EHang Holdings Limited

Good day, ladies and gentlemen. Thank you for standing by and welcome to the EHANG fourth quarter and fiscal year of 2024 earnings conference call. Please note that the management's prepared remarks and the subsequent Q&A session will primarily be conducted in Chinese and the corresponding simultaneous or consecutive interpretation can be accessed on the English line. As a reminder, all translations are for convenient purpose only. In case of any discrepancy, the management statement in the original language will prevail. To listen to the original remarks by management, please join the Chinese line. Additionally, both the Chinese and English lines are open for questions. And today's call is being recorded. Now I will turn the call over to Angie Ehang, Senior Director of Investor Relations. Ms. Ann, 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 fiscal year 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. 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. 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 applicable law. Also, please note that all numbers presented are in RMB and are for the fourth quarter of 2024, unless stated otherwise. With that, let me now turn it over to our CEO, Mr. Hua Zhihu. Please go ahead, Mr. Hu.

Hello everyone and thank you for joining our earnings call. Q4 and full year 2024 marked another record-breaking period for Yihan. We continue to grow significantly, beating our guidance and setting new record high quarterly and annual deliveries and revenues. In Q4, we delivered 78 units of EH216 series product, generating revenues of 164 million RMB, representing an increase of 239.1% year-over-year. For the full year, we delivered 216 units, with the total revenue reaching 456 million RMB, marking a 288.5% year-over-year increase. More importantly, 2024 was a breakthrough year as we achieved positive adjusted net income and positive operating cash flow for the first year, a significant milestone in Ehon's decade-long journey. With this, Ehon also became the first eVito company in the global urban air mobility industry to achieve non-GAAP profitability, further solidifying our leadership. At China's 2025 two sessions, the low-altitude economy took center stage as strategic emerging industry a key driver of new quality productivity for the second consecutive year it was included in the government work report which explicitly calls for large-scale demonstration projects to advance new technologies new products and new applications to promote the sector's safe and healthy development additionally china's ndrc national development and reform commission established a dedicated low altitude economy development department in december 2024 Meanwhile, the local governments in over 50 cities across China have introduced their localized development plans for the sector. These government initiatives further highlight China's long-term national strategy and strong commitment to developing the low-altitude economy. If 2024 was the year of planning for low-altitude development, 2025 will be the year of its implementation. Since obtaining the three airworthiness certificates, we have been accelerating the commercial deliveries and operational deployment of the EH216S. Our customers have already established over 20 eVito operational demonstration sites and ePorts across 16 cities in China, including Hefei, Guangzhou, Shenzhen, Shanghai, Wuxi, Taiyuan, and Wenzhou. This year, our top priority is to launch operational demonstration projects in key cities to enable the public to experience the EVITO flights firsthand. To this end, we have been actively driving the operator certification process for pilotless passenger-carrying EVITO aircraft. Currently, the Civil Aviation Administration of China has completed document and on-site inspections for the first two applicants accepted. They are Yihan General Aviation, our wholly-owned subsidiary substantializing in UAM operation services, and He Yi Aviation, our joint venture in Hefei. Both are now awaiting the final approval. We look forward to the early issues of the two-operator certificate, marking the beginning of the commercial eVito operation era. Looking ahead, we expect more operators to apply for the operator certificates, paving the way for broader commercial flight service of the EH216s in the future. 