EHang Holdings Limited (NASDAQ: EH), a pioneer in the autonomous aerial vehicle (AAV) industry, has reported a record-breaking fourth quarter for 2023, with significant achievements including the world’s first Type Certificate (TC) for its EH216-S pilotless passenger-carrying aircraft system.
The company delivered 23 units of the EH216-S series product, the highest in a single quarter over the past three years. With a surge in market demand, EHang saw its Q4 revenue exceed RMB56 million, tripling year-over-year and nearly doubling from the previous quarter. The company also generated positive operating cash flow and anticipates a Q1 2024 revenue of approximately RMB58 million.
Key Takeaways
- EHang obtained the world’s first TC and standard Airworthiness Certificate (AC) for its EH216-S eVTOL aircraft.
- Delivered 23 units of EH216-S in Q4, the most in a single quarter in three years.
- Q4 revenue surpassed RMB56 million, a year-over-year increase of over 300%.
- Positive operating cash flow achieved in Q4, with cash and equivalents totaling RMB334.1 million.
- Hundreds of pre-orders received for EH216-S from domestic and international customers.
- Partnership with Wuxi City government resulted in pre-orders for at least 100 units.
- EHang differentiates itself with its autonomous technology and competitive pricing.
Company Outlook
- Revenue of about RMB58 million expected in Q1 2024.
- Plans to complete eVTOL vertiport infrastructure in 2024 and launch commercial operations.
- Expanding partnerships and investing in product development for enhanced performance.
Bearish Highlights
- Adjusted operating loss in Q4 was RMB24.9 million, although a 59.4% improvement year-over-year.
- Adjusted net loss in Q4 improved by 62.8% year-over-year but still amounted to RMB22.1 million.
Bullish Highlights
- Q4 total revenue increased by 260.9% year-over-year.
- Gross margin remained high at 54.7% in Q4.
- Adjusted operating expenses decreased, leading to improved operating and net losses.
Misses
- Despite the positive growth, the company reported adjusted operating and net losses for the quarter and fiscal year.
Q&A Highlights
- The CEO discussed the ongoing R&D and internal testing for the new VT-30 product.
- EHang plans to submit the TC application for the VT-30 within the year.
- A collaboration with the GAC Group aims to establish an autonomous production line and develop their own flying taxi product.
EHang has made considerable strides in the burgeoning urban air mobility (UAM) sector, delivering a record number of its EH216-S series products in the fourth quarter of 2023. With the world’s first TC for a passenger-carrying eVTOL aircraft and the commencement of deliveries for the certified EH216-S, the company has cemented its position as a leader in the industry.
The company's financials reflect this growth, with total revenues of RMB56.6 million in Q4 and RMB117.4 million for the fiscal year 2023. The gross margin remained stable at a high level of 54.7% in Q4. Adjusted operating expenses decreased, leading to improved operating and net losses. EHang achieved positive cash flow from operations in Q4 and had RMB334.1 million of cash and cash equivalents as of the end of Q4.
Looking to the future, EHang anticipates achieving revenue of about RMB58 million in Q1 2024, representing a significant increase year-over-year. The company has seen increasing demand for its EH216-S product, with substantial pre-orders from domestic and overseas markets. EHang expects to be the only company able to commercialize eVTOL in the near term, differentiating itself with its compact, pilotless design, autonomous technology, and competitive pricing.
As EHang plans to kick off commercial operations this year, the majority of revenue is still expected to come from the sales of its EH216 series. However, as they expand their fly services to more areas, operational revenues are expected to gradually increase. The company has already received orders from overseas markets, including a partnership with Wings Logistics in the UAE for the purchase of 100 units.
EHang is also working on the development and testing of its new product, the VT-30, which will cover additional application scenarios for urban air mobility. In collaboration with the GAC Group, EHang is setting up an autonomous production line and developing their own flying taxi product, aiming to improve product quality and ensure safety.
The company's proactive approach to establishing regulatory system standards with the CAAC for eVTOL commercial operations and its plans to increase production capacity signal a strong commitment to leading the UAM revolution.
