South Korean music producer and entrepreneur Lee Soo Man is investing $23 million in eVTOL aircraft developer EHang. The Chinese manufacturer announced the private share subscription agreement on July 12, explaining that 80 percent of the new capital will be deposited in three business days with the rest to follow when the transaction closes in the third quarter of 2023.
The company said the proceeds from the new share placement will be used as working capital to enable the “acceleration of strategic plans for technology advancement, business development, and post-certification commercial operations.” The Guangzhou-based group is working to achieve Chinese type certification for its EH216 two-seat autonomous aircraft, while also developing the larger, longer-range VT-30 model.
As of May 31, EHang reported that more than 90 percent of type certification compliance tests have been completed through inspections by the Civil Aviation Administration of China. The company explained that the remaining tasks relate to compliance test plans, laboratory tests, ground tests and inspections, flight tests and data analysis, and test reports and reviews.
Reporting 2022 financial results in March 2023, EHang’s balance sheet at the time showed cash and equivalents worth RMB 249 million ($35 million) and total group assets of RMB 530 ($74 million). EHang founder, chairman, and CEO Huazhi Hu told analysts at the time that the company plans to start delivering the all-electric aircraft to customers in China and other Asian markets this year. It expects the EH216 to be used for applications including passenger transportation, sightseeing, cargo deliveries, firefighting, and emergency medical support.
EHang Develops Early eVTOL Aircraft Use Cases across Asia
Last year, EHang conducted public flight demonstrations with the EH216 at three locations in Korea, including Seoul, Daegu, and Jeju island. The company also has demonstrated the aircraft extensively in countries including Thailand and Japan, as well as extensively within China.
On July 13, EHang signed a memorandum of understanding with the Bao'an district government to jointly develop urban air mobility commercial services in the Chinese city of Shenzhen. The partners intend to develop use cases for eVTOL aircraft and will employ the OH Bay building in the city as a UAM Operation Demonstration Center.
In December 2022, EHang received a $10 million investment from Qingdao West Coast New Area. The organization, which is one of China’s government-backed “national new areas,” further agreed to a potential additional $10 million investment in the future.
Lee is the founder of K-pop and SM Entertainment, a public company listed on Korea’s Kosdaq exchange. EHang has not disclosed how many Class A ordinary shares he is getting for his investment, explaining that the private placement will be made outside the U.S. as restricted securities that cannot be resold without approval under U.S. financial rules.
“I appreciate EHang’s unwavering dedication to enabling safe, autonomous, and eco-friendly air mobility for the general public, as the first mover and a leading innovator in the emerging urban air mobility industry with great potential,” Lee commented. “I’m excited to embrace opportunities and contribute to its growth convergence of cutting-edge transportation technologies and popular culture to create sustainable value, and I’m proud to be part of it.”
In December 2019, EHang became the first urban air mobility company to go public when it completed an initial public offering on New York’s Nasdaq exchange. The offering, which raised around $46 million, gave the company a market capitalization of $687 million. At the close of trading on July 13, EHang's stock was trading at $18.60, which is markedly higher than several other publicly listed eVTOL aircraft manufacturers, most of which went public via mergers with special purpose acquisition companies between 2020 and 2022. By comparison, Eve Holding's stock closed at $10.07, Joby at $9.97, Archer at $5.02, Lilium at $1.40, and Vertical Aerospace at $1.96.
This story was updated on July 14 with more current information about the status of the type certification process for EHang's EH216 eVTOL aircraft.