EHang - Earnings Call - Q3 2025

Transcript

Operator (participant)

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the EHang Q3 2025 Earnings conference call. Please note that the management's prepared remarks and the subsequent Q&A session will primarily be conducted in Chinese, and the corresponding simultaneous or consecutive interpretation can be accessed on the English line. As a reminder, all translations are for convenient purpose only. In case of any discrepancy, the management statement in the original language will prevail. To listen to the original remarks by management, please join the Chinese line. Additionally, both Chinese and English lines are open for questions, and today's call is being recorded. Now I will turn the call over to Anne Ji, EHang's Senior Director of Investor Relations. Ms. Anne, please proceed.

Anne Ji (Senior Director of Investor Relations)

Thank you all for joining us on today's conference call to discuss the company's financial results for the Q3 of 2025. The earnings release is available on the company's IR website. Please note the conference call is being recorded, and the audio replay will be posted on the company's IR website. On the call today, we have Mr. Huazhi Hu, our founder, chairman, and the Chief Executive Officer; Mr. Zhao Wang, Chief Operating Officer; and Mr. Conor Yang, Chief Financial Officer. 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 this 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 Q3 of 2025, unless stated otherwise. With that, let me now turn it over to our CEO, Mr. Huazhi Hu. Please go ahead, Mr. Hu.

Huazhi Hu (Founder Chairman and CEO)

Hello everyone, and thank you for joining our call today. In Q3 of 2025, we continue to advance our business roadmap in a steady and disciplined manner. We delivered 42 units during this quarter, generating RMB 92.5 million in total revenues. Under our annual strategy of operations-driven sales, we proactively optimized our delivery pace and prioritized resources toward supporting existing customers in building regular operations in order to establish sustainable commercial operating capabilities. As a result, deliveries saw a temporary slowdown, while new orders continued to grow strongly and our order backlog further increased. We believe this strategy will strengthen the foundation for commercial operations and drive EHang's healthier, more sustainable long-term growth. This quarter, we achieved sustainable progress in product portfolio, product development, industrial deployment, and international expansion, laying a solid foundation for the next phase of growth.

First, in terms of product portfolio, we continue to expand our product line this year to cover more diverse application scenarios in the low-altitude economy. In October, we officially launched the VT35, our next-generation long-range lift and cruise pilotless human-carrying eVTOL. The VT35 has gone through a long six-year period from finalization to productization, integrating the advantages of eVTOLs while avoiding shortcomings of products with other configurations. Adopting an advanced tandem wing design, the VT35 maintains full aerodynamic efficiency and flight stability while minimizing the overall size of the aircraft. Its design range with a full load is at least 200 km. This is only our conservative data under the strict conditions. It can cover various medium to long-distance scenarios such as cities, islands, and mountain areas, greatly expanding the application scope of eVTOLs in intercity and regional transportation.

Consistent with our safety-first principle, the VT35 adopts fully redundant systems and autonomous obstacle avoidance, ensuring further enhancements in safety and reliability. Meanwhile, the VT35 extensively uses the mature system architecture of the EH216S, including its command and control system and ground infrastructure such as standardized vertiports and charging platforms. In the future, this will enable the true realization of intercity door-to-door travel while significantly reducing infrastructure costs and deployment thresholds. We announced the pre-sale price of CNY 6.5 million for the standard version of VT35 in China. Supported by China's strong manufacturing capabilities and new quality productive forces, we believe this compelling pricing advantages will make the VT35 highly competitive in global markets. We have already received purchase orders from customers in Hefei, Zhejiang, and Hainan, and have started delivery and test flights in Q3.

On certification and industrial deployment, the Civil Aviation Administration of China formally accepted the VT35's type certificate application in March this year, and the certification progress is progressing steadily. We're following the proven certification path of the EH216S and are fully accelerating the testing and certification efforts of the VT35. Meanwhile, we further deepen our strategic partnership with the Hefei government to establish the VT35 product hub in Hefei. The Hefei government will provide comprehensive support totaling RMB 500 million, including purchase orders to build an integrated layout across R&D, manufacturing, airworthiness certification, sales, and operations. This partnership meaningfully strengthens our foundation across the entire industry chain.

From the product portfolio perspective, the EH216S focuses on intercity transportation, while the VT35 addresses intercity and regional transportation, covering major metropolitan clusters such as the Yangtze River Delta, the Pearl River Delta, and the Beijing-Tianjin-Hebei region, extending the radius of the one-hour air travel circle to hundreds of kilometers. Together, the two models form an intercity plus intercity product matrix that alleviates and expands EHang's low-altitude mobility network. Separately, we also began mass production and commercial deployment of our self-developed next-generation formation drone, the GD4.0, in Q3. With a single charge flight endurance of up to 45 minutes and modular box launch design deployment, the lightweight system with high precision positioning enables long-duration, highly stable flights and significantly enhances visual effects and operational efficiency for aerial light shows.

