eVTOL startup’s share price takes hit

The EHang EH216 AAV (autonomous aerial vehicle) is the latest iteration of a multirotor design that EHang created for offshore oil-platform supply, organ transport delivery, and other logistical operations, along with firefighting missions. EHang says the EH216 has so far flown on 10,000 trial flights, as well as on 42 demonstration flights in China and eight other nations. The company announced its first offshore flight trials on February 25, with photos and video included in the news release. This may prove relevant, given accusations leveled two weeks before that the company was mostly pumping out hot air, not so much aircraft.

Many analysts agree that EHang enjoys advantages over many eVTOL rivals. Based in Guangzhou, China, EHang benefits from a friendly domestic certification authority, the Civil Aviation Administration of China (CAAC), which has said the EHang will receive certification by mid-2021. This alone is noteworthy, given that the two-seat multicopter was designed from the start to be fully autonomous. This decision was no doubt influenced by EHang’s experience as a drone manufacturer.

At present, the EH216’s international market potential is constrained by its certification pathway. Initially, it will be certified under a Specific Operations Risk Assessment provision honored by the CAAC. Certification under FAA regulations and the European Union Aviation Safety Agency (EASA) is up in the air, so to speak, for the simple reason that these regulatory bodies have yet to conclusively agree on eVTOL regulations. It’s expected that the FAA will use FAR Part 23 rules for eVTOL certification, with adjustments addressing their specific aerodynamics and propulsion systems. EASA certification is likely to apply stricter safety rules. True, EASA has certified Pipistrel’s Velis Electro, a piloted, electrically powered two-seat, high-wing trainer. But it’s not an eVTOL. Apart from its electric motor and associated hardware, the Velis Electro is fairly conventional. The EHang has 16 battery-powered motor/rotor units and no pilot.

Certification aside, the EHang is constrained by its performance. Its advertised, approximate maximum endurance and range of 25 minutes and 22 statute miles (with maximum payload), respectively, mean short legs. Its one-hour battery recharge time means more time at the charging station than in the air.

Even so, EHang says it has attracted substantial investment and earned $18 million in revenue. After its 2019 initial public offering the company now lists on NASDAQ (ticker symbol:EH).

A recent report published by Wolfpack Research asserted that sales to EHang’s principal customer, Kunxiang Intelligent Technology Co. Ltd., were inflated to boost EHang’s stock price, and that Kunxiang hadn’t in fact fulfilled its purchase obligations. Some have said that Kunxiang was itself a sham of a customer, and that the whole affair was a stock promotion. The Wolfpack Research report went so far as to claim that EHang has lied about products, manufacturing, partnerships, and revenues. In response, EHang said it’s committed to upholding the highest standards of corporate governance.

EHang’s stock has had a wild ride in 2021, reaching a zenith of $124 per share on February 12, days before the Wolfpack Research report came out, then dropping to $42 per share as of March 3. It’s not clear yet if or how the recent volatility of the broader markets may have been a factor. As with everything else in the eVTOL segment, these developments bear watching. In the meantime, other industry-watchers rate EHang as one of the brands most likely to succeed.