2025 marks a pivotal year for AI technology innovation in China globally. This year's government work report reaffirms the nation's commitment to the AI Plus initiative, emphasizing the acceleration of AI applications across various industries, including the low-altitude economy. As a pioneer in pilotless eVito technology, Yihan continues deepening our AI Plus strategy. Leveraging our core technologies, including safety redundancy, autonomous flight and fleet management, along with intelligent system platform, we're integrating AI across the whole eVito lifecycle to drive intelligent upgrades and innovative practices in commercial operations. This includes further optimizing our key technologies and capabilities, such as intelligent flight control algorithms, Autonomic Detection, Flight Route Planning, Command and Control, Human-Machine Interaction, Scenario Simulation and the UAV Cloud System. Beyond enhancing our aircraft, AI is set to expedite the construction and enhancement of the digital infrastructure for air mobility. EHON will collaborate with multiple Chinese universities, colleges and relevant government departments and the commercial conglomerates to advance the integration and innovative integration of digital technologies such as 5G, 6G, satellite communication sensor technologies, and high-precision navigation with the low-altitude aviation industry. Together, we aim to build a smart low-altitude ecosystem, interconnecting air traffic infrastructure, flight corridors, communication and navigation systems, airspace management, and operational services. This will establish a secure, efficient, and intelligent digital foundation to support commercial operations for Yihan and our customers. On the product front, we continue to advance our multi-rotor eVito series through strategic collaborations with the leading upstream companies, including INX, Greater Bay Technology, and Empower. Together, we are developing customized the next generation high-energy solid-state lithium batteries, fast-charging batteries, and electric motors. We have achieved great progress in sample design, prototyping, and testing. We conducted the industry's first eVito test of light powered by solid-state lithium batteries, delivering an impressive endurance of over 48 minutes. We are thrilled about this major technological breakthrough that it reinforces our confidence in next phase overall performance enhancements. For our upgraded lift and cruise model VT-35, its prototype is in its final assembly and testing. We plan to complete the full functionality test to fly as soon as possible and initiated the airworthiness certification process. It will be unveiled soon. For the flying car that targets the mass consumer market, we formed a cross-industry strategic partnership with China Automobile to actively design and discuss new product solutions to explore innovative approaches to future personal transportation. Over the past decade, Ehan has pioneered numerous industry firsts, and we firmly believe the next 10 years will witness the rise of the low altitude economy, disruptive development of AI technologies, and transformative development in unmanned aviation. As the saying goes, our journey of thousand miles begins with the first step. As Ehan enters its next decade in 2025, we remain steadfast in our commitment to advancing technological innovation, industry standards, operational demonstration, and ecosystem development of pilotless EVs. We aim to lead the transformation of urban air mobility while promoting the safe, healthy, and sustainable development of the industry. Next, I'll turn the call over to our COO, Mr. Wang. Thank you. Hello everyone, this is Wang Zhao. We closed 2024 with record high deliveries and revenues, exceeding our performance guidance. This success is driven by strong market demand and growing customer orders. In particular, our EH216S autonomous messenger eVito has received a 30-unit order from Shandong Province, a 30-unit order from Zhejiang Province, along with an initial 5-unit order and an indicative order from another 45 units from Sun River, with the result of 78 units deliveries in Q4 and 164 million in revenues. The total annual deliveries reached 216 units with a total revenues of 456 million RMB. To meet the continuously growing order demands, we're focusing on enhancing production efficiency, scaling production capability, and planning capacity expansion. Guided by our Manufacture-to-Order principle, we're establishing our original and networked production base layout in South China, East China, and North China. In South China, our Phase 1 Yunfu production base currently has an annual capacity of 300 units. This year, we plan to expand Phase 2 with 24,000 square meters of new production lines while upgrading automation, and efficiency. By 2025, UNFO production base is expected to reach double size and a total annual capacity of 1,000 units. It will also produce large number of aviation materials and components for our customers. In East China, with Hefei as our regional headquarters, we are further deepening strategic cooperation with Hefei government, partnering with advanced new energy vehicle manufacturer JAC Group and Hefei Guo Xian Holdings to build an advanced, generalized, and automated eVito manufacturing base. Additionally, we are collaborating with the Weihai High-Tech Zone in Shandong Province to establish a pilotless passenger eVito R&D and manufacturing base there, creating an all-round collaboration system, integrated production, sales, and operations. In North China, we have entered a partnership with the Beijing Fangshan District Government to establish a national headquarters for low-altitude emergency rescue equipment. The