Q4 2023 EHang Holdings Ltd Earnings Call

March 15, 2024

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Operator: Oh, baby, you're any way the world goes. Sing a song about the wonders and the miracles that our love will showcase. Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Ehang four-quarter and fiscal year 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. Hello, everyone.

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Good day, ladies and gentlemen, thank you for standing by and welcome to the Hunk fourth quarter and fiscal year of 2020 Suite earnings Conference call. As a reminder, we are recording today's call.

Now I will turn the conference over to on G. E hung senior director of Investor Relations. Mr. <unk>. Please proceed.

Anne Ji: 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 website. Please note a conference call is being recorded, and the audio replay will be posted on the company's website. On the call today, we have Mr. Huazhi Hu, our Founder, Chairman, and Chief Executive Officer, and Mr. Colin Yang, Chief Financial Officer and the Director of the Board. The management team will successfully give prepared remarks. Remarks delivered in Chinese, followed by an English translation. All translation is for convenience purposes only.

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 our call today, we have Mr. <unk> Hu, our founder Chairman and Chief Executive Officer, and Mr. Collier, Chief Financial Officer, and a director of the board.

The management team will successfully Gabe prepared remarks, relapses deliberate in Chinese followed by English translation.

Oh translation is for convenience purpose only NK cell that any discrepancy divestments statement email regional language will prevail.

Operator: In case of any discrepancy, the measurement 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 Security Litigation Reform Act of 1995, forward-looking statements involving 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 statement, except as required under applicable law.

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 this and other risks and uncertainties is included in the company's public filings with the SEC.

Company does not assume any obligation to update any forward looking statement, except as required to enter applicable law.

Huazhi Hu: Also, please note that all numbers presented are in RMB and are for the fourth quarter of the fiscal year of 2023 unless they say otherwise. With that, let me now turn the call over to our CEO, Mr. Huazhi Hu. Please go ahead, Mr. Hu.

So please note that the old numbers presented in RMB and I for the fourth quarter and fiscal year 'twenty 'twenty suite.

Unless stated otherwise.

Let me now turn the call over to our CEO. Mr. <unk>. Please go ahead Mr. Hu.

Huazhi Hu: Xie xie, Annie, da jia hao, gan xie ge wei can jia yi hang zhi neng de dian hua hui yi, In the fourth quarter of 2023, we achieved remarkable results in many areas. In October last year, Ehang's innovative product, EH216S, the Unmanned Vehicle Carrier Aircraft System, This is the world's first pilot-level vertical aircraft model co-pilot certificate. We have officially launched the commercialization of unmanned aerial vehicles. In December, the first EH216-S test flight version was launched, and it also obtained the world's first EVTOL standard test flight certificate. EH216S After obtaining TC and AC, we are very happy to see that the market has significantly increased the demand for our EH216 unmanned aerial vehicle carriers. , 23 EH216 has the highest single-season turnover in three years. The fourth quarter revenue was more than 56 million yuan, which was more than twice as much as the previous year and twice as much as the previous year. , Gongsun Yuanying, Ji Xu Wen Zhong You Sheng.

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Huazhi Hu: Our strong growth is due to the positive policies and support of local governments in China to promote the high-quality development of the air-conditioned economy. Since December 2023, Chairman Xi Jinping held a meeting on the Central Economic Cooperation and proposed strategic new industries such as low-and-middle-income economies. China has written a government work report on the low-and-middle-income economy in nearly 20 provinces in 2024. During the two sessions just held in China, the low-and-middle-income economy has also written a central government work report for the first time.

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Huazhi Hu: , According to the calculations of research institutions, in 2023, China's global economy will exceed 500 billion yuan. In 2030, it is expected to reach 20,000 billion yuan. This is a large-scale new market. An unmanned aircraft carrier like EH216-S will undoubtedly lead the entire industry forward. In the momentum of market acquisition, leading edge, and policy spring, the market is ignited by the demand and enthusiasm for our Ehang 216 products. In the fourth quarter of last year, we received hundreds of large-scale pre-orders from China, Guangzhou, Hefei, Wuhan, Alianqiu, and other domestic and foreign customers. Recently, we have also reached cooperation with the Jiangsu Wuxi City Government and signed hundreds of pre-orders for EH216. We have achieved low-cost economic demonstration scenarios and strong market demand from customers to boost our future performance. We also announced that the EH216S unmanned aeronautical system is priced at 2.39 million RMB and 410,000 U.S. dollars in China and overseas markets, respectively. We believe that this price is highly competitive in the world of e-vehicle products, meets market demand, and promotes the development of the low-cost economy.

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Huazhi Hu: ,, PCPC, All required quality system documents have been submitted to the Civil Aviation Bureau for final summary. Production license PC is expected to be obtained soon. Based on the supervision of the Civil Aviation Bureau, it provides a strong guarantee for the quality of newly produced products. In the fourth quarter, we built a low-altitude economic demonstration site in Shenzhen, Guangzhou, and Hefei and completed a commercial first-flight demonstration at Huanle Island Bay UAM Operating Center, Huangpu District, Guangzhou, Jiulonghu Park, and Hefei Luogang Central At the same time, the Hefei City Government and Ehang Holdings have reached a low-cost economic strategic cooperation and plan to provide $100 million in support. The Guangzhou City Government has also introduced a policy to promote low-cost economic tenets.

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Huazhi Hu: At present, we are actively developing operational personnel training, operational system construction, and other business operations preparation work. Combined with unique leading advantages and practical experience in unmanned aeronautical operations, Ehang will continue to strengthen cooperation with the Chinese Civil Aviation Bureau. The plan is to complete the world's first EVETO commercial operating supervision system standard in the second quarter of this year, to provide the essential safety regulations and regulations for the e-vehicle industry.

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Huazhi Hu: In 2024, we will cooperate with local governments to complete the construction of infrastructure such as E-Vehicle starting points and create a low-cost economy model city. ??, In terms of the industrial chain, we have partnered with more excellent suppliers and partners to expand the scale of the low-cost economy. In January this year, we reached a strategic partnership with the world's leading new energy solution supplier, Guoxuan High-Tech, to jointly develop a new battery pack, storage system, and charging infrastructure specially designed for unmanned aerial vehicles. In February, we reached a strategic partnership with Guangxi Group.

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Huazhi Hu: Guangxi Group will make full use of its rich experience and mature industrial chain in smart manufacturing to accelerate the smart production, application popularization, and market promotion of one-way unmanned aerial vehicles. In terms of product iteration, we will continue to improve the various performance of EH26-S, making it more applicable. Therefore, last year, we strategically invested in Shenzhen's Gu Taiji battery company, Xinjian Energy. The E-VITO solid-state battery supply chain is designed to provide a significant advantage in terms of safety, energy density, thermal stability, battery life, recharge performance, and so on, while the battery life will double in comparison with the liquid-state battery.