InvestingPro Insights
As EHang Holdings Limited (EH) celebrates its groundbreaking fourth quarter and looks to a promising Q1 2024, several metrics and insights from InvestingPro paint a detailed picture of the company's financial health and market position. Notably, EHang's market capitalization stands at $890.56 million, reflecting the market's valuation of the company's potential within the autonomous aerial vehicle (AAV) industry.
InvestingPro Tips indicate that EHang holds more cash than debt on its balance sheet, a sign of financial stability that is critical for a company in a capital-intensive industry like AAVs. Additionally, analysts anticipate sales growth in the current year, aligning with the company's positive revenue forecast for Q1 2024. This anticipated growth could be a result of EHang's strategic partnerships and the increasing demand for its EH216-S product.
InvestingPro Data further reveals an impressive revenue growth of 104.91% for the last twelve months as of Q1 2023, which corroborates the company's reported surge in Q4 revenue. The gross profit margin stands at a strong 64.12%, underscoring EHang's ability to maintain profitability on its products. However, with a price to book ratio of 23.67, the stock trades at a high valuation multiple, which investors should consider in the context of the company's growth potential and industry position.
For those looking to delve deeper into EHang's financials and future prospects, InvestingPro offers a wealth of additional tips. By using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to an expanded suite of analytics and insights. There are 11 more InvestingPro Tips available for EHang, providing a comprehensive understanding of the company's performance and market dynamics.
Full transcript - Ehang Holdings Ltd (NASDAQ:EH) Q4 2023:
Operator: Good day, ladies and gentlemen, thank you for standing by, and welcome to the EHang Fourth Quarter and Fiscal Year of 2023 Earnings Conference Call. As a reminder, we are recording today's call. Now, I will turn the conference over to Anne Ji, EHang's Senior Director of Investor Relations. Ms. Anne, please proceed.
Anne Ji: Hello, everyone. Thank you for joining us on today's conference call to discuss the company's financial results for the fourth quarter and the fiscal year of 2023. The earnings release is available on the company's IR website. Please note that conference call is being recorded and audio replay will be posted on the company's IR website. On the call today, we have Mr. Huazhi Hu, our Founder, Chairman and Chief Executive Officer; and Mr. Conor Yang, Chief Financial Officer and Director of the Board. The management team will successfully give prepared remarks. Remarks delivered in Chinese will be followed by English translations. All translation is for convenience purpose only. In case of any discrepancy, the management's statement in the original language will prevail. A Q&A session will follow afterwards. 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 these and other risks and uncertainties is included in the company's public filings with the SEC. 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 and the fiscal year of 2023, unless stated otherwise. With that, let me now turn the call over to our CEO, Mr. Huazhi Hu. Please go ahead, Mr. Hu.
Huazhi Hu: [Foreign Language] [Interpreted] This is the English translation of Mr. Hu's remarks. Hello everyone, thank you for joining us on this conference call. In the fourth quarter of 2023, we have achieved remarkable results across various aspects. In October last year, our EH216-S pilotless passenger-carrying aircraft system, an innovative product independently developed by EHang, obtained the Type Certificate, TC, from the CAC. This milestone marks the world's first TC for a passenger-carrying eVTOL aircraft, signifying our qualification for commercial applications of a pilotless passenger-carrying eVTOL aircraft. In December last year, our first certified EH216 rolled off our production line and obtained the world's first eVTOL standard Airworthiness Certificate, which is AC. As a result, we commenced the delivery of the certified EH216-S aircraft. Following the TC and AC, we are delighted to see a substantial surge in market demands for our EH216-S pilotless passenger-carrying eVTOL, resulting in a significant sales volume growth in the fourth quarter, with a total of 23 units of EH216-S series product delivered. Notably, this represents the highest number of deliveries in a single quarter in the past three years. The revenue of the fourth quarter surpassed RMB56 million, marking a year-over-year growth rate of over three times and nearly doubling quarter-over-quarter. Moreover, we generated positive operating cash flow in the fourth quarter as demand for our product is strong and our company's operations continue to steadily improve. Our strong growth was attributed to the proactive policies and supports from local Chinese municipal governments that are actively fostering the high-quality development of the low-altitude economy. Since the Central Economic Work Conference chaired by President Xi in December last year, when the low-altitude economy was elevated to a strategic emerging industry, nearly 20 provinces in China, have incorporated the low-altitude economy, into their 2024 government work reports. Furthermore, during the two sessions recently held in China, the central government work report included the low-altitude economy for the first time. This recognition, underscores the expectation that the low-altitude economy, will serve as a new growth engine for China, and a globally competitive emerging industry, and a vital sector for nurturing and advancing, new high-quality productive forces. According to research institution estimate, the market size for China's low-altitude economy surpassed RMB500 billion in 2023, and expected to reach RMB2 trillion, by 2030. This represents