During the 15th National Games held in Guangzhou, we deployed more than 11,000 GD4.0 drones for a night sky performance, making our largest formation record to date. We're also advancing development on several next-generation models, including the firefighting variant of the EH216 series, the VT series logistics aircraft, and a two-rotor configuration to support a broader range of commercial applications. Our joint venture with Chang'an Automobile EHang Jihang has been formally established, and we will co-design and develop the next-generation product line, further strengthening industrial synergies and accelerating the diversification of our overall portfolio. In terms of industrial development, we continue to strengthen our manufacturing system and long-term capacity planning. Our strategic cooperation with the Mint Group deepened further this quarter, leveraging this expertise in lightweight structural components and intelligent cabin system to enhance the core competitiveness of EHang's eVTOL products.

Meanwhile, our joint venture with Empower Yunfu EHang has entered trial production for its phase two project at the Yunfu production base. Construction of our facilities in Hefei, Weihai, and Beijing is also progressing as planned, forming a full value chain layout across R&D, manufacturing, airworthiness certification, delivery, and operations. As these major industrial bases come online, we expect to further strengthen our production capacity, supply chain resilience, and delivery efficiency. Internationally, we continue to advance global deployment in a steady and phased manner, establishing scalable market entry models through demonstration flights and local partnerships. During the quarter, we achieved notable progress across Asia, the Middle East, and Africa, including ongoing trial operations under Thailand's regulatory sandbox program and completing the Mideast's first intra-city pilotless human-carrying eVTOL flight in Qatar, which showcased the efficiency of point-to-point low-altitude transportation.

We also carried out consistent demonstration flights and regulatory engagements in Africa and Japan. These overseas initiatives, the path of flight verification, scenario application, commercial operation, laying a solid foundation for future large-scale business expansion. On the policy front, China's 15th five-year plan proposal released in October explicitly called for accelerating the development of industrial clusters in strategic low-altitude economy, providing long-term, stable, and high-certainty policy expectations for the industry. Ongoing regulatory improvements, aerospace reform, infrastructure build-out, and application scenarios collectively create a comprehensive environment that supports the R&D, production, testing, and operations of eVTOLs. As an industry pioneer, EHang will continue to participate in standards development and demonstration programs, leveraging policy momentum to accelerate technology deployment and industrial expansion. Guided by national policy support, local governments are increasingly supporting the low-altitude economy, providing more practical operational guidance for the industry.

For example, in October, Guangdong Province introduced several measures to promote the high-quality development of the low-altitude economy, supporting Guangzhou, Shenzhen, and Zhuhai in pioneering intra-city and intercity low-altitude passenger routes and promoting cross-border drone logistics in the Greater Bay Area. Similarly, in September, the Hong Kong government also proposed in its latest policy address to formulate a low-altitude action plan and launch an advanced sandbox pilot. The initiatives cover more complex scenarios, including cross-border flight routes and human-carrying eVTOL operations. We are currently working closely with Hong Kong regulators to advance pilot initiatives. These policy breakthroughs will not only strengthen the industry's long-term outlook but also provide clear institutional guidance for our commercial implementation. We also continue to invest in the broader industrial and research ecosystems.

Following the establishment of the Joint Research Institute with Tsinghua University this quarter, we recently signed a strategic cooperation framework agreement with the China Academy of Civil Aviation Science and Technology. The partnership will focus on six major areas, including flight safety, route management, operational support, regulatory standards, and technology validation, and jointly building a standard system for low-altitude commercial operations. Looking ahead, we will continue to prioritize safety while leveraging our product strength, innovation capabilities, and operational expertise as our core drivers. We will advance commercial operations in a disciplined manner and further deepen our global footprint. Benefited from an increasingly supportive policy environment, a more complete product portfolio, and our continuously strengthened full-chain capabilities across R&D, manufacturing, airworthiness certification, and operations, we remain confident in our long-term growth outlook. Meanwhile, we're also very pleased to welcome our new board member

Ms. Hai Ying Li, to the company's board of directors. With her extensive global experience in capital markets, asset management, and corporate strategy, her addition will provide significant support for enhancing the company's international perspective, capital market engagement, and strategic decision-making in the future. Her appointment will also strengthen the diversified structure and governance capabilities of our board. We look forward to working with her to drive the company into its next phase of growth. I will now hand it over to our Chief Operating Officer, Zhao Wang, for operational updates this year.

Zhao Wang (COO)

Thank you, Mr. Hu. In Q3, we continued to execute against our core strategy, focused on safety, operational excellence, and commercial deployment. We generated revenues of RMB 92.5 million and delivered 42 units of eVTOL, including 41 units of EH216 series and the first VT35.