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This is an English translation of Mr. <unk> remarks.

Hello, everyone. Thank you for joining us on this conference call.

And our first quarter 2023, we have achieved a remarkable results across various aspects.

October last year, our <unk> S pilotless passenger touring aircraft system and innovative product independent dealers worldwide.

Obtained a type certificate Tc Fabless EAC.

This milestone marks the worst first DTC for a passenger carrying EBITDAR aircrafts.

<unk> our qualification for commercial applications, our talent base passenger carrying eval aircrafts.

And December last year, our first just certified had to asics rolled out of our production lines and obtain the worst first David on standard Airworthiness certificate, which is AC.

Huazhi Hu: I believe that in the future, it will significantly improve the multi-performance of EHR-S. Swag. This year, we will put more research and development efforts into the test and certification work of our other unmanned vehicle, the EV1, the V730. We will conduct rigorous tests and inspections on all systems of the VT30. We will conduct a large number of tests on the complete flight of the VT-30 in the near future.

As a result, we commenced the delivery of the certified <unk> S aircraft.

Following the TC NAC, we are delighted to see a substantial surge in a market amounts by hand to asics as panelist Pasadena, Irene that all resulting in significant sales volume growth in the fourth quarter with a total of 23 unit <unk> six series product delivered.

Huazhi Hu: Based on the results of the tests, we will thoroughly review and actively improve, so that all indicators meet the design requirements. VT30,,VT30 Just a few days ago, we started a round-the-clock flight in Japan. Thank you to our COO, Mr. Fang Xin, who is working hard in Japan and cannot attend this press conference. Conor, This is the English translation of Mr. Hu's remarks.

Notably this represents the highest number of deliveries in a single quarter in our past three years.

The revenue of the fourth quarter surpassed 56 million RMB Martin a year over year growth rate of over three patents and nearly doubling quarter over quarter.

Moreover, we generated positive operating cash flow in the fourth quarter as demand for our products 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 at a low altitude economy.

Since the central economic where conference Cerda by President XI in December last year, when the low altitude economy with elevated to a strategic emerging industry nearly 20 provinces in China have incorporated the low altitude economy into their 2020 for government work report.

English Translator: 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 Ehang 216S Pilotless Passenger Carrying Aircraft System, an innovative product independently developed by Ehang, obtained a type certificate TC from the CAC.

Furthermore, during the two sessions recently held in China, the Central government work their points included low altitude economy for the first time.

English Translator: This milestone marks the world's first TCE for a passenger-carrying innovative aircraft, signifying our qualification for commercial applications of a pilot-less, passenger-carrying future aircraft. In December last year, our first certified Ehang-216 rolled out of our production line and obtained the world's first eVito standard airworthiness certificate, which is AC. As a result, we commenced the delivery of the certified EHAM216S airplane. Following the TCNAC, we are delighted to see a substantial surge in the market demand for our EHOME 216S Pilotless Passenger Car Renewal, resulting in a significant sales volume growth in the fourth quarter, with a total of 23 units of Ehang 216 series products 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 56 million RMB, marking a year-over-year growth rate of over three times and nearly doubling quarter-over-quarter.

This recognition underscores J 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 500 billion R&D in 2023.

And expected to reach two trillion RMB by 2030.

This represent a substantial emerging market and a panelist passenger carrying aerial vehicles like <unk> have to asics are poised to play a leading role in propelling the industry forward.

Capitalizing on our first mover advantage in obtaining a witness a vacation and benefiting from favorable policies, we have witnessed a surge in our market amount and the enthusiasm for <unk> six series product.

And first quarter, we received hinders, our preorders from domestic and overseas customers in China, Kwangchow, Hefei, who hang in the UAE and other reaches.

Furthermore, we have recently formed.

Partnership with the government about Wuxi city in Jiangsu Province.

English Translator: Moreover, we generated positive operating cash flow in the fourth quarter, as demand for our products is strong and the company's operations continue to steadily improve. Our strong growth is attributed to the proactive policies and support from local Chinese municipal governments that have 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's work report included the low-altitude economy for the first time.

Routing in preorders for at least the one <unk> unit Southey head to our success.

Through these collaborations we have actively planning to create low altitude economy demonstration application Sandy area.

The strong market demand from our customers gives us greater confidence in our future growth prospects.

We have also announced the pricing of the hand to Asics as Palo this passenger carrying aircraft to system and bolster domestic Chinese market and overseas markets.

The pricing has been set at two <unk>, three 9 million RMB for the Chinese market and 410000 U S dollar for international markets.

We believe these prices are highly competitive when compared to other embedded product worldwide. Moreover, this pricing strategy aligned with the market demands and to contribute to the development of the low altitude economy.

English Translator: 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 500 billion RMB in 2023 and is expected to reach 2 trillion RMB by 2030. This represents a substantial emerging market, and pilotless passenger-carrying aerial vehicles like the Ehang 216 are poised to play a leading role in propelling the industry forward.

In our preparation for the next stage of our mass production our efforts to obtain the production certificate, which is PC is almost completed.

Currently the CSA review team have conducted all the onsite inspections and all the required quality system documents have been submitted to the EAC for the final process.

The PC is expected to be obtained in EMEA future offering a robust insurance and its support for the production quality on the newly produced a onto a six endometrial ablation system of the CIC.

During the first quarter were developing several low altitude economy demonstration sites.

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<unk> completed the first commercial flight demonstrations at our U S.

English Translator: Capitalizing on our first mover advantage in obtaining our worthiness certification and benefiting from favorable policies, we have witnessed a surge in market demand and enthusiasm for our Ehang 216 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 Ehang 216. Through these collaborations, we are actively planning 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 Ehang 216S pilotless passenger-carrying aircraft system in both the domestic Chinese market and the overseas market. The price has been set at 2.39 million RMB for the Chinese market and 410,000 U.S. dollars for international markets.

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The Hefei municipal government has reached a strategic cooperation agreement with <unk> in the low altitude economy.

Planning to extend support to Ehow in various forms with a targeted amount of a 100 million U S. Dollar while the Guangzhou municipal government announced their 10 major supportive of policies to stimulate the low altitude economy.

Currently we are actively conducting a series of a crucial preparations for commercial operations, including operator training and the development of our operation systems.

By leveraging our distinctive and apparent El Rey expertise in parallel.

Patient <unk>.

<unk> stressed in collaborations with the CEC to establish the worst first a regulatory system standards for eventual commercial operations by the second quarter of this year.

This effort will set reliable regulations and our benchmarks for the <unk> operations in a volatile industry.