a substantial emerging market, and the penniless passenger-carrying aerial vehicles like the EH216, are poised to play a leading role, in propelling the industry forward. Capitalizing our first-mover advantage, in obtaining airworthiness certification and benefiting from favorable policies, we have witnessed a surge in market demand, and enthusiasm for our EH216 series products. In the first quarter, we received hundreds of pre-orders from domestic and overseas customers in China's Guangzhou, Hefei, Wuhan, and the UAE, and other regions. Furthermore, we have recently formed a partnership, with the government of Wuxi City in Jiangsu Province, resulting in pre-orders for at least 100 units of EH216-S. Through these collaborations, we have actively planned to create low-altitude economy demonstration applications in the area. The strong market demands from our customers, give us great confidence in our future growth prospects. We have also announced, the pricing of the EH216-S pilotless passenger-carrying aircraft system in both the domestic Chinese market, and overseas markets. The pricing has been set at RMB2.39 million for the Chinese market, and US$410,000 for international markets. We believe these prices are highly competitive, when compared to other in-vitro products worldwide. Moreover, this pricing strategy aligns, with the market demands and contributes to the development of the low-altitude economy. In preparation for the next stage of mass production, our efforts to obtain the production certificate, which is TC, is almost completed. Currently, the CAAC review team, has conducted all the on-site inspections, and all the required quality system documents, have been submitted to the CAAC for the final process. The TC is expected, to be obtained in the near future, offering a robust assurance and a support, for the production quality of the newly produced EH216 under the supervision system of the CAAC. During the first quarter, we developed several low-altitude economy demonstration sites in Shenzhen, Guangzhou, and the Hubei Province, and our EH216-S completed the first commercial flight demonstrations at the UAM Operations Center in Shenzhen, Hubei, Jiulong Lake Park in Guangzhou, Huangpu District, and Luogang Central Park in Hefei. The Hefei Municipal Government, has reached a strategic cooperation agreement with EHang in the low-altitude economy, planning to extend support to EHang in various forms with a target amount of US$100 million, while the Guangzhou Municipal Government, announced a 10 major supportive policies, to stimulate the low-altitude economy. Currently, we are actively conducting a series of crucial preparations for commercial operations, including operator training, and the development of operation systems. By leveraging our distinctive and pioneering expertise in pilotless eVTOL operations, EHang continues to strengthen collaborations with the CAAC, to establish the world's first regulatory system standards for eVTOL commercial operations, by the second quarter of this year. These efforts, will set reliable regulations, and a benchmarks for the safety operations in e eVTOL industry. In 2024, we will coordinate with multiple governments, to complete the construction of infrastructure, such as the eVTOL vertiports, and shape the benchmark cities that exemplify the potential of the low-altitude economy and launch commercial operation ceremonies in key use cases, such as the aero-tourism and urban air taxes. This will allow distinct from science fiction movies to officially step into the public eyes. In terms of the industry chain, we have been actively cooperating with outstanding suppliers and partners striving to expand opportunities within the low altitude economy sector. In January, we entered into a strategic partnership with Bao'an, a leading global provider of the new energy solutions, to jointly research and develop battery cells, battery packs, storage system and charging infrastructure especially designed for pilotless aerial vehicles. In February this year, we partnered with Guangzhou Automobile Group, GAC in short, which will capitalize on GAC's extensive experience and well-established industrial chain and intelligent manufacturing to accelerate the smart production, application and market expansion of our pilotless airway vehicles. Regarding product development, we will continue to enhance our EH216-S performance to unlock its full potential for various applications. To this end, last year, we strategically invested in Inx, a solid state lithium battery company based in Shenzhen, to strengthen the supply chain for solid state lithium batteries in eVTOLs. Lithium metal solid batteries offers significant advantage over the liquid batteries in terms of the safety, energy density, thermal stability, cruising range, charging and discharging performance, et cetera. As a result, we believe that the flat range and many other performance of our EH216-S product will be greatly enhanced in the future. Furthermore, this year, we will devote more R&D efforts towards testing and certification of our -- , another pilotless passenger carrying leased and cruise eVTOL model. This is a long-range aircraft designed for intercity transportation. We will conduct a rigorous testing on older system of the -- and full transition flights in the near term. Based on the test result, we will finally analyze and actively iterate improvements to ensure that all the performance indicators meet design requirements. Myself has experienced a flight with -- in person and it feels amazing. Meanwhile, we also are doing preparations for the PC application for VT-30. And just a few days ago, we commenced another tour of a passenger cabin flight across several cities in Japan. I'd like to extend my thanks to our COO, Mr. Xin Fang, who is currently at our Japan events and thus unable to attend this earnings call. Next I will turn the call over to our CFO, Conor.