Deliveries this quarter were mainly in China, totaling 39 units, with overseas customers in Thailand and Malaysia. The Q2 and year-over-year declines in revenues and deliveries were mainly due to the delayed payment schedules from certain customers. While some sales agreements were signed during Q3, payments were not completed in time, resulting in part of the originally planned Q3 deliveries being deferred and therefore not recognized as Q3 revenue. As of now, 30 units of those orders have been fully paid for and will be recognized in Q4. Based on our current delivery progress and order execution, we are maintaining our full-year revenue guidance of RMB 500 million. On operational readiness, we are steadily preparing for the official commercial operations of the EH216S in China. Our two certified operators, EHang General Aviation and Hefei Heyi Aviation, continued human-carrying trial operations throughout Q3.

As of now, in Q2 of 2025, a total of 1,147 flight missions have been safely conducted by the two certified operators, including 359 human-carrying flights, all demonstrating stable and reliable performance. Hefei Heyi Aviation's operations site is now ready for commercial operations and planned to gradually and carefully open to the public through a reservation system starting in December. This will allow more passengers to experience pilotless eVTOL mobility firsthand. Meanwhile, preparation for point A to B route trial flights at both sites is progressing well. Route planning, vertiport assessment, and aerospace surveys have been completed, and multiple rounds of test flights have already been conducted. Leveraging capabilities of both certified operators, we will continue conducting additional human-carrying flights and operational trials to advance the rollout of point A to B route operations. Furthermore, we continue to support delivered customers with route flights.

These flights have been carried out across a variety of terrains and environments, including Meizhou Island in Fujian, Hangzhou in Shaanxi, Chongqing in Mongolia, and Qinhuangdao in Hebei. Through scenario-specific verification and trial operations, we are gradually establishing an operational guidebook for different applications and accumulating high-quality data and practical experience for future-scale commercial operations. Flight tests in special environments, such as plateaus, coal regions, and straits, are also progressing steadily, further demonstrating the strong flight performance of the EH216S. For external operational support, we have begun delivering or offering services of OC certification assistance and outsourced operation services through EHang General Aviation and Hefei Heyi Aviation. Several customer projects are already underway. To support future commercial scaling, we are accelerating the deployment and development of our key capabilities.

In Q3, we completed the design of all required materials for the EH216S ground operator training program, including training plans, flight manuals, course outlines, training materials, and assessment systems. The Central-South Regional Administration of the CAAC has formally accepted our application, and the first training program is expected to begin shortly. The training cycle will run through the end of the year and proceed under CAAC supervision. Our goal is to verify the first batch of ground operators early next year. We plan to build a team of about 100 professional ground operators to support scaled commercial operations and service delivery, while also training additional ground operators for our customers' own operating teams. Once a certain number of certified ground operators are available in the market, regular operations can be realized in various customer operation scenarios, and the progress for other operating companies to obtain OC will be further advanced.

At the same time, we are making steady progress on developing the EHang trip ticketing system. The internal testing version is now live, allowing our employees to book and experience flights through the online platform, and initial feedback has been very positive. This will prepare us for upcoming launch of the public online ticket service. Internationally, our global visibility and flight footprint continue to expand. To date, the EH216 series had accumulatively completed over 80,000 flights globally, further strengthening its international presence and credibility. In Japan, the EH216S successfully flew near the Osaka Kansai Expo venue and at the foot of Mount Fuji, while the EH216L completed its first cargo logistic route flight in Ishikawa Prefecture and Rwanda. In collaboration with the China Road and Bridge Corporation, we completed the first human-carrying flight of the EH216S in Africa, extending our flight footprints to 21 countries.

Regarding overseas regulatory certification, we are working with local partners and civil aviation authorities in multiple countries, including Saudi Arabia, the UAE, Thailand, Brazil, and South Africa, to advance the establishment of bilateral airworthiness validation with the CAAC and to support the validation of type certificate application for the EH216S. Relevant regulatory frameworks in these markets are accelerating and maturing, laying important groundwork for future commercial eVTOL operations. Meanwhile, we are also actively exploring trial-first pathways to initiate operational trials overseas. In October, together with the Civil Aviation Authority of Thailand and local partners, we officially launched the Thailand Advanced Air Mobility Sandbox project. Through flight validation under the sandbox framework, we were able to obtain special operational approvals through an expedited regulatory process. This initiative represents the world's first regulatory sandbox model for advancing commercial eVTOL operations and is expected to become a benchmark program globally.

The EH216S has now undergone over a month of continuous trial operations within the Bangkok Sandbox area, showing strong stability and reliability across all trial flights. We also conducted a series of on-site emergency response demonstrations for CAAT covering scenarios such as propeller failure, communication loss, and other contingency situations to validate the autonomous handling capabilities and safety performance of our pilotless intelligence system. These efforts not only validate the commercial operational model for eVTOLs but also establish a solid foundation for a replicable regulatory and operational framework. Looking ahead, we plan to expand the sandbox to Pattaya, Koh Lan, Phuket, and Koh Samui, forming a demonstration network covering tourism, commuting, and intra-island transport. This will also provide a scalable and replicable pathway for commercial pilot projects across other Southeast Asian markets.