English Translator: We believe these prices are highly competitive when compared to other e-vital products worldwide. Moreover, this pricing strategy aligns with 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 CAC review team has conducted all the on-site inspections, and all the required quality system documents have been submitted to the CAC for the final process. The PC is expected to be obtained in the near future, offering robust assurance and support for the production quality of the newly produced Ehang 216 under the supervision system of the CAC. During the fourth quarter, we developed several low-altitude economy demonstration sites in Shenzhen, Guangzhou, and Hefei, and our Ehang-216S completed the first commercial flight demonstrations at the UAM Operations Center in Shenzhen Old 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 US$100 million, while the Guangzhou municipal government announced 10 major supportive policies to stimulate the low-altitude economy.

In 2024.

Ordinated with multiple governments to completed the construction of infrastructure such as David already ports.

And shape the benchmark cities that exemplify the potential of the low altitude economy, and a large commercial operations ceremonies in key use cases, such as arrow tourism and urban narrow taxes. This will allow disease from science fiction movies to officially step into the public eyes.

In terms of the industry chain, we have been actively cooperating with outstanding of suppliers and partners striving to expand opportunities within the low altitude economy sector. In January we entered into a strategic partnership with caution a leading global provider of the new energy solutions.

To jointly research and the development battery Chargers battery packs energy stronger system and charging infrastructure.

Especially designed for penalties aerial vehicles.

In February of this year with partners with Guangzhou Automobile group GAC in short, which will capitalize on <unk> extensive experience and a well established industrial chain intelligent manufacturing to accelerate thus far production application and marketing expansion of our panelists.

<unk> their vehicles.

Regarding product development, we will continuously enhance salary onto our success performance to unlock <unk> full potential for various applications to this end last year, which strategically invested in inks.

English Translator: 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 e-vehicle operations. Ehang also continues to strengthen collaborations with the CAC to establish the world's first regulatory system standards for e-vehicle commercial operations by the second quarter of this year. These efforts will set reliable regulations and benchmarks for safety operations in a vital industry. In 2024, we will coordinate with multiple governments to complete the construction of infrastructure such as the Evalu-Verti port and shape the benchmark cities that exemplify the potential of the low-opportunity economy and launch commercial operation ceremonies in key use cases such as aero-tourism and urban air taxes. This will allow the scenes from science fiction movies to officially step into the public eye.

Solid state of lithium battery company based in Shenzhen to strengthen the supply chain for solid state lithium batteries in EBIT loss.

Lithium metal solid batteries offer a significant advantage over the leak rate of batteries in terms of the safety energy density thermal stability cruising range charging and discharging performance etcetera.

As a result, we believe that a flat range and in many of the performance of our onto our success product will be greatly enhanced in the future.

Furthermore, this year, we will develop more R&D efforts towards testing and certification of our <unk> another panelist passenger carrying leased and accrued the better model.

This is a long range aircraft designer for Intercity transportation, we will conduct a rigorous testing on oldest system of the BT <unk> and food transition clients in the near term.

Based on the test result, although salary annualized and are actively iterate improvements to ensure that order performance indicators major design requirements.

English Translator: 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 Gaotian, 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 for 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 air-wheeled vehicles. Regarding product development, we will continue to enhance our Ehang 2.1's success performance to unlock its full potential for various applications. To this end, last year, we strategically invested in a solid-state lithium battery company based in Shenzhen to strengthen the supply chain for solid-state lithium batteries in the U.S. Lithium metal solid batteries offer significant advantages over liquid batteries in terms of safety, energy density, thermal stability, cruising range, charging and discharging performance, etc.

Myself as experienced a flight with <unk> 13 person and it feels amazing.

Meanwhile, we also are doing preparations for the TCE application for beta <unk>.

And just a few days ago, we commence another tour of our passenger carrying flies across December cities in Japan.

Extend my thanks to our CFO Mr. <unk>, 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 corner. Thank you.

Thank you Mr. Hu Hello, everyone. This is Connor before I go into details. Please note that all numbers presented are in RMB and all for the fourth quarter and fiscal year of 2023, unless stated otherwise detail analysis or compare.

<unk> in our earnings press release, which is available on our IR website I will now highlight some of the key points here.

Having obtained the Tc in AC four our proprietary edge to $1 six cash as our total revenues reached $56 6 million in Q4 of <unk>.

<unk> increase of 259% from RMB 15, 7 million in the same period last year and the remarkable increase of 97, 8% from $28 6 million in Q3.

The increase was primarily attributed to the increase in our sales volume of <unk> 206 series products.

We delivered 23 units of <unk> to $1 six.

English Translator: As a result, we believe that the flight range and many other performance characteristics of our E-106S product will be greatly enhanced in the future. Furthermore, this year, we will devote more R&D efforts toward testing and certification of our VT-30, another pilot-less passenger-carrying lift-and-cruise vehicle model. This is a long-range aircraft designed for intercity transportation. We will conduct rigorous testing on all the systems of the VT30 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. I myself have experienced the flight with BD-13 in person, and it feels amazing.

283% year over year, and 77% quarter over quarter for the fiscal year 2023.

Total revenue or $117 4 million as forgiveness can increase or 105% from $44 3 million in.

2022.

<unk> 206 series of AAV deliveries in 2023 were 52 units.

Up 148% from 21 units in 2022.

Gross margin remained stable at.

At a high level of 64, 7% in Q4.

Platform 64, 6% in Q3.

English Translator: Meanwhile, we also are doing preparations for the TC application for BT-13. And just a few days ago, we commenced another tour of passenger cabin 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 event and thus unable to attend this early call. Next, I will turn the call over to our CFO, Connor.

Gross margin was 64, 1% in 2023, despite a slight decrease of one eight percentage points from 65, 9% in 2022 primary 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 Uhm and digital industries.

Ning Yang: Thank you. Thank you, Mr. Hu. Hello, everyone. This is Connor.

In Q4.

Adjusted operating expenses, which are operating expenses, excluding share based compensation expenses were $64 2 million down 12, 4% from $73 2 million in the same period last year and up 18, 8% from 54 million in Q3.

Ning Yang: 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 is contained in our earnings press release, which is available on our IR website. I will now highlight some of the key points here. After obtaining the TC and AC for our proprietary EH216-S, our total revenues reached $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 $28.6 million in Q3. The increase was primarily attributed to an increase in our sales volume of EH216 series products.

The quarter over quarter increase was primarily driven by the expansion of sales channel and intensified marketing efforts in enhancing brand awareness.

And Neil basis, the adjusted operating expenses were $226 3 million in 2023 down six 6% from $242 4 million in 2022 as.

As a result, our adjusted operating loss in Q4.

