EHang - Q4 2023
March 15, 2024
Transcript
Operator (participant)
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 Senior Director of Investor Relations. Ms. Anne, please proceed.
Anne Ji (Head of Investor Relations)
Hello everyone. Thank you for joining us on today's conference call to discuss the company's financial results for the fourth quarter and fiscal year of 2023. 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 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 follow by English translations. All translation is for convenience purposes only. In case of any discrepancy, the management 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 US 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 the fourth quarter and 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.
Operator (participant)
[FL]
Anne Ji (Head of Investor Relations)
This is the English translation of Mr. Hu's remarks. Hello everyone, thank you for joining us on this conference call. In the first 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 a type certificate (TC) from the CAAC. 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 significant sales volume growth in the fourth quarter, with a total of 23 units of EH216 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 RMB 56 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 the product is strong and the 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, a globally competitive emerging industry, and a vital sector for nurturing and advancing new high-quality productive forces. According to research institution estimates, the market size for China's low-altitude economy surpassed RMB 500 billion in 2023 and is expected to reach RMB 2 trillion by 2030.
This represents a substantial emerging market, and the pilotless 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 demands and enthusiasm for our EH216 series product. In the fourth 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 RMB 2.39 million for the Chinese market and $410,000 for international markets. We believe these prices are highly competitive when compared to other eVTOL 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 PC, are 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 PC is expected to be obtained in the near future, offering a robust assurance and support for the production quality of the newly produced EH216 under the supervision system of the CAAC. During the fourth quarter, we developed several low-altitude economy demonstration sites in Guangzhou and Hefei, and our EH216-S completed the first commercial flight demonstrations at the UAM operations center in Shenzhen's OH Bay, 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 $100 million, while the Guangzhou municipal government announced 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 our operation systems. By leveraging our distinctive and pioneering expertise in pilotless eVTOL operations, EHang continues to stress on 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 benchmarks for the safety operations in the 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 aerial tourism and urban air taxis. This will allow scenes from science fiction movies to officially step into the public eyes.
In terms of 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 Gotion High-Tech, a leading global provider of new energy solutions, to jointly research and develop battery cells, battery packs, energy storage systems, 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 a well-established industrial chain in intelligent manufacturing to accelerate the smart production, application, and market expansion of our pilotless aerial 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 offer significant advantage over the liquid batteries in terms of safety, energy density, thermal stability, cruising range, charging and discharging performance, etc. As a result, we believe that the flight range and many other performances of our EH216-S product will be greatly enhanced in the future. Furthermore, this year we will develop more R&D efforts toward testing and certification of our VT-30, another pilotless passenger carrying lift-and-cruise eVTOL model. This is a long-range aircraft designed for intercity transportation. We will conduct rigorous testing on all the systems of the VT-30 and full transition flights in the near term.
Based on the test results, we will thoroughly analyze and actively iterate improvements to ensure that all the performance indicators meet design requirements. Myself have experienced the flight with VT-30 in person, and it feels amazing. Meanwhile, we also are doing preparations for the TC application for VT-30. Just a few days ago, we commenced another tour of passenger carrying flights 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. Thank you.
Conor Yang (CFO)
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 analyses 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 RMB 56.6 million in Q4, a significant increase of 260.9% from RMB 15.7 million in the same period last year, and a remarkable increase of 97.8% from RMB 28.6 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 revenues were RMB 117.4 million, a significant increase of 165% from RMB 44.3 million in 2022. The EH216 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 64.7% in Q4, flat from 64.6% in Q3. Gross margin was 64.1% in 2023, despite a slight decrease of 1.8 percentage points 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 eVTOL industries. In Q4, our adjusted operating expenses, which are operating expenses excluding share-based compensation expenses, were RMB 64.2 million, down 12.4% from RMB 73.2 million in the same period last year, and up 18.8% from RMB 54 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 RMB 226.3 million in 2023, down 6.6% from RMB 242.4 million in 2022. As a result, our adjusted operating loss in Q4 was RMB 24.9 million, a 59.4% improvement from RMB 61.3 million in the same period last year, and a 27.3% improvement from R&D RMB 34.2 million in Q3. For the fiscal year, adjusted operating loss was RMB 144.8 million, a 30.1% improvement from RMB 207.1 million in 2022. Adjusted net loss in Q4 was RMB 22.1 million, a 62.8% improvement from RMB 59.4 million in the same period last year, and a 29.4% improvement from RMB 31.3 million in Q3. For the fiscal year, adjusted net loss was RMB 138.8 million in 2023, a 32.7% improvement from RMB 206.2 million in 2022.
