On October 31, EHang filed an F1 form with the U.S. Securities and Exchange Commission to prepare its planned Initial Public Offering (IPO) before the end of 2019. The company is aiming to raise $100 million from the IPO.
The China-based group's published prospectus provides a fascinating insight into its prospects for fulfilling its ambitions to be one of the early leaders in bringing autonomous electric vertical takeoff and landing (eVTOL) aircraft into commercial service. To meet the SEC's transparency requirements, EHang has had to spell out risk factors associated with its business plan, and this exercise runs to 36 pages of detailed analysis of multiple risk factors. Many of these risks, such as uncertainty about the regulatory process and public acceptance of autonomous flight, would apply to any of EHang's rivals. Others are more specific to EHang's base in the People's Republic of China and the potential it to fall foul of the country's complex corporate legal requirements, such as the new Foreign Investment Law, which takes effect January 1, 2020. EHang Holdings Limited was established in December 2014 as a Cayman Islands-based offshore holding company specifically to facilitate offshore financing and listing.
In some respects, EHang's base in China is both a potential blessing and a curse. For instance, its close relationship with Chinese authorities has presented an opportunity for it to fast-track development work.
With the approval of the Civil Aviation Administration of China (CAAC), EHang earlier this year began some demonstration flights in its home city of Guangzhou and various other locations in China. In February, it filed an application with CAAC for operations in support of a customer’s logistics business under the Pilot Operations Rules (Interim) for Specific Unmanned Aircraft. The company said it is hopeful of getting this approval before year-end. In the SEC filing, EHang indicates that for now its main focus is on the Chinese market. It acknowledged that the regulatory environment for autonomous aircraft operations in the U.S. and Europe remains more complex for now. At the same time, it recognizes that Chinese legal requirements could complicate its status as an international public company.
The SEC filing also flags up the reality that the path to profitability in the urban air mobility market will require deep pockets, and it remains to be seen whether EHang's are sufficiently deep.