$24 9 million, a 59, 4% improvement from $61 3 million in the same period last year and 27, 3% improvement from RMB $34 2 million in Q3.

Ning Yang: We delivered 23 units of EH216, up 283 percent, year-over-year, and 77% quarter-over-quarter. For the fiscal year 2023, total revenue was $117.4 million, a significant increase of 165% from $44.3 million in 2022. The EH216 series of AAV deliveries in 2023 were 52 units, up 148% from 21 illnesses in 2022. Gross margin remains stable at a high level of 64.7% in Q4, slapped 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 continual high gross margin level as a result of our competitive strength and first-mover advantage in the global UAM and EBITDA industry. In Q4, our adjusted operating expenses, which are operating expenses excluding share-based compensation expenses, were $64.2 million, down 12.4% from $73.2 million in the same period last year and up 18.8% from $54 million in Q3.

For the fiscal year adjusted operating loss was $144 8 million.

A 31% improvement from $207 one minute in 2022.

Adjusted net loss in Q4 was $22 1 million or 52, 8% improvement from 59 point.

$4 million in the same period last year.

And a 29, 4% improvement from $31 3 million in Q3 for.

For the fiscal year, adjusted net loss of $138 8 million in 2023.

32, 7% improvement from $206 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 $334 1 million of cash cash equivalents short term deposits and 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 step progress towards obtaining Tc.

For mass production and deliveries.

Anticipated achieving revenue of about 58 million in Q1 this year.

Ning Yang: 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 $226.3 million in 2023, down 6.6 percent from $242.4 million in 2022. As a result, our adjusted operating loss in Q4 was $24.9 million, a 59.4% improvement from $61.3 million in the same period last year, and a 27.3% improvement from RMB $34.2 million in Q3. For the fiscal year, Adjusted Operating Loss was 144.8 million.

Representing an increase of 161% year over year.

Our countries our prepared remarks.

Let's now open the call for questions. Operator. Please go ahead.

Thanks.

Thank you.

To ask a question. Please press star one one on your telephone and wait for your name to be announced.

It's a waste of your question. Please press star one on one again.

Thats Star one on one if you wish to ask a question.

Please standby, while we compile the Q&A queue.

We will now take the first question.

One moment please.

First question comes from tariff Gareth So from T. F. Please go ahead.

Hi management. Thank you for taking my question. So my first question is about.

Ning Yang: A 30.1% improvement from 207.1 million in 2022. Adjusted net loss in Q4 was $22.1 million, a 62.8% improvement from $59.4 million in the same period last year, and a 29.4% improvement from 31.3 million in Q3. For the fiscal year, adjusted net loss was $138.8 million in 2023, a 32.7% improvement from $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 bondship. As of the end of Q4, we had $334.1 million of cash, cash equivalents, short-term deposit, short-term investment, and restricted short-term deposit balance.

Auto size, so with large scale, our deliveries to comment possible up your options that you think have you kind of increase in customer interest that has actually converted onto more orders compared to before.

Okay.

Thank you for your question.

<unk>.

But what else have you economy industry grow rapidly we have seen increasing demand for our year to date.

Yes.

Some of them are related and then a spot operator.

In the first quarter.

And the international intentional purchase order of a 100 units.

Group performed at Wuxi.

Government with the delivery.

With a more similar purchase.

Order to come.

With the supportive policies that growing demand that are yet to unfold as opposed to demonstrate our first mover advantage in a global market.

This year contribute to Jeff.

Stable growth.

Other than the one.

Other than that.

So we see it we're also seeing similar demand for Mercedes.

Hi, Joe Hi, Manny.

Many many other orders to come.

Alright, thank you.

My question was about.

Competition landscape.

Ning Yang: We are also actively in discussions 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 step-by-step progress towards obtaining TCs for mass production and delivery, we anticipated achieving revenue of about $58 million in Q1 this year, representing an increase of 161% year-over-year.

Could you read that wrong.

Are there customers.

Right Okay.

Got it.

Also could you provide a bridge.

Got it.

Yeah.

Thank you.

Okay.

Yes.

October last year that we have obtained the first DC at the end of last year. We have 10 differs AC so keep up the.

At this time.

In this industry we have.

Many other even though companies than peers in China and overseas.

Good morning.

The prototype testing and also the application for the GEC.

Operator: That concludes our prepared remarks. Let's now open the call for questions. Operators, please go ahead. Thank you. Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. That's star, one, and one if you wish to ask a question.

So in the next year and half.

Two two year basically we will be there.

Only company that can commercialize.

Hello.

And power.

Product through other even though.

We have several advantage firstly that.

We have a very.

Compaq fuselage, so measuring around interest.

Operator: Please stand by while we compile the Q&A queue. We will now take the first question. One moment, please.

In them and very lightweight design.

We have the lower demand on the urban infrastructure, so make it a product.

Gareth Tsao: The first question comes from Gareth Tsao from TF. Please go ahead. Hi, my name is Gareth and thank you for taking my question. So my first question is really about, like, order size. So with large-scale deliveries becoming possible after opting for the TC, have you seen an increase in customer interest that has actually converted into more orders compared to before? Thank you. Thank you. Yeah, thank you for your question.

Adaptive and old so a very easy to deploy.

Within the city.

Secondary to that.

Our two countries.

<unk> without pilot so.

Ken.

Definitely.

The determine route lateral or eliminate the need for pilot training hiring costs and potential safety issues related to human error.

Huazhi Hu: As the low-eligibility economy industry grows rapidly, we have seen increasing demand for our EH216S from both government-related and finished-spot operators. In the first quarter, we received an international intentional purchase order of 100 units from the Wuxi municipal government with delivery at a stage and with a more similar purchase order to come, that with their supportive policies and growing demand, our EH216 is supposed to demonstrate our first move of advantage in the global market this year, and contribute to EH's stable growth. So other than Hebei, Shenzhen, Guangzhou, Wuxi, we also see that similar demand from Shanxi, Henan, Wuhan, Zhuhai, Hainan, and many, many others. Thank you. All right, thank you.

Right.

And also that.

Utilizing our autonomous technology and demand a command and control system of fleet management can be achieved.

So that was unable to operate in the future.

And also our price is very very competitive with the domestics are comprised of about $2 9 million RMB and also international selling price of U S 410000 in comparison.

But we know that.

Other global peers or won't be selling at between 3 million U S to U S.

No.

Customer point of view.

We've seen that.

The our customer deposit growth.

In April up to to sustain that overtime.

Okay.

So all of those advantage.

We think we are very very competitive lease up or.

Gareth Tsao: So my second question is about the competition landscape. Could you elaborate on how you target customers and how you differentiate yourself from competitors? Also, could you provide further insight into the competitive landscape? Thank you. Yes, in October last year, we obtained the first TC, and at the end of last year, we obtained the first AC.

