EHang Holdings Limited

Good day ladies and gentlemen. Thank you for standing by and welcome to the Ehang third quarter of 2024 earnings conference call. Please note that the management's prepared remarks and the subsequent Q&A session will be primarily conducted in Chinese and the corresponding simultaneous or consecutive interpretation can be accessed on the English line. As a reminder, all translations are for convenience purposes only. In any case of any discrepancy, the management statement in the original language will prevail. To listen to the original marks by the management, please join the Chinese line. Additionally, both the Chinese and English lines are open for questions. And today's call is being recorded. I will now turn the call over to Angie, Ehang's Senior Director of Investor Relations. Ms. Anne, please proceed.

Hello, everyone. Thank you all for joining us on today's conference call to discuss the company's financial results for the third quarter of 2024. 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. Hua Zhihu, our founder, chairman, and chief executive officer, Mr. Zhao Wang, Chief Operating Officer, and Mr. Connor Yang, Chief Financial Officer and the Director of the Board. 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 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 ICC. The company does not assume any obligation to update any forward-looking statements, except as required under replicable law. Also, please note that all numbers presented are in RMB. and for the third quarter of 2024, unless stated otherwise. With that, let me turn it over to our CEO, Mr. Hua Zhihu. Please go ahead, Mr. Hu.

Okay. Hello, everyone. Thank you very much for joining Ehan's earnings call. Since the third quarter of this year, our order deliveries and financial performance hit a record high again. We have also made exciting progress in multiple aspects, such as the air operator certificate application and certification review, the development of low altitude ecosystem, R&D of next generation technology and products, as well as the expansion of overseas markets. All of these achievements underscore EHON's commitment and capabilities in accelerating our pace towards commercial urban air mobility operations. We have become the world's first EVITO company to obtain the three Airworthiness Certificates for pilotless aircraft, demonstrating we have the capabilities for mass production and deliveries. In July, the Civil Aviation Administration of China officially accepted the OC application submitted by Guangdong Yihang General Aviation and Hefei Heyi Aviation. This is the world's first OC project for pilotless passenger-carrying aircraft, signifying that the first related operational standards are about to be established, which will provide safety assurance for the commercial operations of EH216S in China. Currently, the OC review is progressing well, and the first OC is expected to be issued by the end of this year. We are actively assisting our customers and partners in Shenzhen, Guangzhou, Wuxi, Zhuhai, and Wencheng, Wenzhou in preparing their OC applications as well, with the aim to speed up the commercial operations of EH216S nationwide and promote the development of low-altitude economy demonstration zones across more cities. Since Q3, China's central and local governments have enhanced their support for the low-altitude economy industry, further highlighting its strategic role as an emerging economic growth engine. China's National Development and Reform Commission plans to establish a dedicated bureau for low-altitude economy, which will better coordinate resources across different segments for fostering the industry development. In November, the Ministry of Industry and Information Technology convened another plenary meeting of the leadership group for low-altitude industry development, emphasizing the strategic importance of the industry's high-quality development and outlining key tasks for advancing pilotless, electric, and intelligent low-altitude equipment. As a global leading UAM technology company, EHON actively aligns with national policies. Our product and development philosophy resonate closely with the government's advocacy for innovation and low-altitude equipment. Under the broad and in-depth policy support, the domestic demand for pilotless aerial vehicles in China continues to grow. In Q3, our deliveries and revenues reached a record high again. We delivered 63 units of EH216s, and our quarterly revenues reached 128 million RMB. This demonstrates the robust market demand and strong customer recognition of EH216S. Of course, our focus extends beyond aircraft deliveries. Our top priority is to ensure operational safety as we accelerate the establishment of a comprehensive operational support system, focusing on both sales and operations, as well as enhancing the low-altitude ecosystem. We have achieved a significant operational progress in the following three aspects. Firstly, on infrastructure. With strong support from the Hefei Municipal Government, the second UAM hub, Ascent, was officially established in Luogang Park in Hefei. This hub is tailor-made for the EH216 pilotless passenger aircraft, and it also serves as a UAM hub model for pilotless passenger