headquarters features 72,000 square-meter a training center of over 100,000 square meters and a training and exercise base of hundreds of acres. Leveraging EHAU's current flight platform and autonomous flying technologies, we plan to vigorously develop R&D production and operations in the fire emergency rescue sector, providing support for the life safety with autonomous flying vehicles. This year's two sessions promoted large-scale application demonstration actions and the safe and healthy development of the low-altitude economy, which are deeply in line with EHOT's development strategy. We fully endorse this principle. Safety is the top priority of the sector, from the in vitro design to the flight and operational system. e-hon has implemented comprehensive safeguards for commercial operations e-hon has integrated the full redundancy philosophy from the id sector into the design of our pilotless passenger invitos and has passed vigorous airworthiness testing and certification the three major electrical systems within the aircraft all have sufficient redundancy with backups eliminating single point failures As the low-altitude economy approaches a critical phase of mass adoption, the industry requires a suite of scientific, comprehensive, rigorous, and safety-oriented operational framework for eVITOS. During the operator certification review process, EHON worked closely with government agencies, regulators, academic institutions, and industry associations to advance the establishment and improvement of relevant standards and regulations. To strengthen safety operations, we have internally optimized our organizational structure to establish a comprehensive safety operational system and team. From product sales, customer service, personal training, aviation material sales, maintenance and repair, and software system to landing pass design, route planning, and integrated operational services, we are building a full cycle value chain. encompassing hardware services and operations to provide customers with one-stop solutions. Looking ahead, our revenue streams will become more diversified. This year, EHON remains committed to the Safety First principle while focusing on low altitude tourism as the key entry point and urban air mobility as a large scale goal to expand our UAM operational network in pioneer cities to demonstrate the low altitude economy and then systematically scaling operations from point to point connections to a fully integrated network. For example, Our second UAM hub at Luogang Park in Hefei, the EVITO operation center at Longhua Airport in Shanghai's Shihui Riverside, and the first automated vertiport at the UAM center in Luohu, Shenzhen. These flagship projects serve as typical models. Over the next three years, we will work with partners such as China Construction Group, China Communications Construction Company, and other infrastructure construction units, local governments, and major commercial partners to jointly develop more than 100 urban air mobility terminals and more than 100 low-altitude cultural tourism terminals, in national 5A level scenic areas across China. We aim to build a city-level, low-altitude economy flight service system and carry out integrated business cooperation that combines culture and tourism, transportation, emergency response, and logistics. In 2025, based on Ehan's current mature flight platform and autonomous flying technologies, we will not only vigorously develop passenger business, but also develop non-passenger business. The fire emergency rescue sector has already been established in the capital Beijing. Besides, Ehan is committed to developing low-energy, long-endurance logistics UAV products, which will greatly promote the development of low-cost, high-efficiency, Aerial logistics transportation. We aim to realize applications in interprovincial, interprovincial, and cross-border logistics scenarios. Currently, we have started exploration and layout in Beijing, Guangdong, Guangxi, and Hainan. Overseas, we are expanding our presence in Asia, Europe, and South America to continuously advance our market development, flight scenarios, and regulatory approvals. In Q4 last year, we conducted three consecutive days of EH216S passenger carrying flights in central Bangkok, Thailand, and plan to launch commercial trial operations this year within the sandbox areas designated by the Thai Civil Aviation Authority. In Japan, we completed a new four-city flight tour, expanding our flight footprint across 16 cities and showcasing multiple use cases, including aerial sightseeing, inter-island transportation, aerial logistics, and emergency services. In February this year, EH216S completed Europe's first autonomous EVITO flight in an urban environment in Benidorm, Spain, setting a precedent for future urban air mobility deployment in Europe. Most recently, we conducted our first flight in Mexico, further expanding our global footprint to the 19 countries. To date, our cumulative flight record has surpassed 64,000 flights. As we move into 