Interactive is an actual range.

The loan discipline, we also have a product line of diabetes therapy.

That means that you had mentioned earlier that we.

Plan to central DC application sometime this year.

Thank you.

Alright, Thank you that's very clear.

Thank you thank.

Thank you.

We will now take our next question Alright.

Huazhi Hu: So this is the first time in this industry, and many other UBITO companies and peers in China and overseas are still undergoing 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 UBITO, and when we compare our product to other e-vehicle products, we have several advantages. Firstly, we have a very compact fuselage, measuring around 6 meters in length, and a very lightweight design. So that means we have the lowest demand on urban infrastructure.

From the line of Robyn <unk> from Santander. Please go ahead.

Okay.

Hello can you hear me.

Okay.

Yes.

Please go ahead.

Yes.

Okay.

No.

Thanks very much.

That's helpful.

So as we mentioned before.

Thanks, Tom.

Trading in China.

Okay.

Yes.

You bet.

Okay.

Yes.

Huazhi Hu: So make our product highly adaptive and also very easy to deploy within the city. And secondly, that our 216 is a two-seater without pilots. So this can definitely lead to a predetermined route that will eliminate the need for pilot training, hiring costs, and potential safety issues related to human errors in piloting. And also, by utilizing our autonomous technology and the command and control system, fleet management can be achieved. So that way, I'm able to operate on a mass scale in the future.

Well I think about that.

Modified.

Wide area.

Got it.

Hey, Dan.

Yes.

Bob.

Yes.

The macro site.

Yes.

Yes, Michael.

Okay.

Brian.

Right.

Okay.

Okay. Thank you for your question first of all I would like to translate question into Chinese for our deal.

Oh.

<unk> only got one as well.

Huazhi Hu: And also, our price is very, very competitive. With a domestic selling price of 2.39 million RMB, and also an international selling price of US $410,000, in comparison, as far as we know, our other global peers will be selling for between $3 million to $10 million. So from a customer point of view, we think that only our customers can be profitable, and that will enable our business to sustain for a longer time. So with all those advantages, we think we are very, very competitive. And these are for intrastate, like short range.

You may talk about the future telecoms in that guidance.

Well now take each one.

<unk> will be.

What I think you should have all gone.

No.

<unk> told you yes, okay.

Although we're somewhat hopeful.

Really didn't.

Immediately.

Great.

Yes.

Yeah.

Without any doubt.

Tom.

Yes.

Mhm last year.

Broke up on the on the very top level China.

Now turning to commit the Newton and after this meeting.

Huazhi Hu: For the long distance, we also have a product line of VP30 that Mr. Wu mentioned earlier that we plan to send for PC application sometime this year. Thank you. All right, thank you. That's very clear.

Couple of authority of China.

Okay.

No.

As one of the.

Industry.

Government is going to focus now for this year.

Thank you Tom.

I'll, let Jim go with no problem at all.

Yes.

Article lithium.

Accordingly, there will go up.

Operator: Thank you. We will now take the next question, from the line of Rongyuan to Sintiq. Hello, can you hear me? Hello, can you hear me?

Yes.

Hello, Paul.

There are currently.

There will be a central economy.

So currently there are more than 20 provinces the provincial government.

Rongyuan: Thank you very much for coming to China and for becoming a participant in this conference. So, as we mentioned before, the topic today is China and how things are going to become tradeable in China. So, here I have two questions.

Formerly the loan outlook new economy there.

Okay.

Yes.

Right.

Quarter after quarter.

Thanks, Jeremy.

Okay got it.

So im wondering here.

Anne Ji: I would like to ask Huazhi about the market size of the retail library and what kind of application you have there with Alipay. Thank you very much. Thank you. Okay, thank you for your question. First of all, I would like to translate the questions into Chinese for our CEO. I would like to ask the management team, what is the scope of the EV2 market in the future? Specifically, which applications are likely to land first? And what is the future outlook for the market? Since December last year, the Chinese government held a central economic meeting. At this meeting, China first proposed a low-income economy, which has been listed as one of the strategic directions of the country.

Yes.

We're adaptable.

Dominic.

Now her cockpit, new bad <unk>.

Sure.

Formerly you do.

Right.

The one wildcard.

Please go ahead.

Got it.

Give me.

Wyman.

Okay.

Thanks, John.

Hi, Julien.

Through the brokers.

Central and local government.

Apollo autonomous passenger great.

Aircraft what we.

Applied to.

Thursday.

Tourism, but also for urban transportation.

Integrated as part of the city.

Huazhi Hu: At the end of last year, the central government at the very top level of China had a central committee meeting, and after this meeting, the top authority of China has indicated that the low-efficiency economy is one of the strategic industries that the government is going to focus on for this year. Just like what I said earlier, China has listed more than 20 provinces' public economy in the government work report, and the central government has also listed it for the first time in the central government work report that there are currently over 20 provinces, the provincial government that has formally listed the low-altitude economy as their focus for this year. Yes, so it's a low-flying economy driven by the state government.

System.

Our goal is.

Sure.

The future that's not very long.

Yes.

That's an area.

Sure.

Good morning, John.

Yes.

Sure.

As of June quarter, but of equal instituted the announcement that you Didnt I don't know right now.

Please go ahead.

Sure.

Advanced sensors.

Yes.

The difficulty help out a bit warmer warming warm again.

What do you like to add.

But we estimate that.

From a market side of the low apathy economy in 2023 that suite in China has reached 500 billion RMB.

Huazhi Hu: We can use it in some important applications related to the low-flying economy. The most distinctive is the application of unmanned aerial transport. It can be used in urban and air traffic.

Good to go to.

RMB 2030.

Okay.

Joe.

Hello.

By the way.

Huazhi Hu: Of course, as you may know from our previous reports, we already have a large range of applications in tourism. And this year, the most important thing for us is to bring urban air traffic and air taxis to all the people, through the focus of the central and local governments, so that autonomous passenger grade aircraft will be applied not only for tourist tourism but also for urban transportation as integrated as part of the city's transportation system. So although in the future, it's not very long before the air taxi scenario will come true. In terms of scale, when China's economy started to warm up in 2023, China's GDP reached 5 trillion yuan in 2023.

It was unclear Montana Tommy.

Good morning, gentlemen.

The digital economy.

Tom you adulthood.

Yes.

Okay.

Good afternoon.

Now ill turn to operating at airports.

Thank you.

Real scenario.

This year, though by aircraft.

<unk> is.

As the transportation vehicle.

The people.

And then principal from the regular transportation from our one dimension to Resubmission and therefore greatly enhanced go to market side.

