EHang founder, chairman, and CEO Huazhi Hu has dismissed a negative critique of its prospects in the eVTOL aircraft market by short-seller Hindenburg Research as "false information." In a report published on November 7, Hindenburg accused EHang of misleadingly claiming to have preorders for more than 1,300 of its two-seat EH216-S autonomous eVTOL aircraft, insisting that 92 percent of these are "based on dead or abandoned deals, failed partnerships, and newly formed customer entities with no discernable operations." The report details a number of the sales agreements, including those signed with United Therapeutics and Indonesia's Prestige Aviation.
In response to questions from AIN, the Chinese company would not say who will be the first operators of the EH216-S. It did say that it expects the first commercial operations to be sightseeing flights for tourists that it will be operated either by EHang itself or by unspecified customers. EHang said that its “order pipeline” for series production now includes more than 100 aircraft, which suggests that the larger numbers of provisional sales have yet to be firmed up.
The Hindenburg report also focuses on the recent issuing of type certification for the EH216-S by the Civil Aviation Administration of China (CAAC). It claims that the certification "comes with numerous flight restrictions" that would "invalidate the bulk of potential commercial use cases, including restrictions against flying in densely populated areas, in shared airspace, and out of sight of a ground crew."
In a written statement, EHang told AIN that early operations will be conducted “under the guidance of the CAAC” following regulations such as the country’s Interim Measure for Flight Management of UAVs. The company said it is now reviewing where to launch initial operations, taking account of existing partnerships with Chinese cities including Shenzhen, and tourism areas such as Jishou Aizhai and Hechi Fengshan.
EH216-S Flights Restricted for Now
In the company's response to Hindenburg, Hu acknowledged that the EH216-S will be "subject to operational restrictions at [the] initial stage for safety" and that "EHang will gradually lift these operational limitations with the ultimate goal to realize broader commercial operation scenarios across urban areas."
Hu did not directly address accusations that EHang has given misleading accounts of its aircraft sales but did report that it is working to secure the production certification needed to begin series manufacturing. "As we sell and deliver more eVTOLs per customers' requests and steadily expand our commercial operations in the future," he said, "our cash flow will improve and we are confident that the company can generate positive cash flow in the next few quarters."
Responding to Hindenburg Research’s suggestion that EHang has insufficient capital to scale up production of the EH216-S and will not be able to compete with better-funded Western rivals, Hu said his company will exercise “financial prudence” in executing its long-term growth strategy, “no matter what our global peers are doing with their financial and other resources.”
Stating that he wants to avoid investors in Nasdaq-listed EHang being “misled by rumors and false information in the stock market” Hu concluded that “the most effective way to defeat rumors is to deliver excellent operating and financial results and let rumors and misinformation crumble on their own.”
According to EHang, authorities in Southeast Asian countries such as Indonesia are expected to issue type certificates based on validations of the CAAC airworthiness approval. On this basis, the company expects the process for getting clearance to export the EH216-S will be simplified.