The EH216-S unmanned aerial vehicle system, the EH216-S unmanned aerial vehicle system, obtained the world's first unmanned eVTOL model certification on October 13, 2023. It is qualified for commercial operation in the Chinese market, and has a leading position and uniqueness in the industry. In addition to the domestic order reserves already announced by Yihang Intelligence, the company continued to receive inquiries and interest from the government and scenic spots after obtaining the model certification, and the prospects for future order delivery and revenue will continue to improve.

1. Low-altitude tourism policies are blowing frequently, and driverless manned eVTOL travel and tourism application scenarios will be the first to benefit:

1. Strong demand for tourism

Currently, the domestic low-altitude tourism market has a capacity of about 60 billion yuan, but it has not been effectively satisfied. There are more than 12,000 scenic spots in China, including 280 5A scenic spots and 3,720 4A scenic spots. The number and scale of scenic spots suitable for low-altitude tourism should not be underestimated.

2. Laws and regulations tend to improve. The “Interim Regulations on the Administration of Unmanned Aerial Vehicle Flight” will come into effect on January 1, 2024. Quarantined flights mentioned in the “Regulations” benefit the tourism industry in unregulated airspace.

3. Policy warmth continues to blow frequently

Recently, four departments, including the Ministry of Industry and Information Technology, the Ministry of Science and Technology, the Ministry of Finance, and the Civil Aviation Administration of China, issued the “Green Aviation Manufacturing Industry Development Outline (2023-2035)”, which mentions goals such as putting electric aviation aircraft into commercial use in 2025 and achieving pilot operation of eVTOLs, further verifying that the market and policy decisions have ushered in active catalysis. The above tourist attractions are basically distributed in non-urban suburban areas and meet the flight restrictions mentioned in the TC certification. Tourism itself means visiting great rivers and mountains all over the country. A flight with preconditions such as crowded areas/thunderstorms, windy weather/dark nights does not meet that definition in the first place.

2. Yihang's smart order reserve situation:

1. Domestic related orders for travel and sightseeing:

(1) Xi'an Air Investment's intended purchase order for 20 EH216-S aircraft;

(2) Purchase intentions for 25 EH216 aircraft in Jishou Dowzhai Scenic Area, Hunan, etc.;

(3) ST Western Region (SZ.300859) has purchased 10 EH216-S, and the operating scale for the next five years will not be less than 120;

(4) Strategic cooperation with Bao'an District of Shenzhen to build “Wings of the Bay Area” in Bao'an Happy Harbor - the world's first urban air traffic operation demonstration center. Shenzhen Boling Holding Group Co., Ltd. plans to purchase 100 EH216-S, of which 5 have already been delivered;

(5) Strategic cooperation with the Hefei Municipal Government to establish the East China Regional Headquarters will receive various support from the Hefei Municipal Government with a total value of 100 million US dollars, including coordination or promotion of purchase orders for no less than 100 EH216-S vehicles. The above orders are expected to be delivered gradually according to customer needs after the company obtains TC certification.

2. Some of Ehang Smart's overseas orders need to obtain relevant regulatory approval before delivery. Therefore, the delivery cycle is long, and customers purchase in batches and stages according to their needs.

(1) In 2016, Ehang Intelligence signed a long-term procurement contract with United Therapeutics (“UTHR”) for 15 years, and plans to purchase a total of 100 Eair intelligent unmanned aerial vehicles. UTHR is a high-tech company engaged in artificial organs. Currently, the company has delivered 5 EH216 aircraft. The UTHR team has set up a flight test site in Canada to conduct operational tests and performance flights related to the EH216 series. In the future, UTHR will continue to procure products including but not limited to the EH216 series from EH216 series in stages according to its own business development needs.

(2) In 2022, Eair Intelligence has successively received 100 EH216 pre-orders from Indonesian airline company Prestige Aviation and 50 EH216 series pre-orders from AirX, Japan's leading air traffic digital platform company. The former engages in high-end automobile agency business in Indonesia, while the latter engages in helicopter related operation services in Japan. Both customers are very optimistic about the application scenarios of the emerging eVTOL industry, so they procure leading aircraft products from Ehang Intelligence and promote them at local exhibitions and events to increase public interest and acceptance.

(3) In 2019, Yihang Intelligence signed a strategic cooperation agreement with DHL Sinotrans DHL on logistics transportation. The two sides still maintain communication on logistics express delivery and peer-to-peer delivery, and jointly explore possibilities and fields of further cooperation, hoping to provide customers with diversified drone commercial services in the future.

(4) Yihang Intelligence and AEROTREE Malaysia signed an order for 50 EH216 series unmanned aerial vehicles, including the EH216-S, EH216-L, and EH216-F, as well as 10 VT-30 long-range electric vertical take-off and landing aircraft. When an aircraft has obtained an airworthiness certificate in its country of manufacture, if the aircraft needs to be commercially operated or flown in another country, it usually needs to be airworthy abroad in accordance with a bilateral agreement with the target country. This means that the aircraft needs to meet the airworthiness standards and requirements of the target country and go through the target country's airworthiness certification process. This process is also called “verifying that the model is qualified”, referred to as VTC for short. The type certificate issued by the Civil Aviation Administration of China can provide a certification basis, shortening the airworthiness certification time of the product in the local country accordingly.