Huazhi Hu: In 2030, according to some reports, China's GDP will reach 2 trillion yuan. This is a very large scale. In terms of our company's feeling, I think it's far more than that. We estimate that the total market price of the low-efficiency economy in 2023 in China has reached 500 billion RMB and is expected to go to 2 trillion RMB by 2035. This year, we will have a commercialized operation of the air taxi. It will be like a sci-fi scene, coming to the front of ordinary people.

Even though.

Hi, Brian.

Hello, a while ago.

<unk> will address that.

It is on that.

Business from that group.

Okay.

Thank you.

BARDA.

From the RFP here with telecom.

And then so.

So no question.

About <unk> ever been.

So.

As a company growth to accommodate the sale.

With the end.

At <unk>.

Managed more tightly so we mined CRE mortgage sales regarding the expansion in the future.

Huazhi Hu: So, under the driving force of such a similar scene, large-scale transportation from one-way traffic to three-way traffic will be shown. It will show a huge scale. I would plan to operate an air taxi, and make it a real scenario sometime this year. So the air taxi as a transportation vehicle that people can use can transform their regular transportation from one dimension to three dimensions. And this will greatly enhance the total market size of the vehicle. Sorry, I forgot to say that I am the CEO of Ehang Holdings, Huazhi Hu. I will make up for it later.

First for our economy. Thank you.

Yes regarding to the.

Operating expenses, which components of our sales and marketing.

G&A and also research and development.

As we ramp up our revenue ramp of our revenue.

I would say that the fourth quarter 2003, or even though we have rich revenue of 56 million R&D was that year on year growth rate of about 250%.

The revenue growth as such we.

Our adjusted operating expenses.

Our fourth quarter last year.

113% of total revenue compared to one year ago.

Huazhi Hu: Thank you, everyone. OK. Thank you very much for the answer from our CEO, Mr. Hu. And so I have one last question about our expenses. So as a company grows, the company's sales and operations costs will be managed more precisely. So would you mind sharing more details regarding the expenses in the future? That's for our comments.

Adjusted operating expenses was 466% of revenue. So you can see the rapid drop off opex.

Due to rapid increase in our revenue.

Sure.

We believe that our growth on the revenue will continue to.

Ning Yang: Thank you. Regarding operating expenses, which are composed of sales and marketing, G&A, and also research and development, as we ramp up our revenue, you can see that post-quarter 2003, for example, we have a rich revenue of 56 million RMB, with a year-on-year growth rate of 250%. So, when revenue grows at such a speed, our adjusted operating expenses at post-quarter last year were 113% of total revenue. That compared to one year ago, our adjusted operating expenses were 466% of revenue.

To grow at a very high <unk>.

Australia in the next several years, so we hope that the.

We can manage that.

Adjusted operating expenses in the year.

Hi, it's Ralph.

Currently 113% of revenue dropped to about 40% of total revenue in three years' time.

Thank you.

Okay. Okay. Thank you very much for your three and thanks to all of your company.

How low ethylene economy in China.

Fair enough.

That's my question and thank you all of you and thank.

Ning Yang: So, you can see the rapid drop of RPEX due to a rapid increase in our revenue. We believe that our growth on revenue will continue to grow at a very high rate, go straight, in the next several years. So we hope that the... we can manage that our adjusted operating expenses in three-year time drop from currently 113 percent of revenue to about 40 percent of total revenue in three-year time. Thank you. Okay, okay.

Thank you.

We will now take the next question.

Coming from the line of Jin sang from Goldman Sachs. Please go ahead.

Thank you for taking my question.

So.

Hong has announced the launch of <unk> and operate operation demonstration center roles Shenzhen Goldman in December. So my question is do we expect to see any revenues from.

Rongyuan: Thank you very much for your answer and thank you for all of your company that will help us the low equity economy in China's development in the future. So that's my whole question and thank you all of you and have a nice weekend. Thank you. Thank you. We will now take the next question. Coming from the line of Ting Song from Goldman Sachs, please go ahead.

Julie and operation this year.

Right.

Michelle's revenues from shipments of <unk>.

<unk>. Thank you.

Mr Hu mentioned earlier.

<unk> planned to kick off the commercial operations this year.

With me.

Okay.

Thank you.

Ting Song: Thank you for taking my question. So Ehang has announced the launch of the UAM Operation Demonstration Center with the Shenzhen government in December. So my question is, do we expect to see any revenues from UAM operations this year besides the sales revenues from the shipment of EH216? Yes, as Mr. Hu mentioned earlier, the company plans to kick off commercial operations this year with the Pioneer Aviation A1A program, which is coming to the United States in March. Therefore, we can expect a number of operations to exit the service area, but they may not be significant this year.

Yeah.

Goodbye.

Operator.

Great.

But it may not be significant this year.

In the current in the initial stage.

The majority of our revenue will still come informed ourselves.

Our Egypt Jordan Syria.

For the time being and looking forward as we expand brand services through more areas recurring revenue such as the operational revenues will grow gradually so we can tap the receiving.

We have a cab receiving orders.

Domestic and overseas and we also received a lot of requests from our customers not to form a joint venture for what the future operation. So we expect that.

Ning Yang: In the current initial stage, the majority of our revenue is still coming from the sales of our EH216 series for the time being. Looking forward, as we expand flight services to more areas, recurring revenue, such as operational revenues, will grow gradually. So we can have the receiving, we have a cap on receiving orders, you know, domestic and overseas. And we also receive a lot of requests from our customers not to form a joint venture for the future operation.

Our next year and going forward.

Revenue coming out of.

Ratio will gradually increase the percentage of our total revenue.

Okay.

Thank you.

Another question is about overstatement osh revenue side fee.

The company has a partnership with a partner with overseas companies in Dubai and also.

It's from government and European country.

Ning Yang: So we expect that next year and going forward, the revenue coming out from operations will gradually increase the percentage of our total revenue. Thank you. Thank you. Another question is about overseas revenues.

Do we expect ending 12 glass in overseas market.

Next year. Thank you.

Yes, after we obtain PC.

Also we received a very strong demand obviously market, yes, we have announced that we have.

Ting Song: So I see the company has a partnership with a partner with overseas companies in Dubai and also some governments in European countries. So do we expect any progress in the overseas market this year or next year? Yes, after we obtained TC, we also received very strong demand from overseas markets. Yes, we have announced that we have a form of strategic partnership and have also received orders from UAE customers. We noticed that they intend to purchase 100 units, and we actually start to deliver the first batch in the first quarter this year. As of, for example, the fourth quarter last year, we also sold our product 216 to many places like Colombia, Saudi Arabia, and Qatar. So for, and we also perform our drone light shows in Japan and Spain. So in the fourth quarter last year, the revenue derived from overseas markets was 26% of our total revenues.

