EHang: Investors Underestimate How Much The Chinese Government Wants This

Core Thesis - EHang is the first company in the world to receive certification for passenger-carrying electric Vertical Take-Off and Landing (eVTOL) aircraft, enabling mass production of its EH 216-S model [3][5] - The company is experiencing significant government support in China, which is expected to drive product sales and market expansion [6][12] Company Developments - EHang has achieved multiple regulatory certifications, including type certification, standard airworthiness certification, and production certificate, allowing for mass production [3] - The company is ramping up production and has begun delivering EH 216-S units to customers, with 23% of Q1 2024 sales attributed to international customers [3][4] - EHang is focusing on tourism and low-altitude transportation applications, with a potential market of 6,000 spots in China alone [4] Government Support - The Chinese government is actively promoting the eVTOL sector as part of its low-altitude economy strategy, with significant investments and policy support [6] - EHang has received commitments from regional governments for infrastructure development, including vertiports and purchase orders [6] - The company has signed a memorandum of understanding for the purchase of 50 EH 216-S units, with a conditional plan for an additional 450 units [6] Financial Performance - In Q1 2024, EHang delivered 26 units, showing sustainable growth, with guidance suggesting a return to over 50% quarter-over-quarter revenue growth [7] - The company expects to reach breakeven at an annual production rate of 200-250 units, with a current run rate of 160 units [10] - EHang has a solid cash position of approximately $45 million and has raised over $55 million through equity offerings [7][10] Market Position - EHang is the only certified eVTOL provider globally, giving it a competitive edge over more than 300 companies in the sector [10] - The company is developing new models, including the VT-30 for longer-range transport, which is currently preparing for certification [7][10] - EHang's market cap remains stable while its competitors have faced challenges, positioning it favorably for future growth [10][12]