up 18.8% from $54 million in Q3. The quarter-over-quarter increase was primarily driven by the expansion of sales channel and intensified marketing efforts in enhancing brand awareness. On an annual basis, the adjusted operating expenses were $226.3 million in 2023, down 6.6% from $242.4 million in 2022. As a result, Our adjusted operating loss in Q4 was 24.9 million, a 59.4% improvement from 61.3 million in the same period last year, and a 27.3% improvement from RMB 34.2 million in Q3. For the fiscal year, adjusted operating loss was 144.8 million, a 30.1 percent improvement from $207.1 million in 2022. Adjusted net loss in Q4 was $22.1 million, a 62.8 percent improvement from $59.4 million in the same period last year, and a 29.4 percent improvement from $31.3 million in Q3. For the fiscal year, Adjusted net loss was $138.8 million in 2023, a 32.7% improvement from $206.2 million in 2022. Thanks to our stringent approach to cash liquidity management, I would like to highlight that we achieved positive cash flow from operations in Q4. Further strengthening our balance sheet As of the end of Q4, we had $334.1 million of cash, cash equivalents, short-term deposits, short-term investment, and restricted short-term deposit balances. We are also actively in discussion with several commercial banks regarding the expansion of credit facilities. Although our current cash position and expected cash flow from operations will be sufficient to fulfill our cash needs for us to reach profitability in the near future. Looking ahead with our step D progress towards obtaining TC for mass production and deliveries, we anticipated achieving revenue of about $58 million in Q1 this year, representing an increase of 161% year over year. That concludes our prepared remarks. Let's now open the call for questions. Operators, please go ahead. Thank you.
spk05: Thank you.
spk04: To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. That's star, one, and one, if you wish to ask a question.
spk05: Please stand by while we compile the Q&A queue. We will now take the first question. One moment, please.
spk04: First question comes from from TF. Please go ahead.
spk02: Hi, I'm . Thank you for taking my question. So my first question is really about the order size. So with large-scale deliveries becoming possible after opting in the TC, have you seen an increase in customer interest that has actually converted into more orders compared to before? Thank you.
spk03: Yeah, thank you for your question. As the low-altitude economy industry grows rapidly, we have seen increasing demand for our EH216S from both government-related and finish spot operators. In the first quarter, we received an international intentional purchase order of 100 units from the Wuxi municipal government with the delivery at stage and with a more similar purchase order to come. with the supportive policies and growing demand that our EH216 is supposed to demonstrate our first mover advantage in a global market this year, contribute to EH's stable growth. So other than Hefei, Shenzhen, Guangzhou, Wuxi, we also think that similar demand for Shanxi, Henan, Wuhan, Zhuhai, Hainan, and many, many other orders to come. Thank you.
spk02: All right, thank you. So my second question is about the competition landscape. So could you elaborate on how the customers and how also could you provide for the competitive landscape? Thank you. Thank you. Yes.
spk03: October last year, we have obtained the first TC and end of last year, we have obtained the first AC. So this is the first kind of time in this industry. We have many other eVTOL companies and peers in China and overseas are still undergoing the prototype testing and also the application for the TC. So in the next year and half to two years, basically, we will be the only company that can commercialize for eVTOL. And compare our product to other eVTOL products, we have several advantages. Firstly, that we have a very compact fuselage, so measuring around six meters in length and very lightweight design. So that means we have the lower demand on the urban infrastructure. So make it our product highly adoptive and also very easy to deploy within the city. And secondly, our 216 is a two-seater without pilots. So this can definitely with the predetermined route that will eliminate the need for pilot training, hiring cost, and potential safety issues related to human errors in piloting. And also that by utilizing our autonomous technology and the command and control system, fleet management can be achieved. So that will enable to operate in the mass scale in the future. And also, our price is very, very competitive. With a domestic selling price of 2.39 million RMB, and also international selling price of US $410,000 in comparison. As far as we know that our other global peers will be selling at between 3 million US to 10 million US. So, you know, from customer's point of view, we think that only our customer can be profitable that will enable our business to sustain in the longer term. So with all those advantages, we think we are very, very competitive. These are for instances for intra-city, like shore range. For the long distance, we also have a product line of VP30 that Mr. Wu has mentioned earlier that we plan to send for TC application sometime this year. Thank you.
spk00: All right.
spk02: Thank you.
spk00: That's very clear.
spk04: Thank you. Thank you. We will now take the next question. The next question. From the line of from Cintiq. Hello, can you hear me? Hello, can you hear me?
spk02: Yes.
spk03: Okay. Thank you very much for coming. So as we mentioned before, trading in China. So here I have two questions. I have a question. to ask a lot of things about the market size of the library and the kind of applications. I'd like to ask you about the market size of it.
spk00: Are you just doing the real? This is my first session.
spk03: All right. Thank you.
spk00: Okay.
spk08: Thank you for your question. First of all, I would like to translate the questions into Chinese for our CEO.
spk00: Okay.