<unk>.

Strategic.

Relationship and also received orders or UAE customers when Russia.

We intend to repurchase 100 units.

And actually we start to deliver the first batch in first quarter of this year.

For example as of fourth.

Fourth quarter last year, we also.

Our prana two I'd say, it's too many places like <unk>.

Colombia, Saudi Arabia, and Qatar, so or and also perform our drawn light show in Japan and spend during the first quarter last year. The revenue derived from obviously market was 20, 26%.

Of our total revenues.

This year, we are also.

We expect there will be.

But a good amount of our revenue will be coming out of the three markets.

Thank you.

Okay.

Ning Yang: And this year, we also expect that a fairly good amount of revenue will come out from overseas markets. Thank you. We will now take the next question. From the line of Yu Chen from Haitong Securities, please go ahead. Thank you, management. I have two questions. And the first?

Thank you.

We will now take the next question.

From the line of <unk> Chen from <unk> Securities. Please go ahead.

Okay. Thank you management.

Two questions the first one.

Previously, we would like to know.

Congrats regarding the OLED AC.

Yu Chen: Now who would like to know the details regarding the overseas AP uptake. We need to enter the overseas market, we think, to obtain the benefits of the Overseas ASEAN Framework. 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 VQ-30. That's two questions.

Ah patients.

Q into the market.

And I guess to obtain the.

Uh huh.

B C H E.

And the second one is about our production capacity.

We would like to note that the.

Regarding Q1.

Sure.

Following senior ethanol listed.

Ning Yang: Thank you. Thank you. Yes, regarding overseas TCs, 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 were in, we rely on our local partner to obtain the local TC. So, have you already obtained the TC from CAC? So when we apply for the overseas TC that we can through a streamlined process, we call validation of the TC, validation of Thai certificate with the overseas aviation authorities.

Vertical.

Judy.

That's your question. Thank you.

Okay.

Yes regarding to OLS BTC, we have as I mentioned earlier, we have seen strong demand from overseas market, especially in the middle East.

South Africa, and ASEAN countries and.

So those are places that we well.

Rely on our.

Our local comment to obtain that local PC.

Javier already up turn the TV on CRE.

When we apply the overview.

For a streamlined process, we call validation of their.

Patient type certificate.

B oversee aviation authorities and this is expected to be simplified procedure.

Ning Yang: And this is expected to be a simplified procedure. Consequently, this approach enables us to assess market entry and expansion in these countries. And in terms of orders and 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, the government and customers commit to pre-orders or orders or 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 increases, then they will acquire additional products. So the favorable policies surrounding the low-eligibility economy have provided us with an attractive, environmentally friendly growth.

Consequently, this approach enable us to expedite market entry and expansion in these countries.

And in terms of the.

The order and the production.

<unk>.

We're currently receiving a substantial number of odors, and preorders, which will be fulfilled reporting to our customers' specific requirements.

And typically about the government and customers.

Customers come in but commit to preorders or customers.

Sure.

Our intention of older for example up to 100 units.

With an initial purchase of frankly.

Flanker 10 units for trial operations at local sites.

As their operations to expand and demand increase that they will acquire additional products.

So the favorable policies surrounding the lower outage economy.

Provide us attractive.

Ning Yang: So consequently, we anticipate a substantial increase in delivery volume throughout 2024. For the first quarter, we gave our guidance that 58 million slightly increased from a quarter of a 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 to that we have seen very strong demand for orders for this year.

Environmental growth so.

Consequently, we anticipate a substantial increase in delivery volume throughout 2024.

First quarter, we have gave our guidance that $58 million slightly increased from a.

Quarter over quarter, because the first quarter as the Chinese new year typically there is a known location data.

In the quarter.

But so far.

Look forward, but we have seen very strong demand.

Ning Yang: Currently, our production in Yunfu facility has an annual capacity of 600 units Yibitou, and we are exploring opportunities to establish other facilities to further support our production capacities as market demand grows. Thank you. Thank you for answering. Have a nice week.

Orders.

For this year.

Currently our production in April facility.

And our annual capacity of 600 units.

EBITA.

<unk>.

Exploring opportunities to establish other facilities will further support our production capacities.

As market expand as market demand growth.

Thank you.

Operator: 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.

Thank you for answering have a nice weekend.

Thank you Sarah.

As a reminder, if you wish to ask a question. Please press star one one on your telephone and wait for your name to be announced that star one on one if you wish to ask a question.

Operator: We will now take the next question. From the line of Laura Lee from Deutsche Bank US, please go ahead. Hey, thank you for taking my question, and congratulations on the robust quarter. So my first question is about the VT30, our new product. You mentioned you're already preparing for the testing and the certification now. So are there any specifications you can talk about now?

Okay.

We will now take the next question.

From the line of Laura Lee from Deutsche Bank. Please go ahead.

Hey.

Thank you for taking my question and congratulations on the robust quarter. So.

So my first question is about the <unk>.

<unk> New products. You mentioned you are preparing for the passing in communications now so are there any specs you can talk about now and.

Laura Lee: And do you expect the client base will be similar to the EH216, or will the new product kind of bring us more applications now? Thank you. Okay, I will translate your question to our CEO, who will take your question. The first question is about the progress of VG30, and the difference between its operating environment and No.1, No.2, and No.6. Thank you. I'm Huazhi, the CEO. In fact, we have been doing a lot of research and development in the process of selecting VG30, and it took off a few years ago. Yeah, actually, we have been doing the R&D work for the VT-30 during our certification for the past few years, and we have done some internal testing slides. But for urban air traffic, the air ambulance in the city should be the most powerful. This is a characteristic of China.

Do you expect elective client base will be similar to the H Q1, six or the new product will kind of bring us more applications now.

Thank you.

Yes.

Okay I will translate your question to our CEO will take your questions I think deeper into Asia by Sallie Mae.

I think Shanghai auto Davita.

Okay.

Sure.

Thanks.

So it is all inside she said.

Womens chaff and deal with 101 in Europe and broken out again.

Okay, ladies and gentlemen.

Yeah Julien June shortly.

Yeah.

Actually we are doing R&D work or the vd, Turkey, joining our certification in the past.

And we have done that.

Internal testing right.

Sure.

Hunter coding Jos Carlos.

I would say the political maturity investors as well.

You put it.

And what attracted polyethylene ethylene out of the Aercap unique within the urban area is the most.

Traffic came out so much.

Right.

Sure sure.