In the Middle East, with operational authorization from the Qatar Civil Aviation Authority and the support from the Ministry of Transport, we successfully completed a series of human-carrying flights with the EH216S in downtown Doha and the region's first pilotless intra-city point-to-point eVTOL flights. The flights connected Doha Port and the Qatari cultural village, reducing a 30-minute car ride to just 8 minutes, clearly demonstrating the EH216S's application potential in urban air mobility scenarios. We will continue deepening cooperation with Qatar's Ministry of Transport and advance the pilotless air taxi project in a phased manner. In Central Asia, we signed an MOU in September with LU Group, a major industrial and commercial enterprise in Kazakhstan, outlining a phased procurement plan for 50 units of EH216 series eVTOL.

Together, we will establish the first UAM operations center in Central Asia and plan to build a localized assembly base, further promoting the localized development of the low-altitude economy industrial chain across the region. The partnership has attracted strong attention from Kazakhstan's First Deputy Prime Minister and the Governor of Karaganda Region. We held two meetings with the First Deputy Prime Minister in Beijing and Astana, during which EHang was invited to share China's leading operational experience and regulatory best practices to support Kazakhstan in building a compliant and sustainable low-altitude economy. Beyond our human-carrying business, and in line with this year's strategic priorities, we are also actively expanding our non-passenger business, including emergency firefighting, logistics, urban inspection, and drone light shows.

For emergency response applications, we have developed an integrated system. It links small drones deployed from automated drone ports with our command and control system and specialized firefighting UAVs. This solution enables cities to build a comprehensive, rapid-response emergency framework. Several municipalities, including Fengshan District in Beijing, have already expressed strong interest, and project planning and demonstration drills are underway. EHang was among the first enterprises to conduct drone light shows. This year, our newly developed GD4.0 drone also demonstrated strong performance and high scalability. It successfully completed an 8,000-drone performance for CCTV's China Science and Technology Innovation Gala, and over 11,000 drones for the National Games, and has already achieved formations of up to 14,000 drones. Currently, test flights for a 20,000-drone show are in progress, which would surpass the current Guinness World Record. In addition, the GD4.0 is multifunctional.

With minor modifications, it can be used for urban inspection and as a key component in building 3D digital twin models and smart city management systems. The strong overall performance of the GD4.0 positions our aerial media business to shift its focus from primarily providing show performance series to becoming hardware solution suppliers through direct sales of formation drones. To date, the GD4.0 has secured firm orders for 3,000 units and customer purchase intentions exceeding 10,000 units. Selling formation drones not only enables us to quickly recover R&D investments and generate product-level margins but also helps us cultivate the drone formation show market and capture greater market share. In addition, it brings recurring revenue opportunities from aircraft maintenance and consumables. This drives a more diversified and resilient revenue structure for the business.

Looking ahead, we will continue to strengthen our overall competitiveness through our diversified product portfolio, modified systems, low-altitude solutions, and solid safety record, improving commercial operation capabilities, and our growing global partnership network. These capabilities collectively reinforce the foundation for the company's long-term and sustainable growth. Now, I will turn it over to our Chief Financial Officer, Conor, to walk us through the financial results.

Conor Chia-hung Yang (CFO and Director)

Hello everyone. Before I go into the details, please know that all numbers presented are in RMB unless otherwise stated. A detailed analysis is available in our earnings press release on the IR site. Now, I will present some key financial data. Total revenues were RMB 92.5 million in Q3 2025. These year-over-year and sequential decreases are primarily driven by decreased sales volume of EH216 series products.

This was primarily due to the company's strategic focus being adjusted to the various operational preparations before the launch of operations, as well as assisting customers in the establishment of operation certificate systems and capabilities, which thus affected the short-term delivery. Gross profit was RMB 56.2 million in Q3, showing both year-over-year and sequential decline caused by decreased revenues in the quarter. The gross margin in Q3 was 60.8%, slightly lower than 61.2% in Q3 2024 and 62.6% in Q2 2025. Despite a slight decline, our gross profit margin remains at a relatively high level, which reflects our competitive advantages in the eVTOL sector. Turning to expenses, total operating expenses in Q3 were RMB 151 million, which remained basically flat year-over-year and decreased quarter on quarter. The quarter-on-quarter decrease was primarily due to significant decreases in sales and marketing expenses.