Thanks to our stringent approach to cash 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 RMB 334.1 million of cash, cash equivalents, short-term deposits, short-term investments, 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 steady progress towards obtaining TC for mass production and deliveries, we anticipated achieving revenue of about RMB 58 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 (participant)
Thank you. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To whisper your question, please press star 1 and 1 again. That's star 1 and 1 if you wish to ask a question. Please stand by while we compile the Q&A queue. We will now take the first question. One moment, please. First question comes from the line of Gareth Zhao from TF. Please go ahead.
Gareth Zhao (VP)
Hi, Management. Thank you for taking my question. My first question is really about the order size. So with large-scale deliveries becoming possible after obtaining the TC, have you seen an increase in customer interest that has actually converted into more orders compared to before? Thank you.
Conor Yang (CFO)
Yeah, thank you for your question. As the low-altitude economy industry grows rapidly, we have seen increasing demand for our EH216-S from both government-related and scenic Spot 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, with more similar purchase orders to come. With the supportive policies and growing demand, our EH216 is supposed to demonstrate our first mover advantage in the global market this year, contribute to EHang's stable growth. So other than Hebei, Shenzhen, Guangzhou, Wuxi, we also see similar demand from Shaanxi, Henan, Wuhan, Zhuhai, Hainan, and many, many other orders to come. Thank you.
Gareth Zhao (VP)
Great. Thank you. My same question about the competition landscape. Could you elaborate on target customers and how customers differentiate themselves from competitors? Also, could you provide further insight into the competitive landscape? Thank you.
Conor Yang (CFO)
Yes. October last year, we have obtained the first TC, and end of last year, we have obtained the first AC. So this is the first kind of. It's time. In this industry, 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 a 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, we have a very compact footprint, so measuring around six meters in length and very lightweight design. So that means we have lower demand on the urban infrastructure, so makes our product highly adaptive and also very easy to deploy within the city.
And secondly, our 216 is a two-seater without pilot. So this can definitely with 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 will enable to operate in a mass scale in the future. And also, our price is very, very competitive. With the domestic selling price of RMB 2.39 million and also international selling price of $410,000 in comparison, as far as we know, that our other global peers will be selling at between $3 million-$10 million. So from 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, we think we are very, very competitive. These are for 216 is for intra-city, like 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.
Gareth Zhao (VP)
All right. Thank you. That's very clear.
Conor Yang (CFO)
All right. Thank you. That's very clear.
Operator (participant)
Thank you.
Speaker 9
Thank you. We will now take the next question.
Operator (participant)
The next question.
From the line of Rongyan Tu from CITIC, please go ahead.
Rongyan Zhou (Analyst)
Hello. Can you hear me?
Conor Yang (CFO)
Yes.
Huazhi Hu (Founder, Chairman and CEO)
Yes.
Conor Yang (CFO)
Yes.
Rongyan Zhou (Analyst)
Yes. Okay. Ask Rongyan Tu and Richard Liu. First, thank you very much for coming to the topic of how maybe we can start talking. As we mentioned before, the topic is low-altitude economy becoming basically a trend in China. Here I have two questions. I would like to ask a lot about the market size delivery in the future and the risk analysis scenarios. I'd like to ask you to come here with us and what do you think about the market size of each scenario. That's my first question.
Conor Yang (CFO)
That's my first question.
Huazhi Hu (Founder, Chairman and CEO)
Thank you. Thank you.
Operator (participant)
Okay. Thank you for your question. First of all, I would like to translate the questions into Chinese for our CEO.