Huazhi Hu: And for the traffic volume, as we know, the air taxi within the urban area is the most, you know, the traffic amount. EH216 Yeah, that's why we're doing the certification for EH216, this type of model. Now we have completed all the configuration design and internal testing for the VT30. And this year, we'll put more effort into the, you know, the testing for the VT-30, and we will release more videos about the flight. Actually, the VT-30 will do a lot of practical flights, and our CEO personally has taken the flight within the VT-30. It's a very stable flight. So, including my flight video, I will provide it to you in the future.

Yes, that's why I like Green Dot certification.

Yes to Asics.

On the model.

Ladies and gentlemen.

What are you doing so.

So.

Yes, no question.

And now we have completed all the.

Configuration design and internal testing or the <unk> the enrollment there.

Good job on Java, but thats supposed to redo.

Okay great.

Great harm brought our 80000 investors.

And the synergies with <unk>.

Now I'll lay down by that amount, we decided about goodwill balance sheets.

From a rent agenda digital work John block.

It is now.

We don't Gamble redevelopment casual.

Hello.

And in this year, we'll offer more efforts into that.

Testing for the <unk> 13 annual will release more video is all.

About the flight acclimated.

Well do a lot of practical flight.

Our CEO personally.

Take the life within.

Ladies and Turkey is a very unstable so either one or both of our water our favorite children, but downhill.

Huazhi Hu: And we will choose a more appropriate time this year to test the VT-30, and 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. So Ehang, 216 and VT-30, these two models basically cover all the applications of China's low-altitude economy and low-altitude travel. This is the main thing Ehang needs to do. So the typical way, the EHAM 216 and the VT30 almost cover all the, you know, the application scenarios for urban air mobility. That's why these two models are our main products. The EHAM 216 has the most data on unmanned aerial vehicles in the world.

We've actually now if you go into that.

Peter or monthly that demand.

Sure.

Yeah, I'm not sure if the deadline.

The difference is as strong today.

And later, we'll go release that our seals the deal.

Maybe 30 and what that.

That means.

PC applications or within this year.

I also leave your time is about lithium hauck <unk>.

<unk> found him dial up June quarter.

Is it equaled into decomposing best travel.

Yes.

Okay.

Typically you have to run six nanometers almost covers all the the application and now will.

Florida Urban Air mobility, that's why.

These two models our men.

Thank you operator.

The word cash flow they can see that the ESP.

Huazhi Hu: So our VT30 will also make a lot of progress. We will show you the progress of VT30 very soon. Yeah, we have accumulated a lot of, almost all the slide data for EH216, and soon we will release more updates and progress for the BT30. Thank you. Okay, thank you so much for the color.

Yes, I don't know.

Okay.

It is agency that she's odyssey's without.

Ladies and gentlemen.

Moving on to that so you can triangulate on that come out.

We did that.

I'll do that.

Yes, we have accumulated a lot of Oh.

Almost.

Most flight data.

Iain to Asics and Super wholesale.

We need more update in progress for the BT <unk>.

Okay.

Okay. Thank.

Laura Lee: 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?

Thank you so much for the color and my second question is about.

As you mentioned you recently reached a cooperation agreement with the GEC group.

Could you give more details <unk> like how does it work, where you like surety R&D or manufacture collectively or.

Laura Lee: Will you like to share the R&D or manufacture collectively or not? What kind of support and preparation do you provide to each other? The second question is, is there any information about cooperation with Guangxi? Okay, first of all, China's low-income economy has a very strong policy direction, and local governments are actively cooperating with us. And there is a strong, durable policy and trend in China about the low altitude economy.

Like what kind of support or the protection.

Provide to each other.

Okay.

Yes, Glenn.

<unk> also already and we are comfortable with it.

Okay.

So again these are there for <unk>.

We continue to use the appointment that is appealing to us installed base out there.

On the channel.

Okay <unk>.

Good luck.

There was a favorable policy and trained in China about the low <unk> to the economy.

Huazhi Hu: So under this background, a lot of governments are working with us. So we are very honored to be able to cooperate with such a large state-owned enterprise, especially Guangqi Group. So it's our pleasure to work with some state-owned enterprises, such as the DSE. First of all, the most obvious thing that we think of with Guangqi Group is that Guangqi will work with us on the production side of things. And we know that Guangqi is also making aircraft carriers, and Guangqi's aircraft carriers will be handed over to Ehang for development and production. Yeah, the first thing maybe that pops up in people's minds about our collaboration is mainly about production.

His background a lot of governments are working with us.

So you will know.

Yes, they have.

Great.

<unk> balance sheet.

Is it below collision parts you desire.

So it's a pleasure to work with some date on enterprises such as.

Well one of the contingent auto does that at least.

Yes.

<unk> here.

Shanghai Blemishes pinch hit one of them, particularly.

Yeah, that's what I meant.

Thanks, you too.

I think the quality of the payments you talk with Jojo.

Yes.

Yeah, No first thing maybe that pop up into People's mind is about our collaboration is mainly about the production and actually on the other hand, we will also help.

Huazhi Hu: And actually, on the other hand, we will also help the GAC group to develop their flying taxis product. So we have recently chosen a production location in Guangzhou with GAC, and we will establish an automated production line with it. Now we have selected a production site within Guangzhou, in cooperation with GAC Group, and we are going to establish an autonomous production line with GAC.

The GAC group.

The RFID tax detected.

<unk> got tissue umbrella.

The parties have whichever volatility doesn't do that.

Our monthly domestic gently.

Kelly.

Hello, how are you able to show that yet.

Now we have lacked at our production sites within Guangzhou.

And our cooperation with GAC group, and we're going to establish a autonomous production line with GDP.

Huazhi Hu: In this cooperation, we will further improve the production quality and quality of our aircraft, making flying safer. So, through our collaboration, we will continue to improve the product quality of our e-vato products and ensure the safety of our e-vato products. Thank you. Okay, thank you so much. Thank you. Given that time is limited, let me turn the call back to Ms. Anne for her closing remarks. Okay, thank you, operator. Thank you all for participating in today's call. If you have any further questions, please contact our firm by email or participate in our following events through the calendar information provided on our website. We appreciate your interest and look forward to our next call. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

That's it.

No, but they did a patient from a purely out.

Sure.

With <unk> now.

Now facing.

So through our collaboration with <unk> continuing to improve the product quality.

And to ensure that.

In safety our of our either okay.

Thank you.

Okay. Thank you so much.

On the walls.

Thank you.

Even the time is limited let me turn the call back to Ms. Ann for closing remarks.

Okay. Thank you operator, thank you all for participating on today's call. If you have any further questions. Please contact our IR department that are participating are following investor events throughout the calendar information provided on our website and we are.

And your interest and look forward to our next earnings call. Thank you.

This concludes today's conference call. Thank you for participating you may now disconnect.

[music].

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