2025, we will continue to execute our global market strategy of deepening domestic business while expanding globally. We will remain focused on both sales and operations, further diversifying our revenue streams. Amidst China's trillion-level low-altitude economy and the Blue Ocean market, along with the great potentials for aerial sightseeing across nearly 15,000 Class A and above tourist attractions and nearly 700 cities for urban air mobility, we remain optimistic about the strong demand for our in vitro products and operational services. Confident in our long-term growth prospects, we expect total revenue for 2025 to reach 900 million RMB, representing an approximately 97% increase year-over-year. Now, I'll turn the call over to our CFO, Connor, for the financial performance. Thank you. Hello, everyone. This is Connor. Before I go into details, please know that all numbers presented are in RMB, unless otherwise stated. Detailed analysis are contained in our earnings press release, which is available on our IR site. I will now highlight some of the key points here. I am pleased to report that we closed 2024 on a strong note, surpassing expectations for both Q4 and the full year. In Q4, we achieved record revenues of $164.3 million, representing an impressive 190% year-over-year growth. For 2024, our total revenues reached an all-time high of $456.2 million, up a substantial 289% year-over-year. This outstanding performance was primarily driven by strong eVito market demand, along with our well-coordinated and impactful strategic initiatives in key areas including OC certification, production scaling, and commercial readiness. On deliveries, we set a new quarterly record with 78 units of the EH216S delivered in Q4, marking a 239% year-over-year increase and a 24% sequential growth. For 2024, total deliveries of the EH216 series reached 216 units, up 315% from 52 units in 2023. Our gross margin for Q4 was 60.7%, slightly down from 64.7% in the same period of 2023 and on par with Q3. For full year 2024, the annual gross margin was 61.4%, a slight decrease from 64.1% in 2023. The decreases in gross margin were primarily due to changes in the revenue mix and higher unit costs for the EH216S. Despite these modest declines, our gross margin remained high at 60%, highlighting our competitive edge and pricing power in the EVITO sector. Turning to the operating expenses, in Q4, adjusted operating expenses, which is defined as operating expenses excluding share-based compensation, were 78.2 million, up 22% year-over-year from 64.2 million, but down 10% from Q3. The sequential decline reflects cost control and efficiency optimization, while the year-over-year increase was mainly due to the expansion of sales channels higher employee compensation and investments in new EVITO models. In addition, we continue to actively invest in the development and iteration of new EVITO models and technologies since we obtained the three Airworthiness Certificates. For 2024, adjusted operating expenses were $290.1 million up 28.2% from $226.3 million in 2023. Strong top-line growth and cost efficiency contributed to a solid improvement in non-GAAP profitability. Adjusted operating income for Q4 was $27.9 million, a significant improvement from the adjusted operating loss of $24.9 million in Q4 2023 and up 208.2% from Q3. In Q4, we realized the third consecutive quarter of adjusted net income for $36.4 million, a sharp improvement from the adjusted net loss of $22.1 million in Q4 2023, and up 132.3% from Q3. For 2024, we achieved the first-ever annual adjusted net income of $43.1 million, a significant improvement from the adjusted net loss of $139 million in 2023, marking our entry into a new phase of sustainable and accelerating profitability. Alongside strong revenue growth and improving profitability, we also maintain a solid liquidity position. As of the end of Q4, our total cash and cash equivalents restricted short-term deposits and short-term investments was $1,155,000,000. This strong cash balance provides us with strategic flexibility to support growth initiatives, invest in innovation, and enhance market competitiveness. Notably, we recorded our fifth consecutive quarter of positive operating cash flow and the first ever annual positive operating cash flow. amounting to approximately 160 million in 2024, demonstrating our ability to generate a sustainable cash flow while scaling operations. Looking ahead to 2025, we are in the final stretch of obtaining operator certificates. We believe that the achievement of this key milestone along with our active progress in eVito commercialization readiness, operational deployments, production scale-up, technological innovation, and a global market expansion will further solidify our industry leadership, a strong foundation for accelerated growth, and drive us into a new growth cycle. Based on our current progress and market demand, we're expecting a total revenue in 2025 of approximately 900 million RMB, representing a year-over-year increase of 97%. Thank you.