Conor Yang: Thank you, Mr. Hu. Hello, everyone. This is Conor. Before I go into details, please note that all numbers presented are in RMB and are for the fourth quarter and fiscal year of 2023 unless stated otherwise. Detailed analysis are contained in our earnings press release, which is available on our IR website. I will now highlight upon some of the key points here. Having obtained the TC and AC for our proprietary EH216-S, our total revenues reached RMB56.6 million in Q4, a significant increase of 260.9% from RMB15.7 million in the same period last year and a remarkable increase of 97.8% from RMB28.6 million in Q3. The increase was primarily attributed to the increase in our sales volume of EH216 Series products. We delivered 23 units of EH216, up 283% year-over-year and 77% quarter-over-quarter. For the fiscal year 2023, total revenue were RMB117.4 million, a significant increase of 165% from RMB44.3 million in 2022. The EJ216 series of AAV deliveries in 2023 were 52 units, up 148% from 21 units in 2022. Gross margin remained stable at a high level of 54.7% in Q4, flat from 4.6% in Q3. Gross margin was 64.1% in 2023 despite a slight decrease of 1.8 percentage point from 65.9% in 2022 primarily due to changes in revenue mix. This represents the continued high gross margin level as a result of our competitive strength and first-mover advantage in the global UAM and digital industries. In Q4 our adjusted operating expenses, which our operating expenses excluding share-based compensation expenses, were RMB64.2 million, down 12.4% from RMB73.2 million in the same period last year and up 18.8% from RMB54 million in Q3. The quarter-over-quarter increase was primarily driven by the expansion of sales channels and intensified marketing efforts in enhancing brand awareness. On an annual basis, the adjusted operating expenses were RMB226.3 million in 2023, down 6.6% from RMB242.4 million in 2022. As a result, our adjusted operating loss in Q4 was RMB24.9 million a 59.4% improvement from RMB61.3 million in the same period last year and a 27.3% improvement from RMB34.2 million in Q3. For the fiscal year, adjusted operating loss was RMB144.8 million, a 30.1% improvement from RMB207.1 million in 2022. Adjusted net loss in Q4 was RMB22.1 million, a 62.8% improvement from RMB59.4 million in the same period last year and a 29.4% improvement from RMB31.3 million in Q3. For the fiscal year, adjusted net loss was RMB138.8 million in 2023, a 32.7% improvement from RMB206.2 million in 2022. Thanks to our stringent approach to cash and liquidity management, I would like to highlight that we achieved positive cash flow from operations in Q4 further strengthening our balance sheet. As of the end of Q4, we had RMB334.1 million of cash, cash equivalents, short-term deposits, short-term investment and restricted short-term deposit balances. We are also actively in discussion with several commercial banks regarding the expansion of credit facilities although our current cash position and expected cash flow from operations will be sufficient to fulfill our cash needs for us to reach profitability in the near future. Looking ahead, with our -- progress towards obtaining TC for mass production and deliveries, we anticipated achieving revenue of about RMB58 million in Q1 this year representing an increase of 161% year-over-year. That concludes our prepared remarks. Let's now open the call for questions. Operator, please go ahead. Thank you.