The adjusted operating expenses for the third quarter, which excluded share-based compensation expenses, were RMB 89.1 million, representing a slight year-on-year increase of 2.6% and a quarter-on-quarter decrease of 8%. This quarter-on-quarter decrease was mainly due to the company's continuous efforts to enhance operational efficiency, which has led to a reduction in various operating expenses. Adjusted net loss was RMB 20.3 million, compared with adjusted net income of RMB 15.7 million in the second quarter of 2024 and RMB 9.4 million in the second quarter of 2025. The adjusted net loss was mainly caused by decreased revenue generated in the quarter. In Q3, the company raised $10 million through its at-the-market offering program. The proceeds will mainly be used for the company's research and development of next-generation technologies and products, team and production expansion, establishment of new headquarters, commercial operations, working capital, and general corporate purposes.

The company continues to have strong capital reserves. As of September 30, 2025, our cash and cash equivalents, restricted short-term deposits, and short-term investment totaled RMB 1.13 billion. This solid foundation gives us the flexibility to support future R&D investments, expand our production capacities, and grow our commercial operations. With steady delivery progress for orders in hand in the fourth quarter, we currently remain confident in achieving our full-year 2025 revenue guidance of approximately RMB 500 million. Looking ahead, as commercial operations begin to scale and international sandbox projects advance with the establishment of a scalable operating system and the continued expansion of our global footprint, EHang is rapidly building a robust foundation for sustained long-term growth. We'll continue to pursue healthy, sustainable.

Operator (participant)

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Tim Hsiao with Morgan Stanley. Please go ahead.

Foreign Language (Chinese)

哎，你好，观礼腾，然后我是那个摩根士丹利的Joey。我这边其实只有一个问题，还是想多请教一下关于沙河项目。就是能不能请观礼腾多介绍一些，可能就是从资本市场的角度，我们应该关注接下来应该关注的一些节点，包括获得运营资质，从这个试运营过渡到实际的开放运营，以及就说接下来我们可以看到的，您刚才也提到了，可能会扩大到四个地区。那我们在这里的运营规模的展望大概是什么样的？然后可能稍微深入一点，就是您刚刚其实管理层有提到，就说我们的沙河模式其实有可能有助于我们把这个商业模式复刻到其他的东南亚国家。那我不知道就说目前，其他的国家是否有一些已经开始接触，或者说能够分享的一些进展，因为我理解东南亚国家岛屿比较多，其实，EVTOL这样的这个模式还是蛮适合那个地区的。对，就这一个问题可能分为两块吧，谢谢。

Hi, I am Joey from Morgan Stanley. I would like the management to share more color on the sandbox initiative. Could you share more, from the capital markets perspective in terms of the exact or rough timeline, that we are currently looking at, particularly, you know, on specific crucial stages like OC application, transition from trial operations to official commercial operations? I have heard that you are currently expanding this sandbox initiative to four regions. Collectively, what kind of scale are we looking at from this perspective? An additional separate question is that you are planning to replicate the sandbox initiative to other Southeast Asian countries. I was wondering, could management share any progress on that front? Are there any engagements that we are having with various countries in that region? Because we know that eVTOL is a good fit for many of these island countries. So could management share more color on that? Thank you.

对，问题，问得非常好。在泰国呢，我们在10月中旬第一次呢，这个当然之前我们跟泰国民航局有深度的这个交流跟沟通，也获得这个民航局的同意。在10月中旬呢，在泰国正式启开启这个AAM的这个沙河项目。那时候在这个曼谷第一个沙河场地实现了这个从A点到B点的一个飞行。那这个，目标是这个能够在未来三个月内借助这个沙河计划。当然我们在那里就是持续的每天飞，然后这个递交这个飞行记录给到泰国民航局。目标是三个月后能够正式开启这个eVTOL航空器的这个沙河，商业服务运营服务。 这是一个目标。然后这个，泰国民航局呢，他是，那么是上周，这周一，Actually，泰国民航局局长，也是亲自坐上我们的这个eVTOL的飞机，然后在泰曼谷的这个中心，乘坐飞行，也成为全球首个亲自乘坐我们无人驾驶eVTOL的这个民航局的局长。那其实泰国是明年被国际民航组织，就ICAO的先进空中交通研讨会，将在这个泰国举行在明年的这个四季度。那泰国民航局的局长是目标是希望在这个会议举行之前呢，能够正式的这个开通商业化运营。在A点到B点在泰国。今天其实有一个访谈，我们也刚也是发布在这个视频上，你们可以在YouTube，Twitter上看到，就是，我们在泰国的运营方的这运营商，就是AA Aero C Venture的创始人，那也是银行最大的这个机构投资人呢，跟泰国民航局局长的一个访谈。那这个访谈有特别提到就是说在明年年底之前呢，能够开展20个沙河区的商业化常态化飞行，那当然就可以对外收费。那这个潜在的市场是明年年底能够有100台216的交付在泰国，这是一个目标。那当然以整个泰国的这个潜力，这么多的观光岛，还有这个，交通的这个需求来讲，未来泰国的整体的这个市场规模跟潜力有望达到这个千架以上。 这是从资本市场的角度。当然最近这个，前一阵子这几天呢，可能市场上有些分析师对EHang商业化的这个进展呢，有一些误解。觉得就是说我们可能这个商业化进程非常的，还可能还距离遥远，但实际上呢，经过今年全年的这个运营准备，明年将是商业化这个爆发的一年。特别是我觉得就是说不论是在国内或者是在国际市场，就将有非常重要的这个商业化的进展。那另外就是说，其他东南亚的这个民航局的我们也都有客户，还有深度的这个沟通，比如说在越南，在柬埔寨，马来西亚，新加坡等国。这周一其实新加坡的这个民航局局长也同时在曼谷参观我们的216的飞行。那我也亲自的解说，所以从这几个国家呢，其实都在看，因为这是一个新的行业跟新的商业模式。一旦泰国开展商业化的沙河正式运行的话，运营的话，这个其他国家我们相信会有非常正面的促进作用，所带来的这个潜力是巨大的。谢谢。

