The electric vertical-takeoff-and-landing (eVTOL) vehicle developer is defending itself

As valuations skyrocket for urban air mobility startups, a dispute between China’s EHang and an activist short seller has underlined the challenges of investing during a nascent industry chasing a market that doesn't yet exist.

EHang rebuts allegations of sham sales

Investors invited to look at eVTOL factory

The electric vertical-takeoff-and-landing (eVTOL) vehicle developer is defending itself against a highly critical investigative report by short-biased due-diligence company Wolfpack Research. The report alleges EHang “is an elaborate stock promotion, built on largely fabricated revenues supported sham sales.”

Most of the allegations center on sales to major customer Shanghai Kunxiang Intelligent Technology (Kunxiang), but Wolfpack also disputed EHang’s claims of progress with production and described its autonomous two-seat EH216 multicopter eVTOL as “majorly flawed” and “inherently dangerous.”

EHang responded by defending its decision to specialise in autonomous vehicles, detailing its R&D expenditures and property (IP) portfolio, providing an update on completion of its new production facility in Guangzhou and releasing details of its sales contracts with Kunxiang.

The startup’s share price, which peaked at $124 on Feb. 12 amid reports that Volkswagen was watching partnering to develop an urban air taxi in China, fell 60% when the Wolfpack report was released. Its market capitalisation , which had soared above $6 billion, was hovering around $2.5 billion by Feb. 26.

Founded in 2014, EHang was the primary eVTOL developer to travel public, through an initial public offering in December 2019, and a few of its troubles are often attributed to its inexperience as a publicly traded company. But a number of Wolfpack’s accusations echo concerns raised by others within the UAM industry.

Rival eVTOL manufacturers like Wisk, which is similarly developing a self-flying two-seat air taxi, have expressed concern that EHang could also be moving too fast, helped by a supportive regulator, the Civil Aviation Administration of China, which is using drone regulations to approve EH216 trial operations.

Perhaps more damaging for EHang, Wolfpack’s report quotes critical comments by Mark Moore, the previous NASA eVTOL pioneer who co-founded Uber’s Elevate aerial ride-sharing initiative. Criticizing the security and quality of the EH216, Moore says the configuration “is inherently not safe” and expresses “significant reservations” about whether the eVTOL are often certified to hold passengers within the U.S.

Calling on EHang to play by an equivalent rules as other leaders within the eVTOL industry, including fully disclosing accidents and providing greater accuracy in reporting progress, Moore tells Aviation Week: “I have significant concerns about their concept, their component technologies, their testing operations, and their attempts to suggest publicly that they're much further along than they really are.”

Responding to the Wolfpack report, EHang says its decision to develop autonomous vehicles is predicated on safety and efficiency and is vital to bringing air mobility to the mass population. Defending its IP portfolio, the corporate listed core technologies it's developed in areas like redundant automatic control and battery management also as propulsion, mission management and collision avoidance.

Rebutting the accusation of “anemic” R&D spending, EHang says it's invested $37 million since 2014. this is often low compared with Western eVTOL developers. “We don't have a culture of burning money for white elephant money-pit projects. Every penny counts,” says EHang founder Huazhi Hu. “Only snobs will overestimate the facility of cash but underestimate the facility of will of self-devoting engineers.”

Facing lawsuits from investors, EHang has launched action against Wolfpack Research. The startup also has scheduled an investor day for late June at its new 600-unit-a-year eVTOL production facility in Yunfu, China, which is planned to return on line within the second quarter. Demonstrating solid progress are going to be essential for EHang because it seeks to rebuild investor confidence.

The electric vertical-takeoff-and-landing (eVTOL) vehicle developer is defending itself

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