Thank you.

Now let's open the call for questions. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Ting Song from Goldman Sachs. Please go ahead.

Thank you for accepting my question. I have a question about production. We just mentioned that Yunfu will have 1,000 production units this year. How do we see the progress of Hefei and Weihai in 2025 and 2026? And how do we understand the relationship between production and production at the end of the year? So I thank you for taking my question.

I just have a question which is regarded on the production capacity. I know we are expanding our production capacity for the phase two. So wondering what kind of added production capacity we are looking at for the Hefei production facility by the end of 2025 and 2026. And also, if we're talking about a total production capacity of 1,000 units, so how much volume are we seeing? So how much will be the utilization rate I'll be looking at between 2025 and 2026?

Thank you. Hello, everyone. I'll answer this question.

The expansion of Yunfu 2.7 will complete the annual production capacity of 1,000 units this year. In the future, the production line of Yunfu 1.7 and Yunfu 2.7 will also be more clear and precise, focusing on the assembly, production, processing, and assembly of parts. In addition, at Yunfu, we will cooperate with Ingber's joint venture company in smart manufacturing and functional chain management to modify and expand the production line. I'll take this question.

For Unifil Phase 2, for the capacity expansion, this will complete this year, reaching a total annual capacity of 1,000 units. And the Unifil Phase 1 and Phase 2 production lines will have specialized focuses. They will be focusing on aviation materials, slash components, manufacturing, and aircraft assembly, respectively. So additionally, with our joint venture with Empower. We are also upgrading the production lines, improving the automation and efficiency in manufacturing and supply chain management. With regard to Hefei, we plan to establish a JV with JAC Motors and Hefei Guo Xian Holdings to build a modern low-altitude aircraft manufacturing facility. And according to the planning of the government, of the Hefei local government, the expansion construction work is expected to be completed in one and a half and two years.

In addition, we also have production plans in Shandong, Weihai and Beijing. Just now, I have introduced in detail that the principle of the company's future overall production expansion is to sell fixed production and continue to expand. And additionally, we also have plans for production in Weihai, Shandong province, and Fengshan district, Beijing, as previously mentioned.

And our expansion for the capacity follows manufacturing to order principle. So we will adopt a systematic growth strategy across different parts of China, say South, East, and North China. And they will have a specialized management for different product lines, including passenger transport, logistics, and emergency response, and firefighting.

Thank you.

Thank you.

Your next question comes from Cindy Huang from Morgan Stanley. Please go ahead.

感谢接受我的提问,也非常恭喜你们取得了亮眼的四季度业绩。 我的第一个问题是想请管理层更新一下获取这个OC的时间点,还有哪些步骤跟预期的里程碑。 The second question is to ask the management to share with us when will the bank expect to achieve full-year GAAP profits? With the development of active partner relationships and basic facilities, can you provide guidance for OPEX and CAPEX in the next few seasons? Thank you.

Thank you for taking my question. First, congratulations on the strong Q4 results.

Could management provide additional color on the executive timeline for our OEC application? What are some of the milestones we are expecting with regard to the application? And my second question is that when are we going to achieve a GAAP profitability With our collaboration initiatives and also the construction of many of the infrastructure and facilities, can you please offer a ballpark CAPEX and OPEX for the coming quarters of this year?

Thank you. Hello everyone, I will answer the first question. I am very happy to tell everyone The Chinese Civil Aviation Bureau has completed the OC documents and live inspection work of the two EVETO operators in the first batch. Including our full-fledged subsidiary, Yihang Airways, and our joint operating company in Hefei, Heyi Airways. That is, as a applicant, the first batch of these two operators have completed all related work. We are waiting for the final results of the bureau. This is already a milestone. Let me take your first question.

We are glad to announce that the CAAC has completed the acceptance and onsite inspection of these two AC applicants. That's for our He Yi subsidiary company. And we are now just waiting for, so we have pretty much completed all the required work and just waiting for the final regulatory approval. So we also expect these OC will be rewarded to us as soon as possible. But so the inspection and everything I mentioned itself is already a milestone. And these will provide the basis for us to roll into commercial operations as soon as possible.

我们想强调的是,这将是无人驾驶航空器飞行管理暂时条例新规生效后的首批无人驾驶载人以为头的OC证书。 因此首次OC审定的过程也是相关审定标准的建立,完善的过程。 责任重大,意义非凡。 它将为未来EH216-S乃至整个无人驾驶载人航空器在中国的商业化安全运营规定。

I want to emphasize that these will be the first unmanned EVito OC issued under the new interim regulations for the UAV flight management. So the certification process itself is establishing and also refining the standards. So it is a significant responsibility that will set crucial precedents for the safe commercial operation of EH216S and all unmanned passenger-carrying aircraft in China. Thank you.

Hi, I'm Connor. Let me answer the second question. In 2024, we have implemented the adjustment code, which is the non-gap power supply. This is called

Okay, sure. This is Connor. I will take your second question. As we have mentioned, we have achieved a non-gap profitability in 2024. And with your question of how and when are we going to achieve a full year gap profitability, so according to our plan and also our estimated revenue growth of 97%, which is $900 million, revenue in 2025 but we expect it to achieve gap profitability quarterly in the second half of 2024 however for three-year gap profitability that it will be sometime in 2026. uh

uh uh

So with regard to capex, our full year capex guidance for 2025 will be 14 million U.S. dollars. And the capex will be used in scaling up our production capacity in Yunfu Phase 2, Weihai, Heyi, as well as our planned production site in Fangshan District, Beijing. And we will also use some of the for developing models that will be used in emergency response and the logistics. Plus, there's going to be investment in construction of our new headquarter in Beijing, in Guangzhou.

对,另外一个整个APEX的这个增长的话,2025年, And we expect the OPEX to grow at 40% year-over-year in 2025.