Huazhi Hu (Founder Chairman and CEO)

Thank you for your question. Let me answer this question. Actually in mid-October, the regulators from Thailand, the civil aviation regulators from Thailand, have actually approved that we conducted a sandbox initiative in Bangkok. This is a from point A to point B sandbox initiative. The goal for us is to officially commence eVTOL commercial operations in the next three months. Currently we are still conducting daily tests and we are submitting these test data to the civil aviation regulator in Thailand.

You know, actually for the just from Monday, the Director General of Thailand's Civil Aviation Authority just took a ride of our eVTOL, you know, flying across the city center of Bangkok. You know, this marks the very first of its kind for a Director General of a civil aviation regulator to ride on eVTOL. Actually, there is an important industry conference called IATEL that's going to be held in Q4 in 2026. You know, given this important meeting, the goal for the Director General of the Thailand Civil Aviation Regulator is to officially launch commercial operation of eVTOLs before the conference took place. Actually, you know, we just released an interview, which is posted on YouTube and X, other social media platforms. It's available out there.

It is an interview between the founder of our Thailand operator, between the founder of Aerial Company, which is our Thailand operator. In the interview, they officially, you know, mentioned they proposed that they are going to have 20 sandbox initiatives in 20 by the end of 2026. You know, by then it is gonna be commercial operations where it is gonna generate revenue. Judging by this goal, we are looking at a delivery of 100 EH216 units in 2026. Looking at the overall market, you know, given the islands and also the transportation requirements and needs out there, we are looking at a potential over 1,000 units of EH216, I mean, to be delivered to this market. Of course we understand that there has been some misunderstanding from some industry analysts recently on our commercialization path.

However, I want to assure you that with the preparations we have put in place over the years, we are preparing, and we are going to see a breakthrough in EHang's commercial operations, both domestic and overseas. You know, with the engagement with other, you know, regulators in the Southeast Asian countries, I am gonna tell you that they are progressing well. We are maintaining close communication with them. We are currently engaging the authorities in Cambodia, Malaysia, and Singapore. Just to give you an information, the Director General of Singapore's Civil Aviation also, you know, visited and saw the 216S demo flight. I personally offered the explanation.

It is a new industry and, you know, with the new, say, demo projects that we are going to enter into our commercial operation in Thailand, it is gonna set up a good role model for the rest of the, you know, countries, surrounding countries in Southeast Asia. Hopefully that answers your question.

Foreign Language (Chinese)

好的，谢谢，谢谢，非常非常清楚。

Operator (participant)

Thank you very much. Thank you. Your next question, it comes from James Zhu from UBS. Please go ahead. Pardon me?

Foreign Language (Chinese)

嗯，管理层您好。

嗯，管理层您好。那个我想问一下，关于为什么我们要开展就是，一些非载人的业务，像消防应急，还有这个编队表演巡检，以及我们是怎么去看这些，业务对于我们整个营收的一个还有利润的贡献。

Unknown Speaker (Translator)

Hi management, thank you for taking my question. I was wondering why we're expanding into unmanned, product, portfolios, for instance, firefighting, drones or eVTOLs, as well as the formation performance drones. What's their contribution to our revenue and also profit? Could management share more on that?