[Fl]
Conor Yang (CFO)
[Fl]
End of last year, the central government on the very top level of China has a central committee meeting. After this meeting, the top authority of China has indicated that the Low-Altitude Economy as one of the strategic industries that the government is going to focus on for this year.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Conor Yang (CFO)
That they are currently through the central economy meeting. Currently, there are more than 20 provinces, provincial government that has formally listed the Low-Altitude Economy as their focus for this year.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Conor Yang (CFO)
Through the focus of the central and local government, that autonomous passenger-grade aircraft will be applied not only for Phoenix Spot tourism but also for urban transportation as integrated as part of the city's transportation system. So also in the future, that's not very long, that air taxi scenario will come true.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Conor Yang (CFO)
We estimate that the total market size of the Low-Altitude Economy in 2023 that has reached in China has reached RMB 500 billion and expected to grow to RMB 2 trillion by 2030.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Conor Yang (CFO)
We plan to operate the air taxi, make it a real scenario sometime this year. By air taxi as a transportation vehicle, that the people can transform from their regular transportation from one dimension to three dimensions. This will greatly enhance the total market size of eVTOL.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Conor Yang (CFO)
This is from our CEO, Mr. Hu. Okay.
Rongyan Zhou (Analyst)
Okay. Thank you. Thank you. Thank you very much for the answer from our CEO, Mr. Hu. And so I have another question about our expense. So in fact, as our company grows, the company's sales and operations will be managed more precisely. So would you mind sharing more details regarding the expense in the future? Just for our company. Thank you.
Conor Yang (CFO)
Yes. Regarding our operating expenses, which compose of sales and marketing and G&A and also research and development. As we rapidly ramp up our revenue, so you can see that fourth quarter 2023, for example, we have reached revenue of RMB 56 million with a year-on-year growth rate of 260%. So when the revenue grows at such a speed, our adjusted operating expenses at fourth quarter last year was 113% of total revenue. That compared to one year ago, the adjusted operating expenses was 466% of revenue. So you can see the rapid drop of our tax due to rapid increase in our revenue. So we believe that our growth on the revenue will continue to grow at a very high growth rate in the next several years.
We hope that we can manage that our adjusted operating expenses in three years' time drop from currently 113% of revenue, drop to about 40% of total revenue in three years' time. Thank you.
Rongyan Zhou (Analyst)
Okay. Okay. Thank you very much for your answer, and thank you for all of your company that help add the low-altitude economy in China's development in the future. So that's my all questions. And thank you all of you, and have a nice weekend. Thank you.
Conor Yang (CFO)
Thank you.
Operator (participant)
Thank you. We will now take the next question. Coming from the line of Ting Zhaofrom Goldman Sachs, please go ahead.
Ting Song (VP)
Thank you for taking my question. EHang has announced the launch of UAM operation demonstration center with Shenzhen government in December. My question is, do we expect to see any revenues from UAM operations this year besides the sales revenues from shipment of EH216-S? Thank you.
Conor Yang (CFO)
Yes. As Mr. Hu mentioned earlier, the company plan to kick off the commercial operations this year with some revenue in the company's selected cities in China. Therefore, we can expect some revenue from our operational services, but it may not be significant this year. In the initial stage, the majority of our revenue will still come in from the sales of our EH216 series for the time being. Looking forward, as we expand flight services to more areas, recurring revenues such as operational revenues will grow gradually. So we can cap the receiving we have a cap receiving orders domestic and overseas. And we also receive a lot of requests from our customers to form joint ventures for the future operations. So we expect that next year and going forward, the revenue coming out from operation will gradually increase the percentage of our total revenue. Thank you.
Ting Song (VP)
Thank you. So my another question is about overseas revenues. So I see the company has a partnership 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 (CFO)
Yes. After we obtain TC, we also receive a very strong demand from overseas markets. Yes, we have announced that we have formed a strategic relationship and also received orders from UAE customers, Wings Logistics, that they intend to purchase 100 units. Actually, we start to deliver the first batch in first quarter this year. For example, as of fourth quarter last year, we also sold our product EH216 to many places like Colombia, Saudi Arabia, and Qatar. And we also perform our drone light shows in Japan and Spain. So in fourth quarter last year, the revenue derived from overseas markets was 26% of our total revenues. And this year, we also expect there will be a fairly good amount of revenue will be coming out from overseas markets. Thank you.
Operator (participant)
Thank you. We will now take the next question from the line of Yu Chen from Haitong Securities. Please go ahead.
Yu Chen (Equity Research Analyst)
Okay. Thank you, management. I have two questions. And the first one is following the previous one. We would like to know the detailed progress regarding the overseas AC obtention because if we need to enter the overseas market, we think that the first step is to obtain the overseas AC 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 VT30. That's two questions. Thank you.