Operator: [Operator Instructions] First question comes from the line of [Gary Tsao from TF]. Please go ahead.
Unidentified Analyst: Hi, management. Thank you for taking my question. So my first question, is really about the like order size. So with large-scale deliveries becoming possible after opting the TC, have you seen an increase in customer interest that, has actually converted into more orders, compared to before? Thank you.
Huazhi Hu: Yes, thank you for your question. With the low-altitude economy industry grow rapidly, we have seen increasing demand, for our EH216-S from both government-related and Phoenix bus operators. In the first quarter, we received an international - intentional purchase order of 100 units from the Wuxi Municipal Government, with the delivery at stage, and with a more similar purchase order to come. That the - with the supportive policies and growing demand that, our EH216 is supposed to demonstrate our first move of advantage in the global market this year, contribute to EH's stable growth. So other than like - Hebei, Shenzhen, Guangzhou, Wuxi, we also see that similar demand from Shaanxi, Henan, Wuhan, Zhuhai, Hainan, and many, many other orders to come. Thank you.
Unidentified Analyst: All right, thank you. So my second question, is about the competition landscape. So could you elaborate on other customers and how you differentiate yourself from competitors? Also, could you provide further insight - into the competitive landscape? Thank you.
Conor Yang: Yes. October last year that we have obtained the first TC. And end of last year, we have obtained the first AC. So this is the tip of the year - this is first kind of this time in this industry. And we have many other eVTOL companies and peers in China, and overseas are still undergoing, the prototype testing, and also the application for the TC. So in the next year and half to two years, basically, we will be the only company that can commercialize for eVTOL. And compare our product to other eVTOL products, we have several advantages. Firstly, that we have a very compact fuselage, so measuring around six meters in length and very lightweight design. So that means has been - we have the lowest demand on the urban infrastructure. So make it, our product highly adaptive, and also very easy to deploy, within the city. And secondly, our 216 is a two-seater that without pilot. So this can definitely needs – is the predetermined route that will eliminate the need for pilot training, hiring costs, and potential safety issues related to human errors in piloting. And also that by utilizing our autonomous technology, and the demand - command and control system, a fleet management can be achieved. So that we're able, to operate in the mass scale in the future. And also our price is very, very competitive. With a domestic selling price of RMB2.39 million, and also international selling price, of US$410,000 in comparison, as far as we know, that our other global peers, will be selling at between US$3 million to US$10 million. So from a customer's point of view. We think that - only our customer can be profitable that, will enable our business to sustain in the longer term. So with all those advantages that, we think we are very, very competitive. These are for - and 216 is for intra-city, that short range. For the long distance, we also have a product line of VT-30 that Mr. Hu has mentioned earlier, that we plan to send for TC application sometime this year. Thank you.
Unidentified Analyst: All right, thank you. That's very clear.
Operator: Thank you. We will now take the next question from the line of [indiscernible] from Citi. Please go ahead.
Unidentified Analyst: So hello, can you hear me?
Huazhi Hu: Yes. We can hear. All clear.
Unidentified Analyst: [Indiscernible]?
Huazhi Hu: Okay. Thank you for your question. First of all, I would like to translate the question into Chinese for our CEO. That's through the end of last year, that the central government and the various top network of China that has a central committee meeting. And after this meeting that, the top authority of China has indicate that, the low-altitude economy, is one of the strategic industries that, the government is going to focus on for this year. That there are currently through the essential economy meeting. So currently, there are more than 20 provinces, provincial government that has formally less that the low-altitude economy as their focus for this year. Through the focus of the central and local governments that a balance, economic passenger-grade aircraft will be applied to, not only for tourist part - tourism, but also for urban transportation, as integrated as part of the city's transportation system. So, also as - in the future that, not very long that, the air taxi - the scenario will come true. You asked me that the open market size of the low-altitude economy in 2023, that has reached - in China reached RMB500 billion and expected to grow to RMB2 trillion by 2030. So we tend to operate that the air taxi make it a real scenario sometime this year. So by - air taxi as transportation vehicle that the people can - transport from their regular transportation from one dimension to three dimension times. And this will greatly enhance the total market size of the eVTOL.