Thank you. Thank you.

Thank you. Your next question comes from Wei Shen from UBS. Please go ahead.

Two questions.

Good evening, management. Two questions. One is on the gross margin outlook, and the other one is on financing plans in 2025.

I'm Connor. I want to answer.

The net profit, our target net profit is 60%, but there will be some ups and downs. As I mentioned earlier, we will diversify our products this year. There may be an expansion abroad, which will help the net profit. In addition, we will develop a commercial business. Our targeted gross margin is around 60%, give or take.

So to achieve that, we're going to adopt two initiatives. For one, we're going to invest more efforts, roll out more product lines to make our product offering more diversified. with the diversification that's going to help drive up the gross margin. And the second initiative we're planning to, you know, what I've just mentioned, that is going to help grow the gross margin. However, we're planning to do distribution model, which is going to, you know, sacrifice the gross margin a little bit. But give or take, we're aiming 60% gross margin.

The company's financing plan Last year, we accumulated nearly $100 million in financing, and our cash reserves exceeded RMB1.1 billion. In 2020, we also created a full-year cash flow of RMB160 million. So the current company's self-management situation has the ability to self-create and enter the healthy development track. But of course, as we accelerate the market and business expansion this year, Of course, the business will also increase our capital strength through further financing, which will help the company in the development of new technologies, new products, and the expansion of market sales, the expansion of production bases in various places, and the expansion of team members to provide more funding for the company's next stage of growth. Thank you.

So last year we raised nearly 100 million U.S. dollars. And also our current cash reserves exceeded 1.1 billion RMB. And as I mentioned, our positive cash flow is around 160 million for 2024. So as you can see, our business is self-sustaining. capability and healthy development. So with regard to this year, we'll accelerate market and business expansion, seeking additional financing to strengthen our capital position. This will support new EBITO technology and product development, market expansion, new headquarters construction, production facility development, and team growth, so ensuring sufficient funding for our next growth phase. Thank you.

Thank you. Your next question comes from Laura Lee from Deutsche Bank. Please go ahead.

Hey, thank you for taking that question, and congrats on a strong year. So my first question is about the air taxi part. So we noticed there are increasing announcements of UAM, either you're building like an experience center or development of digital infrastructures. So just wondering, is there any rough timeline for the air taxi operation and any notable milestones in between?

首先感谢管理层接受我的提问,恭喜全年强弱的业绩。

My question is about the aerial taxi, and we actually noticed that there are more related news releases on the market about UAM, or more about the experience center, or cooperation to develop some digital technology facilities, etc. Then I would like to ask about the general timetable of our company's aerial taxi operation, and what is the important milestone? Thank you.

I am Wang Zhuo. I will answer this question. The scene of the air taxi is the vision and mission of the company that Yihang has been hoping to achieve for a long time. However, the aviation industry has put safety first. It needs to roll up and down step by step. Therefore, in the past two years, we have been flying around in various tourist areas. We have accumulated enough safety travel data to go through the scene of the air taxi. The scene of the air taxi is based on the infrastructure construction of the ground. Some of the low-altitude digital infrastructure, including communication navigation, monitoring, air traffic system, etc. are perfect. Currently, all over the country, there are clear low-altitude infrastructure plans and land time charts. Many cities are planning to build hundreds of thousands of low-altitude aircraft carriers and routes in the next three years. Currently, we are designing and building cities, air traffic, bookmarks, and aircraft stations with Zhongjiao Group. At the same time, as industry pioneers, Thank you. This is only Joe.

I will take this question. While air taxi services remain our long-term vision and mission, aviation prioritizes safety above all. requiring careful step-by-step progress. So over the next couple of years, we will first establish operations in domestic tourism areas to accumulate enough data before we venture into air taxi services. And also, air taxi implementation depends on ground infrastructure, particularly 30 ports, and many low altitude digital infrastructures, including communication, navigation, surveillance, air traffic management. Right now, cities across China have put forward clear and specific plans and timelines for the infrastructure construction, and with many planning hundreds to thousands of birdie ports and routes over the next three years. As an industry pioneer, EHON is actively contributing to policy development and infrastructure planning. Our partnerships with CCCC and CSCEC and many local governments are actually helping to build the ecosystem and framework for air taxi operations.

Thank you. Your next question comes from Rongyan Zhu from Citix. Please go ahead.

