Chen Yu

Chen Yu from GF Securities Co., Ltd. inquired about the airworthiness certification plan (TC, PC) for the newly delivered VT35 model and sought clarification on the slight decline in Q3 gross profit margin, including reasons and future stabilization expectations.

Answer

Zhao Wang, COO, stated that the VT35's TC application was accepted by the CAAC in March, with airworthiness review progressing steadily, leveraging the EH216S's successful certification path and an experienced team. Conor Chia-hung Yang, CFO, attributed the Q3 gross margin decline to discounts for repeat major customers and distributors, and the higher unit cost of the VT35 which is still in trial production. He projected that the gross margin would stabilize around 60% long-term, despite potential fluctuations from a diversifying product mix.

Chen Yu from GF Securities Co., Ltd. inquired about the airworthiness certification and Type Certificate (TC) application plan for the VT35 model, following its October debut and a Q3 delivery. Additionally, Chen Yu asked about the slight decline in Q3 gross profit margin, seeking reasons for the decrease and whether the margin is expected to stabilize around 60% going forward.

Answer

Zhao Wang, Chief Operating Officer of EHang Holdings Limited, stated that the VT35's TC application was accepted by the CAAC in March, with airworthiness review progressing steadily. He noted the VT35 has completed key tests, including wind tunnel, ground load, multi-rotor, single-propeller power failure, and conversion flights, leveraging the EH216S's successful certification path and an experienced team to accelerate the process. Conor Chia-hung Yang, Chief Financial Officer of EHang Holdings Limited, attributed the Q3 gross margin decline to discounts offered for repeat bulk purchases by major customers and sales to distributors, as well as the higher unit cost of the VT35, which is still in trial production. He projected that the gross margin would stabilize around 60% in the long term, despite potential fluctuations from a diversifying product mix including drone formation sales, firefighting, and logistics aircraft.

Chen Yu from Guangdong Securities requested an update on the production capacity and timeline for the Yunfu and Hefei facilities and asked if the company is maintaining its SG&A expense growth guidance.

Answer

COO Wang Zhao detailed that the Yunfu facility expansion will increase annual capacity to 1,000 units by year-end, while the new Hefei base is a 1-2 year project. CFO Connor Yang confirmed that despite cost control achievements in Q1, the company is maintaining its full-year guidance for 40% growth in operating expenses, alongside the RMB900 million revenue target.