Huazhi Hu: This is from our CEO, Mr. Hu. Okay.
Unidentified Analyst: Okay. Thanks very much for answer from our CEO Mr. Hu. And so, I have next question about our expense. So in fact as a company growth, the company is the sales and operation costs will be managed more precisely. So, we mind gearing more details regarding the expense in the future. Just for our company? Thank you.
Conor Yang: Yes. Regarding to the - our operating expenses, which composed of sales and marketing and G&A and also research and development. As we ramp up our - let me ramp up our revenue. So you can see that the first quarter 2013, for example, we have reached revenue of RMB56 million with a year-on-year growth rate of 250%. So, when the revenue grow as such the - our adjusted operating expenses at fourth quarter last year was 113% of total revenue. Not compared to one year ago the - adjusted operating expenses was 466% of revenue. So you can see the rapid drop of OpEx that's due to rapid increase in our revenue. So, we believe that our growth on revenue will continue, to grow at a very high growth rate in the next several years. So, we hope that we can manage that our adjusted operating expenses in three years' time dropped from currently 113%, of revenue dropped to about 40% of total revenue in three years' time. Thank you.
Unidentified Analyst: Okay. Thank you very much for your answer. And thank you for all of your company starts, to help us the low-altitude economy in China's development in future. So, that's my all questions and thank you, all of you, and have a nice weekend. Thank you.
Conor Yang: Thank you.
Operator: Thank you. We will now take the next question - coming from the line of Ting Song from Goldman Sachs. Please go ahead.
Ting Song: Thank you, for taking my question. So, EHang has announced the launch of UAM operation demonstration center with Shenzhen government in December. So my question is, do we expect to see any revenues from UAM operation this year, besides the sales revenues from shipment of EH216-S? Thank you.
Xin Fang: Yes, as Mr. Hu mentioned earlier, the company plans, to kick off the commercial operations this year. We see that there are many companies that are planning to kick it off. We expect to see some revenues from our operation service area, but it may not be significant this year. In the current initial stage, our majority of our revenue will still come in from the sales of our EH216 series, for the time being. But looking forward, as we expand fly services to more areas, recurring revenues such as operational revenues will grow gradually. So, we can have the receiving. We have a cab receiving orders of domestic and overseas. And we also receive a lot of requests from our customers that to form joint venture for the future operation. So, we expect that next year and going forward, the revenue coming out from our operation, will gradually increase the percentage of our total revenue. Thank you.
Ting Song: Thank you. So - another question is about overseas revenues. So, I see the company has a partnership with a partner with overseas companies in Dubai and also some government in European countries. So, do we expect any progress in overseas market this year, or next year? Thank you.
Conor Yang: Yes, after we obtain TC, we also receive a very strong demand from overseas markets. As we have announced that, we have a form of strategic relationship and also received orders from UAE customers, Wings Logistics that, they intend to purchase 100 units. And actually, we start to deliver the first batch in the first quarter of this year. As of - for example, as of fourth quarter last year, we also sold our product, 216, to many places like Colombia, Saudi Arabia, and Qatar. And we also performed our drone live shows in Japan and Spain. So in first quarter last year, the revenue we derived from overseas markets was 26% of our total revenues. And this year, we also that - expect there will be fairly good amount of revenue will be coming out from the overseas market. Thank you.
Operator: Thank you. We will now take the next question from the line of Yu Chen from Haitong Securities. Please go ahead.
Yu Chen: Okay. Thank you, management. I have two questions. And the first one, following the previous one. We would like to know the detailed progress regarding the overseas TC uptation, because if we need to enter the overseas market, we think that the first step is to obtain the overseas TC first. And the second one is, about our production capacity. We would like to know the capacity regarding EH216 this year, and in the following three years, as well as the new vertical of VT-30. That's two questions. Thank you.