Foreign Language (Chinese)

大家好，我是王庄，我来回答这个问题。首先呢，在低空经济整个产业中，不管是载人业务还是非载人业务，都是其中重要的一环。而一行在经历了10年的研发和沉淀中，那么我们把载人业务作为我们的一个非常重要的一个目标，是因为载人业务是在低空经济所有飞行器里面是，最困难的一件事情，也真正把人从地面带到天上。所以呢，在这个过程中，我们研发了大量的技术，也取得了大量的专利。实际上一行的能力，包括载人业务，也包括非载人业务，包括中短途，包括长途，包括小型微型的无人机，也包括大型的载人飞行器。

Zhao Wang (COO)

This is Wang Jiao, let me take your question. Actually the low altitude economy encompasses or consists of both manned business and unmanned business. They are both critical components of this economy. With EHang's decade R&D investments, we first set out to, you know, pick manned operation as our goal because this is the most challenging sector, because it involves flying men from the ground up to the sky. It poses significant challenges. Over the years, we have accumulated a lot of technologies and patents. With our capabilities covering, you know, various travel distances, various sizes of the eVTOLs, we are able to tackle all of these problems.

Huazhi Hu (Founder Chairman and CEO)

实际上在一行的216整个系列中，不只是有216S载人版本，还包括有216L物流版本、216F城市消防版本、216LF森林灭火版本。所以216是整个一个系列，而非一款产品。以及我们现在刚刚在10月份刚刚发布的VT35，也是一个系列，也包括它对应的物流版本，以及其他功能性产品。所以对于一行来说，我们最大化的使用我们的技术，更多的生产，更多的机型，能够进一步的补充公司的在各个层面的营收。在低空经济整个行业中，有更多的市场，这是我们的，战略方向。之前大家不太关注我们这个其他的产品，是因为，把很多的关注点都放在了载人业务上。毕竟载人业务是低空经济里面，最后的一环，也就是最难的一环。但实际上我们要想让公司健康的发展，我们要把我们的所有的产品都推向市场，并且都占据一定的市场份额。

Zhao Wang (COO)

Actually for our 216, it's actually a series product. We have the 216S, which is for manned transportation, and we have 216L, which is dedicated for logistics, 216F dedicated for firefighting, and 216LF dedicated for forest, you know, fire extinguishing. Additionally, we just launched a VT35 in October. It also has a model dedicated for logistics services and with other, you know, application scenarios available. What we are trying to do is to maximize the technology that we have. We are going to introduce more models. We are going to expand our product portfolio so as to increase the revenue and, try to, you know, that's our strategy and how we are going about it in the low-altitude economy. Maybe in the past, analysts are not, you know, following our unmanned products very closely. In order to achieve sustainable, healthy development, we need to extend our product portfolio so as to gain more market share. You know, the reason why is where everyone is focused on the amount of eVTOLs, that's because it's the most challenging part, and that's the one that we're choosing to focus on first. Hopefully, that's the first bit.

Foreign Language (Chinese)

随着我们载人业务商业化进程逐步趋于稳定，那么今年呢，我们在不断的扩张团队，同时呢，也把一些精力放在非载人业务上，是为了能够把一行的这个所有产品都完善，并且形成现金流。那么在这个过程中呢，大家可以看到，我在去年年末和今年年初的时候都分别提到了我们要调整我们的收入构成，是为了让我们的收入更加的多元化，有不同的业务来源。但这都是对我们来说都属于，无人机或载人机这个范畴，都属于低空经济的范畴，都是我们的主营业务。所以未来大家可以看到，一行的收入构成和产品都将非常的丰富，并且在整个市场各各个地方都占有一席之地。谢谢。

Zhao Wang (COO)

You know, as our manned eVTOL hub is gradually entering commercial operation, we have been expanding the teams, recruit more personnel, and try to extend our unmanned business. What we're trying to do is to build a comprehensive product portfolio, which can generate positive cash flow for the company. As we mentioned at the end of last year and as well as earlier this year, what we're trying to do is to adjust the product mix and trying to have a more diversified portfolio. Nevertheless, they all fall under the low-altitude economy umbrella. They're all gonna be the major business for our company.

Huazhi Hu (Founder Chairman and CEO)

Going forward, you're going to see a much more diversified product mix, which all gonna contribute to the company's bottom line. Thank you.

Foreign Language (Chinese)

好的。

Operator (participant)

Thank you. Your next question, it comes from Chen Yu from Guangfang Securities. Please go ahead.

Foreign Language (Chinese)

好的，感谢管理层。请问能听得到我说话吗？ 可以的。 哦，好，我这边有两个问题想跟管理层请教一下。一个就是关于 VT35 的，因为我们也看到我们 10 月份首发过后，VT35 的这个机型在最新的 Q3 也有一架的交付。那我们想跟公司请教一下，就是关于 VT35 相关的一些试航认证，TCA PC 等等相关的一个取证计划是怎么样的。这是第一个问题。第二个问题是关于公司的一个财报情况，可能我接入的比较晚，不确定跟管理层在前面有没有解释过，就是我们注意到 Q3 的话，公司的毛利率是有所下行的。那这个是不是意味着后续的毛利率会稳定在 60%？具体单三季度下行的一个原因是什么呢？

Unknown Speaker (Translator)

Hi management, thank you for taking my question. I got two questions. One is on our VT35. Following the October announcement, we noticed that there is a one-unit delivery of the VT35 in Q3. I was wondering what the plan is for the airworthiness application as well as type certificate application. The second question, perhaps I joined the call a little bit late. I'm not sure whether you have touched on that or not. We noticed that the gross profit margin for Q3 declined slightly. You know, whether the gross profit margin will stabilize at around 60% and what's the cause of the decline, for Q3 in gross profit margin. Thank you.