首先感谢管理层之前的介绍, 然后也感谢接受者提问。 我这边主要有两个问题, 第一个就是关于我们国外的问题, 我们公司在国外的整体的各种认证的进度和订单的进展是什么样的? 第二个问题就是, thank you

Thank you for the presentation and thank you for taking my question.

My questions are on your overseas markets. The first one is the progress of our OC certification as well as the orders. What kind of situation are we at right now? And my second question is on our plans on diversifying our revenue streams. So with that, I mean, particularly, what kind of revenue growth or mix are we looking at outside of manufacturing of these flying vehicles?

So any guidance or plan on that?

I will answer these two questions. The first one is about foreign certification. Since the fourth quarter, we have completed flight demonstrations in Japan, Thailand, Spain, and Mexico. The number of flights has now expanded to 19 countries. Last year, we had orders from overseas countries such as Argentina, Japan, and Dominica. Through local flight demonstrations and in-depth contact with multinationals, We, as the founders of unmanned aerial vehicles, have been continuously promoting the pilot certification of new aircraft carriers in various countries. The Ministry of Foreign Affairs also supports our pilot certification overseas. We will work together with the Bureau to promote the pilot certification of unmanned aerial vehicles, which is a new type of aircraft carrier, in overseas. We will actively explore the ideas and methods of the pioneer, and strive to make our IVEITO operate overseas as soon as possible. Thank you.

I'll take the question. Since Q4, we have completed flight demonstrations in Japan, Thailand, Spain, Mexico, and many others, expanding our flight footprint to 19 countries. Last year, we delivered orders to overseas markets. That includes UAE, Japan, and Dominica. As pioneers in pilotless passenger-carrying aircraft, we are actively engaging with civil aviation authorities worldwide through local flight demonstrations and discussions to promote the airworthiness certification for this new aircraft. The CAAC is very supportive of our efforts in applying for international certification. And we are working together to promote the certification of unmanned passenger-carrying aircraft overseas. We are actively exploring some innovative pilot-first approaches to expedite the international operations of our EVs. Thank you.

第二个问题是关于收入多用户。 A company has always maintained a strategy of supply and demand. Our target position is not only to produce and manufacture with VITO. We have a comprehensive value system for customers to build hardware, service and operation, including product sales, customer service, personnel training, asset sales, repair and maintenance, software system, line opening and operation, and other comprehensive services. In the future, VITO's large-scale commercial operations On your second question of diversifying our rapid extremes, Ehan maintains a due strategy of both operations and sales.

So we position ourselves beyond just being an eVito manufacturer. We build a complete lifecycle value system for our customers featuring hardware, service, and operations. So this includes product sales, customer service, personnel training, aviation materials, maintenance, software systems, and route planning and operations. As the EVito commercial operations scale up, Ehan will develop more diversified revenue streams. And additionally, I want to tell you that beyond the passenger transportation, we are intensifying our efforts on logistics and firefighting business this year to broaden our revenue sources.

Thank you.

Thank you.

Your next question comes from Yiming Wang from China Renaissance. Please go ahead.

好的,感谢管理层接受我的提问。 我有两个问题。 第一个问题是想请教一下目前公司的新增订单情况。 第二个问题是有关和江淮的合作。 那想请问在和江淮的这个生产基地合作过程中, 一行和江淮的具体决策丰功以及未来的成本和收益是如何分担的? 谢谢。

Thank you for taking my question. I've got two questions. One is on the update on new orders, and the second question is on the collaboration with the JAC production base. So what kind of roles will JAC and EHON play in this JAV, and what kind of profit split and also cost split we are looking at between you two?

Thank you. The first question is the situation of new orders.

Currently, the demand for domestic orders is very high. Currently, we have more than 1,000 pre-ordered orders. There are also many re-ordered customer orders. There are several customers. Several customers have ordered dozens of orders at a time. In China, there are nearly 1.5 million A-class tourist scenic areas, and there are nearly 700 cities in the air traffic market.

Our domestic demand is very strong, with the current intentional order exceeding 1,000 units, plus many more orders are under negotiation. Just so you know that we have dozens of clients who place orders of dozens of units at each time. And additionally, you should know that China has nearly 15,000 grade A and above tourism attractions for aerial sightseeing. And there are nearly 700 cities that offer planning air mobility services. So we remain optimistic about the strong demand for our EVITO products and operational services.