Xin Fang: Yes. Regarding to overseas TC, we have, as I mentioned earlier, we have seen strong demand from overseas markets, especially in the Middle East, South Africa, and ASEAN countries. And so, for those places that, we will rely on our local partner, to obtain the local TC. So, have you already obtained the TC from CAAC? So, when we apply the overseas TC, we can do a streamlined process we call validation of TC, validation of Type Certificate, with the overseas aviation authorities. And this is expected to be a simplified procedure. Consequently, this approach enables us, to expedite market entry and expansion in these countries. And in terms of the order and the production, we're currently receiving a substantial number of orders and pre-orders, which will be fulfilled according to our customers' specific requirements. And typically, that the government and customers commit to pre-orders, or customers, or intentional orders, for example, up to 100 units, and with an initial purchase of five to 10 units for trial operations at local sites. As their operations expand and demand increase, then they will acquire additional products. So, the favorable policies surrounding the low-altitude economy, has provided us an attractive environmental growth. So, consequently, we anticipate a substantial increase in delivery volume throughout 2024. First quarter, we have given our guidance at RMB58 million, slightly increase from quarter-over-quarter, because the first quarter is the Chinese New Year. Typically, there's a long vacation during the quarter. But so far, we look forward that we have seen very strong demand for orders for this year. Currently, our production in Yunfu facility has an annual capacity of 600 units of EBITDA. And we are exploring opportunities to establish other facilities to further support our production capacity as market expand - as market demand grows. Thank you.
Yu Chen: Thank you for answering. Have a nice weekend.
Operator: Thank you. [Operator Instructions] We will now take the next question from the line of Laura Lee from Deutsche Bank U.S. Please go ahead.
Laura Lee: Hi, thank you for taking my question and congratulations on the robust quarter. So, my first question is about the VT-30, our new product. You mentioned you're already preparing for the testing and the application now. So, are there any specs you can talk about now? And do you expect like the client base, will be similar to the EH216, or the new product will kind - bring us more applications now? Thank you.
Huazhi Hu: Okay, I will translate your question to our CEO, who will take your question. Yes. Actually, we are doing the R&D work for the VT-30 during our certification in the past few years. And we have done some internal testing slides. And for the air traffic volume, as we know the air traffic within the urban area, is the most of the traffic demand. Yes, that's why we are doing the certification for EH216 type of model. And now, we have completed all the configuration design and internal testing for the VT-30. And in this year, we will put more effort into the testing for VT-30. And we will release more videos, about the flight. Actually, the VT-30 will do a lot of practical flight. And our CEO personally, has checked the flight within VT-30. It's a very stable flight experience. And later we will release our CEO's flight video, with VT-30. And we will submit the TC application for VT-30 within this year. So, the typical, the EHang 216 and VT-30 almost cover all the application scenarios - for the urban air mobility. That's why these two models are our main products. Yes, we have accumulated a lot of, almost the most flight data for EH216. And soon we will release more updates and progress for the VT-30. Thank you.
Laura Lee: Okay. Thank you so much for the color. And my second question is about, as you mentioned, you recently reached a cooperation agreement with the GAC Group. Could you give more details about this? Like how does it work? Will you like share the R&D, or manufacture collectively? Or like what kind of support - prepares you - provide to each other?
Huazhi Hu: There was a strong variable policy and planned in China, about the low-altitude economy. So under this background, a lot of governments are working with us. So it's our pleasure to work with some state on enterprises, such as the GAC Group. Yes. The first thing, maybe that pop up into people's mind, about our collaboration, is mainly about the production. And actually, on the other hand, we will also help the GAC Group, to develop their buying taxis product. Now, we have selected a production site, within Guangzhou enter our cooperation with GAC Group. And we are going to establish autonomous production line with GAC. So through our collaboration, we will continue, to improve the product quality of our eVTOL product and to ensure that the safety of our eVTOL products. Thank you.
Laura Lee: Okay. Thank you so much.
Operator: Thank you. Even the time is limited, let me turn the call back to Ms. Anne for closing remarks.
Anne Ji: Okay. Thank you, operator. Thank you all for participating in our today's call. If you have any further questions, please contact our - IR firm by email, or participating our following investor events through the calendar information provided on our IR website. And we appreciate your interest, and look forward to our next earnings call. Thank you.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.