spk03: That's at the end of last year that the central government on the very top level of China that has a central committee meeting and after this meeting that the top The top authority of China has indicated that the low-efficiency economy is one of the strategic industries that the government is going to focus on for this year. So just like what I said earlier, China has already listed the low-income economy in the government work report in more than 20 provinces, and the central government also listed it in the central government work report. that there are currently to the central economy. So currently there are more than 20 provinces, the provincial government that has formally listed the low altitude economy as their focus for this year. Yes, so such a low-altitude economy led by the state government, we can use it in some more important applications related to low-altitude economy. The most characteristic is the application of unmanned aerial vehicles. Then it can be applied in urban air traffic. Of course, everyone may already know in the previous few reports, we have already had a lot of applications on tourism tourism. Through the focus of the central and local government, that autonomous passenger grade aircraft will be applied to not only for tourist park tourism, but also for urban transportation. integrated as part of the city's transportation system. So also in the future, that's not very long, that the air taxi scenario will come true. Especially in terms of scale, when China's economy started to warm up in 2023, China's low-income economy actually reached 5 trillion people in 2023. We estimate that the total market size of the low-aperture economy in 2023 that has reached in China has reached a 500 billion RMB. and expect it to go to 2 trillion RMB by 2030. We expect it to go to 2 trillion RMB by 2030. I would tend to operate the air taxi, make it a real scenario sometime this year. So by air taxi as a transportation vehicle that the people can use, can transform from their regular transportation from one dimension to three dimensions. And this will greatly enhance a photo market size of vehicle. This is from our CEO, Mr. Hu.
spk00: Okay. Thank you.
spk03: Thank you very much for the answer from our CEO, Mr. Hu.
spk02: And so I have another question about our expense.
spk03: So, in fact, as our company grows, the company's sales and operations costs will be managed more precisely.
spk02: So, would you mind sharing more details regarding the expenses in the future? Just for our company. Thank you.
spk03: Yes, regarding to our operating expenses, which is composed of sales and marketing and GMA and also research and development. As we ramp up our revenue, so you can see that post-quarter 2003, for example, we have a rich revenue of 56 million RMB. It's a year-on-year growth rate of about 260%. So when the revenue grows at such a speed, our adjusted operating expenses at post-quarter last year was 113% of total revenue. That compared to one year ago, the adjusted operating expenses was 466% of revenue. So you can see the rapid drop of RPEGs that's due to rapid increase in our revenue. So we believe that our growth on the revenue will continue to grow at a very high growth rate in the next several years. So we hope that we can manage that our adjusted operating expenses in three-year time drop from currently 113% of revenue drop to about 40% of total revenue in three-year time.
spk06: Thank you.
spk02: Okay, okay. Thank you very much for your answer and thank you for all of your comments. start to help the low-edge economy in China's development in future. So that's my all question and thank you all of you and have a nice weekend. Thank you.
spk06: Thank you.
spk05: Thank you. We will now take the next question.
spk04: Coming from the line of Ting Song from Goldman Sachs, please go ahead.
spk07: Thank you for taking my questions. So Yi Hong has announced the launch of UAM Operation Demonstration Center with Shenzhen government in December. So my question is, do we expect to see any revenues from UAM operation this year besides the sales revenues from shipment of EH216S? Thank you.
spk03: Yes, as Mr. Hu mentioned earlier, the company plans to kick off the commercial operations this year. But it may not be significant this year. In the current initial stage, our majority of our revenue will still come in from the sales of our EH216 series for the time being. Looking forward, as we expand flight services to more areas, recurring revenue, such as the operational revenues, will grow gradually. So we can have the receiving, we have a cap receiving orders, you know, from MSDN overseas. And we also receive a lot of requests from our customers to form a joint venture for the future operations. So we expect that next year and going forward, the revenue coming out from operation will gradually increase the percentage of our total revenue.
spk06: Thank you.
spk07: Thank you. So another question is about overseas revenues. So I see a company has a partnership with a partner with overseas companies in Dubai and also some government in European countries. So do we expect any progress in overseas market this year or next year? Thank you.
spk03: Yes, after we obtained TC, we also received a very strong demand from overseas markets. As we have announced, we have a form of strategic relationship and also received orders from UAE customers, that they intend to purchase 100 units. And actually, we started to deliver the first batch in the first quarter of this year. As of, for example, as of fourth quarter last year, we also sold our product to many places like Colombia, Saudi Arabia, and Qatar. So for, and we also perform our drone night shows in Japan and Spain. So in fourth quarter last year, the revenue derived from overseas markets was 26% of our total revenue. And this year, we also expect there will be a fairly good amount of revenue will be coming out from overseas markets.
spk06: Thank you.
spk05: Thank you. We will now take the next question. from the line of Yu Chen from Haitong Securities. Please go ahead. OK. Thank you, management. I have two questions.
spk07: And the first one is following the previous one. We would like to know the detailed progress regarding the overseas AC optation.
spk08: Because if we need to enter the overseas market, we think that the first step is to obtain
spk07: the overseas AC first. And the second one is about our production capacity. We would like to know the capacity regarding EH216 this year and in the following three years, as well as the new vertical of ET30.