Foreign Language (Chinese)

我是王庄，我先回答第一个问题。我们的VT35航空器呢，是在今年10月13号正式官宣发布的，但实际上呢，这款飞行器在今年3月就已经被中国民航局受理，受理它的TC申请。目前的试航审核工作正在稳步推进。我们在10月10月发布会上呢，已经发布了VT35的航线飞行视频。我们是等到它能够正式进行航线飞行之后才发布的这款飞机。目前已经顺利完成了包括风洞试验、地面负载试验、多旋翼试飞、单桨动力失效的实验，以及转换飞行在内的多项关键测试。

Zhao Wang (COO)

This is Wang Jiao. I'll take your first question. Actually, you're right. We debuted the VT35 model on October the 13th. Actually, we submitted the TC application as early as March this year, and the airworthiness application or review progress is progressing steadily. Maybe you have noticed that we released the VT35 route flight demo at the October press conference. It actually has successfully completed multiple key tests, including the wind tunnel tests, ground load tests, multi-rotor test flights, and many other tests.

Foreign Language (Chinese)

那VT35的设计呢，结合了多旋翼和固定翼的部分。那216的成功认证路径和可以复用的技术，将成为VT35认证过程中的一个重要参考。同时呢，我们已经培养了一支经验丰富的技术研发和试航认证的专业团队。那么基于这些所有的原因呢，都将加速VT35的试航认证的过程。谢谢。

Zhao Wang (COO)

Additionally, you know, the design of VT35 incorporates both the multi-propeller, as well as a fixed wing. It's, you know, we have accumulated a rich experience in our EH216S airworthiness review process, and we're gonna leverage those learnings. And, you know, together with the R&D team as well as the airworthiness application team that we have, it's gonna accelerate the AC process. We're pretty confident in that.

Foreign Language (Chinese)

我只看到回答一下毛利率的问题哈。三季度的这个，毛利率有一点点影响，主要就是有这个，有部分的这个大客户呢，在批量的复购，就是 repeated customer，这是个好事。然后也有部分是在一张销售，所以在价格方面呢，有些许的折扣，影响了这个，对毛利率有些许的影响。另外那个本季度也交付了一架这个 VT35，那 VT35 现在还是在这个试验生产的阶段，还没有规模化生产，所以相对的这个，成本高一些。但是从那个我们未来来看的话，VT35 现在也有很多的这个订单，将会这个，将成本会持续的下降。

Conor Chia-hung Yang (CFO and Director)

This is Connor. On the gross profit margin, yes, you're right, the decline is slightly. The causes behind that, for one, there is repeat purchases from some of our existing major customers. That's a good thing. Also, we have made sales to some of the distributors where we offered some discounts. These two are the causes of the decline in the gross profit margin. With regard to the VT35, we delivered one unit this quarter. However, you should know that this model is still in the trial production phase and not being mass produced. That's why, you know, the unit cost of this model is relatively high. We still have a lot of, we have secured orders for VT35. Hopefully that's gonna bring down the unit cost of the VT35.

Foreign Language (Chinese)

每每个季度来讲，就是说随着一些其他刚刚提到的我们这个产品的组合，比如说，编队表演的无人机的这个销售，还有这个无人机的编队表演，消防机、物流机等这个收入占比的提升，也毛利率，汇率有变化。但从长期来看呢，这个预计毛利率还是会维持在60%的这个水水平。谢谢。

Conor Chia-hung Yang (CFO and Director)

Over the long term, we are going to expect our gross margin to, you know, remain stable at around 60%. You're going to see the gross profit margin fluctuate slightly as we introduce more products to enrich our product mix. For instance, the unmanned business, such as the drone formation performance, firefighting, and the logistic aircraft, and et cetera, as that increases. It's gonna, you know, make fluctuate to the gross profit margin. Over the long run, 60% of GP, gross profit margin. Thank you.

Operator (participant)

Thank you. Your next question, it comes from Jason Sum with BDS Bank. Please go ahead. Pardon me, your line may be muted. Pardon me, Jason, you may ask your question. Your line may be muted. What next? Pardon me, once again, you may press star one to join the question queue. We will now pause a moment to allow for any final questions. Pardon me, that is all the time we have for questions this evening. Thank you for participating. You may now disconnect.