aircraft operations. Secondly, on talent training, we have formed a strategic partnership with the Civil Aviation Flight University of China to jointly carry out the training of talents related to operations, maintenance, and management of Yihang's pilotless aircraft and to establish a standardized system. Thirdly, we are building an after-sales maintenance and repair system to support the upcoming extensive operational work. We believe that, In a future of a flourishing low-altitude economy, only truly competitive products can attract a sustained market interest. EHON will continue to increase our R&D investment to maintain our leadership. We will focus on the enhancement of EH216S performance and the commercialization of a long-range product on the following aspects. Regarding EH216S performance enhancements, We have entered into a strategic partnership with Empower, a pioneer in new energy vehicle power systems, to co-develop electric motors and motor controllers tailored for EHON's eVITO. This new solution features an integration of a lighter weight and higher power density. Meanwhile, we have strategically invested in INX and achieved a significant breakthrough in the joint development of a high-energy solid-state battery technology. With this solid-state battery, our EH216S completed a continuous flight test exceeding 48 minutes, significantly improving the flight endurance by 90%. Next year, we aim to improve the flight endurance even further to 60 minutes. This milestone achievement is critical in broadening the application and operational scope for our eVTOL products. Moving on to the development of our long-range product. Building on the VT30 prototype, we have conducted commercial design and upgrades for our lift and cruise eVTOL model to VT35. This long-range product complements our existing product portfolio by targeting application scenarios like inner-city, cross-bay, and crash mountain routes. Extending beyond the EH216S's intra-city UAM coverage, with the two categories of EH216 series and VT35, we will achieve full scenario coverage for low-altitude flights. In the overseas markets, in Q3, we have conducted demo flights in Brazil, Japan, and Thailand, extending our footprint to 18 countries across the globe. We are also making strides in overseas airworthiness certification for the EH216S. In September, EH216S was granted an experimental flight authorization certificate from Brazil's National Civil Aviation Agency, and we plan to conduct more in-depth test flights in Brazil to facilitate the local airworthiness certification. The Civil Aviation Authority of Thailand also plans to open flight tests for certified and vitals in multiple areas of Thailand. We're planning to expand our flight range in Thailand with the aim to launch commercial flight operations in some regions of Phuket and Sumai by 2025. Reflecting on our progress over the past decade, EHON has launched the world's first pilotless passenger aircraft, EH-1A4, in the United States, becoming a pioneer of the global urban air mobility industry. We have driven and pioneered breakthroughs in pilotless aerial vehicle technology and airworthiness certification. With the launch of operational hubs such as the Hefei UAF hub and others, Ehan's long-held dream of urban air mobility will truly come to fruition. Moving forward, we will steadily advance ensuring safety as the top priority to achieve sustainable industry development. We also strive to create greater value for our shareholders, partners, and the society. Next, I'll turn the call over to our COO, Mr. Wang, to elaborate more on our Q3 operational performance. Thank you. Thank you, Mr. Hu, and hello, everyone. Let me first provide an overview of our product delivery status for the third quarter. In Q3, we received repeat orders from existing customers as well as new customers. Specifically, we completed the deliveries of 40 units to the Shanxi client in the third quarter, reaching a total of 50 unit deliveries to this client. We also delivered three units to our Wencheng client in Wenzhou, Zhejiang Province in the third quarter, reaching a total of 30 units delivered. Additionally, we delivered five units to each of Shenzhen Boling and Hefei Heyi customers for their repeat orders in the third quarter to be deployed in their expanded site at the UAM Operations Center in Luohu District, Shenzhen, and the newly established UAM Hub at Luogang Park in Hefei. Furthermore, we also secured new orders and completed deliveries for clients in Fujian, Chongqing, Tianjin, Guizhou, Shanxi, and Zhuhai this quarter. In summary, we delivered a total of 63 units of the EH216S series in the third quarter. Currently, our domestic order book is more than 1,000 units. As an aircraft manufacturer, EHON is not only responsible for the production and sales of the aircraft. We're also providing customers with maintenance, repair, and related consulting services. Due to the special nature of the aircraft, we are also assisting our customers from various regions in preparing for their operational certification applications, striving to obtain approvals from the CAAC as soon as possible. Before that, we are also assisting customers with services including operational site design, route planning, and