Hindenburg Research has just released a damning Report that states, in pertinent part, that “92+% of EHang’s claimed 1,300+ unit pre order book is based on ‘dead’ or ‘abandoned’ deals, failed partnerships, and newly-formed customer entities with no no discernible operations.”
The Report concludes that EHang seems to have a major credibility issue—whether it be by fluffing up its supposedly massive 1,300+ unit pre-order book (which looks to almost entirely be vapor) or seemingly brazenly misleading about early sales that bear all the hallmarks of fake revenue.
With its consistent underinvestment in R&D, EHang would need to rework its entire design to satisfy the safety needs for the use cases to which it aspires.
Trust is crucial in the aviation industry, both for investors and potential customers who are literally putting their lives at risk. We think the company is a fatal accident waiting to happen, both for investors and for passengers.
To read the full report with all its shocking revelations, click here.
Appendix A: EHang’s Type Certification Has Numerous Flight Restrictions That Weren’t Disclosed To Shareholders
According to the CAAC, EHang’s 216-S Type Certification lists numerous flight restrictions, including restrictions against flying at night, in inclement weather, above water, in densely populated areas, in the same airspace as other aircraft, and out of sight of a ground crew. [Pg. 4, Section F]
We obtained the Type Certification from the CAAC website and have translated the restrictions below.
EH216 Type Certification: Pg. 4, Section F – Unmanned Aircraft System Operational Limitations
- It is prohibited to operate under known or forecast weather conditions such as rain, snow, thunderstorms, icing, sandstorms, fog or other meteorological conditions.
- Operation is limited to daytime only.
- The aircraft can only fly in segregated airspace.
- The aircraft can only fly in sparsely populated areas.
- The aircraft must fly within the line of sight of the remote crew.
- The aircraft is prohibited from operating over water, including takeoff, landing, and forced landing.
Appendix B: EHang’s Reported Preorder Book
Calculating the size of EHang’s claimed preorder book is an imprecise task, as many of EHang’s customer relationships are labeled “conditional” or “indicative,” while others appear to denote vague “plans to purchase”.
EHang’s investor presentation claims 1,200+ international preorders and 100+ domestic orders. Based on EHang’s disclosures and press releases, the company claims 1,475 units at various levels of commitment, including 120 units that a company called Xiyu Tourism “intends to sign” (which we suspect is not counted in the company’s pre-orders).
Based on a review of EHang’s filings, we estimate that the company has around 1,355 pre-orders broken down in the following table:
When faced with allegations of suspicious product purchases by a conflicted party, EHang CEO Hu Huazhi seemingly chose to flagrantly mislead shareholders by claiming that the aircraft purchases were arm’s length.
EHang CEO Hu Huazhi (left) with Antuo Capital Executive Yifei Zhang (right). Source: Weibo blog and Nasdaq bell-ringing corroborating both individuals at the ceremony
EHang never seemed to collect the suspect revenue and has instead been aggressively impairing its receivables since 2020, writing down $15.2 million in receivables during a period where it only reported $15.3 million in revenue.
EHang’s insiders & key stakeholders haven’t reported a single stock purchase since inception. Instead they have reported selling more than 28 million shares, including share sales in September 2022 at prices as low as $4.21-$6.17, 59%-72% below current levels.
Source: Hindenburg Research