Conor Yang (CFO)
Yes. Regarding overseas TC, as I mentioned earlier, we have seen strong demand from overseas markets, especially in the Middle East, South Africa, and ASEAN countries. So for those places, we will rely on our local partner to obtain the local TC. Have you already obtained the TC from CAAC? 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. This is expected to be a simplified procedure. Consequently, this approach enables us to expedite market entry and expansion in these countries. 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 customer's specific requirements.
Typically, the government and customer commit to pre-orders or customer intentional orders, for example, up to 100 units and with an initial purchase of 5 to 10 units for trial operations at local sites. As their operations expand and demand increase, then they will acquire additional products. The favorable policies surrounding the low-altitude economy have provided us an attractive environment for growth. Consequently, we anticipate a substantial increase in delivery volume throughout 2024. First quarter, we have given our guidance that RMB 58 million. Slightly increased from quarter-over-quarter because the first quarter is the Chinese New Year. Typically, there's a long vacation during the quarter. So far, 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 eVTOL.
We are exploring opportunities to establish other facilities to further support our production capacities as market demand grows. Thank you.
Yu Chen (Equity Research Analyst)
Thank you for answering. Have a nice weekend.
Operator (participant)
Thank you. As a reminder, if you wish to ask a question, please press star 11 on your telephone and wait for your name to be announced. That's star 11 if you wish to ask a question. We will now take the next question from the line of Laura Li from Deutsche Bank US. Please go ahead.
Laura Li (Analyst)
Hey. Thank you for taking that question, and congratulations on a 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 certification now. So are there any specs you can talk about now? And do you expect the client base will be similar to the EH216, or the new product will kind of bring us more application scenarios? Thank you.
Operator (participant)
Okay. I will translate your question to our CEO who will take your question
[Fl]
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Operator (participant)
Yeah. 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 flights.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Operator (participant)
For the traffic volume, as we know, the air taxi within the urban area is the most traffic demand.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Operator (participant)
Yeah. That's why we're doing the certification for EH216, this type of a model.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Operator (participant)
Now we have completed all the configuration design and internal testing for the VT-30.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Operator (participant)
In this year, we will put more efforts into the testing for the VT-30, and we will release more videos about the flights. Actually, the VT-30 will do a lot of practical flights, and our CEO personally has taken the flights within VT-30. It's a very stable flight experience.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Operator (participant)
Later, we will release our CEO's flight video with the VT-30, and we will submit the TC application for VT-30 within this year.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Operator (participant)
The typical way, the EH216 and the VT-30 almost covers all the application scenarios for the urban air mobility. That's why these two models are our main products.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Operator (participant)
Yeah. 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 Li (Analyst)
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 detail about this, how this works? Will you share the R&D or manufacture collectively, or what kind of support prepare to provide to each other?
Anne Ji (Head of Investor Relations)
[Fl]
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Anne Ji (Head of Investor Relations)
There is a strong favorable policy and training in China about the Low-Altitude Economy. Under this background, a lot of governments are working with us.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Anne Ji (Head of Investor Relations)
It's our pleasure to work with some state-owned enterprises such as the GAC Group.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Anne Ji (Head of Investor Relations)
Yeah. The first thing maybe that popped 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 flying taxi product.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Anne Ji (Head of Investor Relations)
Now we have selected a production site within Guangzhou under our cooperation with GAC Group, and we are going to establish an autonomous production line with GAC.
Huazhi Hu (Founder, Chairman and CEO)
[Fl]
Anne Ji (Head of Investor Relations)
Through our collaboration, we will continue to improve the product quality of our eVTOL products and to ensure the safety of our eVTOL flights. Thank you.
Laura Li (Analyst)
Okay. Thank you so much.
Anne Ji (Head of Investor Relations)
Thank you so much.
Operator (participant)
Thank you. Given the time is limited, let me turn the call back to Ms. Anne for closing remarks.
Anne Ji (Head of Investor Relations)
Okay. Thank you, operator. Thank you all for participating in our today's call. If you have any further questions, please contact our firm by email or participating in our following events through the calendar information provided on our website. We appreciate your interest and look forward to our next joining call. Thank you.
Operator (participant)
This concludes today's conference call. Thank you for participating. You may now disconnect.