business process planning. For those operation companies that have submitted to their OC applications and are under regulatory review, we provide full technical support to assist them in safety improvements to meet the safety operation requirements of the CAAC. Our company's focus moving forward will be to place greater emphasis on service quality. We aim to proceed steadily and diligently, serving our customers well, building a robust UAM operational system, and improving talent training mechanisms. This will enable our customers to operate their aircraft continuously and stably, achieve commercial returns, and also lay a solid foundation for the company's long-term development. In terms of personnel training, with the aim to assist our clients in better operating and maintaining the aircraft, we have trained a total of 47 operators and 22 maintenance personnel for our customers. Regarding infrastructure construction, we have signed strategic cooperation agreements with several infrastructure service providers. These partners will take the initiative to undertake the construction of low altitude infrastructure, such as takeoff and landing platforms and hangars in some cities. We will use these infrastructure facilities through cooperation or leasing agreements. Since the second quarter, we have visited numerous domestic production bases for new energy vehicles and new energy batteries. Additionally, in October, we visited some European manufacturing facilities specializing in SIFI aviation components. We are currently in discussions with some of these factories about potential cooperation. Our goal is to integrate various production facilities and management expertise to provide ideas and solutions for the integration and upgrade of our production lines and manufacturing technique in order to improve quality and reduce costs. Currently, all of our delivered aircraft are produced in our sole production facility in Yunfu. Starting from Q4, we will strengthen industrial cooperation and plan to expand our industrial layout in Anhui, Shanxi, Guangxi, and Beijing through joint ventures and contract manufacturing. For instance, in Hefei, Anhui, where our East China headquarters is located, We are collaborating with the local government to establish the Yihong Aerial Vehicle Manufacturing Industrial Park and have already completed the site selection for the first phase of the factory and flight test area. In the North China, leveraging our cooperation with Xisheng Tourism, we plan to establish a low-altitude economy industrial park and a North China Delivery Center in Taiyuan. In the capital Beijing, we are actively exploring cooperation on the R&D and testing, manufacturing, education and training, and demonstration applications in areas like emergency response, firefighting, and rescue missions. And we have already begun environmental research work. As for our existing Yunfu factory, we'll start technical upgrades to the production line and flight test area in the fourth quarter. By 2025, with the commissioning of new factories, Our overall aircraft production capacity and component supply will continue to expand. Since the third quarter, we have visited a number of overseas customers, investors, partners, and media. Additionally, we have actively participated in various domestic and international industry exhibitions, including the China International Aviation and Aerospace Exhibition, the China International Import Expo, Grown Italy in Bologna, and Smart City Expo World Congress, GTACS Global, and the Thailand Drone Expo, among others. These activities have further enhanced Yihan's international reputation and allowed us to connect with a large number of potential customers. In China, we have also actively participated in activities and conferences organized by various ministries and commissions, such as the Ministry of Industry and Information Technology, the National Development and Reform Commission, and the CAAC, including the Low Altitude Economy Innovation and Development Conference, the China International Small and Medium Enterprises Fair, and the Urban Air Mobility Forum. Through these conferences and forums, EHON has actively communicated its thoughts on the development of the low-altitude economy and future operational strategies, resonating with attendees and earning recognition from many industry experts. EHON has been invited to almost every low altitude economy related conferences and forum with expectations to bring our aircraft for display or fly demonstrations. Our international reputation has also significantly improved. Since the third quarter, we have obtained special flight permits in Brazil and Thailand and have carried out demo flights. To date, the EH216 series has completed flights in 18 countries. Looking forward, Yihan will continue to promote and lead the commercialization of the low-altitude economy while expanding our industry footprint. We will stay committed to our due focus on sales and operations, fueled by innovation and collaboration, as we support the sustainable growth and commercialization of this emerging industry. Now, I'll hand it over to our Chief Financial Officer, Connor, to walk you through the financial performance for the third quarter. Thank you.