Thank you.

This question is about the cooperation with Jianghuai. The cooperation with Jianghuai is based on the knowledge of the Hefei City Government. We and Jianghuai Hefei Country Control Group established a joint venture company in Hefei to establish Evato's manufacturing base. Jianghuai has accumulated mature manufacturing capabilities and supply chain management experience in the traditional manufacturing field. Our advantage lies in the advanced development, production and market experience in the field of Evato.

And with regard to your second question, the JV partnership with the JAC is actually carried out under the support, with the support of the Hefei municipal government. And we are building a JEV with JAC and Hefei Koshien Holdings Corporation to build EVito production base. So JAC has accumulated expertise in manufacturing and the supply chain management in automobile sector. Whereas for us, we are leading in the development production, and OC in EVito sector. So this cooperation will bring the best of us and leverage both parties' respective advantages. And with regard to the specific details of these JV, it's still under discussion, and I'm sorry I couldn't disclose more at the moment.

Thank you.

Thank you. Your next question comes from Yu Chen from Guangzhou Securities. Please go ahead.

感谢管理层接受我的提问。 首先先恭喜一下公司在奥斯尼亚区的非常大的突破, 也是非常棒的成绩。 我这边的话就是有一个问题, 关于财务方面的问题想跟领导再确认一下。 就是关于咱们的这个, First of all, thank you for taking my question and congratulate on the breakthroughs and strong results achieved in 2024.

I got a question on the financials that I would like to double-check with the management. So in Q4, we have seen that management and R&D related expenses grow significantly quarter over quarter in Q4. So how does management view the trends for these expenses for 2025?

目前公司属于业务扩张期, 所以这些费用都有所上升。 但是如果各位看一下就是 These costs and revenues are significantly reduced. So our profit and loss is also increasing. From this year to next year, I think the research cost and sales cost will definitely continue to go up. But this process will also have some increases. But this increase ratio is definitely much lower than our revenue growth ratio. You know that the company is still expanding.

And that's why we're seeing substantial revenue and delivery growth over the past year. We're also expanding our team, leading to increased expenses. However, expenses as a percentage of the revenue have decreased significantly. And looking into this year, we expected the sales and R&D expenses to grow, definitely for sure, with moderate growth in management expenses. So as revenue growth will outpace expense growth, we expect the ratio of SG&A to revenue to continue declining. As you know, we are projecting a 97% growth in our revenues, whereas our operation growth related costs will grow at 40% over the year.

Thank you.

Thank you. Your next question comes from Ling Lu from Gosheng Securities. Please go ahead.

Hello, everyone. I would like to ask two questions. The first is about our Li-ion IO6 battery. I would like to ask how is the progress of the next generation Li battery? Is there an expected upgrade time? Or can you share the performance of the battery after the upgrade? Thank you. Two questions.

One is on the EH216 battery. So what's the progress on the next generation lithium batteries, and what are the expected upgrade timeline and the anticipated flight endurance improvements? How are they looking? Second question is on the product of VT35. What's the update on that?

And when are we planning to submit to the TC application? Thank you.

The first one is about the battery. Currently, we have divided the battery into two development directions. The first one is the fast charge battery. We have cooperated with G1GN. We have already sent samples to the company for testing. Thank you.

With regard to battery, right now we're pursuing two directions for the battery involvement. First, on the fast-charging batteries. Fast-charging, we are partnering with Gritter Bay Technology and currently testing samples that could significantly reduce the charging time. So that's for one. And secondly, on the solid-state batteries, our strategic investment in Inks Energy is progressing well. We are having very excellent cooperation and R&D breakthroughs. So we have doubled the EH216 flat endurance, and we'll continue fine-tuning the performance and conducting more scenario validation. So we're aiming for mass production and installation by the end of this year.

Thank you.

The second question is about long-haul aircraft. Thanks.

With regard to the long-haul model VT35, right now the development prototype is currently in its final assembly and debugging stage. We plan to complete the full-function flight testing soon and initiate the airworthiness certification project.

It will be unveiled to the public shortly.

Thank you.

Seeing no more questions in the queue, let me turn the call back to Ms.

Anne for closing remarks. Thank you, operator, and thank you for

all for participating on today's call. If you have further questions, please contact our IR team by email 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 call.

Thank you.

Thank you all again. This concludes the call. You may now disconnect.