spk05: That's two questions. Thank you.
spk03: Yes, regarding to overseas TCs, we have, as I mentioned earlier, we have seen strong demand from overseas markets, especially in the Middle East, South Africa, and ASEAN countries. And so for those places that we will rely on our local partner to obtain the local TC. So have they already obtained the TC from CAC? So when we apply the Overseas TC token through a streamlined process we call validation of TC, validation of Thai certificate with the Overseas Aviation Authorities. And this is expected to be a simplified procedure. Consequently, this approach enables us to expertise market entry and expansion in these countries. And in terms of the order and the production, we're currently receiving a substantial number of orders and pre-orders, which will be fulfilled according to our customers' specific requirements. And typically, the government and customers commit to pre-orders or intentional orders, for example, up to 100 units, and with an initial purchase 5 to 10 units for trial operations at local sites. As their operations expand and demand increase, then they will acquire additional products. So the favorable policies surrounding the low-altitude economy has provided us an attractive environment for growth. So consequently, we anticipate a substantial increase in delivery volume throughout 2024. First quarter, we have gave our guidance that 58 million, a slightly increase from quarter over quarter, because the first quarter is the Chinese New Year. Typically, there's a long vacation during the quarter. But so far, I look forward that we have seen very strong demand for orders for this year. Currently, our production and rainfall facility has an annual capacity of 600 units of eVTOL. And we are exploring opportunities to establish other facilities to further support our production capacities as market demand grows.
spk06: Thank you.
spk05: Thank you for answering. Have a nice weekend.
spk04: Thank you. As a reminder, if you wish to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. That's star 1 and 1 if you wish to ask a question.
spk05: We will now take the next question. From the line of Laura Lee from Deutsche Bank US, please go ahead.
spk07: Hey, thank you for taking my question and congratulations on the robots quarter.
spk08: So my first question is about the VT30 on your products.
spk07: You mentioned you're already preparing for the testing and the certification now.
spk08: So are there any specs you can talk about now? And do you expect like the client base will be similar to the EH216 or
spk07: the new product will kind of bring us more applications narrow. Thank you.
spk08: Okay, I will translate your question to our CEO who will take your question. So the first question is about some progress in VT30, which is about some differences in its application environment compared to 1.216.
spk03: Thank you.
spk01: I'm the CEO, Huazhen. Actually, we are doing the R&D work for the VG30 during our certification in the past few years. And we have done some internal testing slides.
spk03: And for the traffic volume, as we know, the air taxi within the urban area is the most, you know, the traffic demand. Yeah, that's why we're doing the certification for EH216, this type of a model. And now we have completed all the configuration design and internal testing for the VT30.
spk01: And in this year, we'll put more efforts into the testing for the VT-30, and we'll release more videos about the flight.
spk03: Actually, the VT-30 will do a lot of practical flights.
spk08: Our CEO personally has checked the flight within VG30. It's a very stable flight experience.
spk01: So we, including my flight video, in the future, I will provide it to you. And this year, we will choose a more appropriate time to do a test flight assessment for VG30.
spk08: And later, we will release our CEO's flight video with the VG30, and we will submit the TC application for VG30 within this year.
spk01: So the two models, E-Hang 216 and VG30, basically cover the entire application scene of China's low-altitude economy and low-altitude travel. These are the two most important platforms for E-Hang.
spk08: So the typical way, the EHAM 216 and the VT30 almost covers all the, you know, the application scenario for the urban air mobility. That's why these two models are our main products.
spk01: Yeah, we have accumulated a lot of almost the most flight data for EH216, and soon we will release more updates and progress for the BT30. Thank you.
spk05: Okay, thank you so much for the color.
spk04: And my second question is about, as you mentioned, you recently reached a cooperation agreement with the GAC group.
spk08: Could you give more details about this? Like, how does it work? Will you, like, share the R&D or manufacture collectively?
spk07: Or, like, what kind of support can you provide to each other?
spk05: There is a strong favorable policy and trend in China about the low altitude economy.
spk03: So under this background, a lot of governments are working with us.
spk01: So it's our pleasure to work with some state enterprises such as the GSE Group. Yeah, the first thing maybe that pop up into people's mind about our collaboration is mainly about the production.
spk03: And actually, on the other hand, we will also help the GAC group to develop their flying taxis products.
spk01: Now we have selected a production site within Guangzhou under our cooperation with GAC Group and we are going to establish
spk08: autonomous production line with GAC.
spk01: So through our collaboration, we will continue to improve the product quality of our EVATO product and to ensure that the safety of our EVATO flight. Okay. Thank you.
spk05: Okay, thank you so much. Thank you. Given the time is limited, let me turn the call back to Ms. An for closing remarks. Okay, thank you, operator.
spk08: Thank you all for participating in today's call. If you have any further questions, please contact our firm by email or participating in our following events. throughout the calendar information provided on our website. And we appreciate your interest and look forward to our next call. Thank you.
spk04: This concludes today's conference call. Thank you for participating. You may now disconnect.
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