EHang, a Chinese company that is preparing to launch what could be the first autonomous air taxi service, filed Thursday with the U.S. Securities and Exchange Commission to go public on the Nasdaq with a $100 million offering of depository shares.
In January, EHang became the first company to receive approval from Chinese aviation regulators to establish a pilot air taxi service. EHang is planning an initial cross-river route in its home city of Guangzhou using a two-seat, 16-rotor autonomous passenger vehicle called the EHang 216. The company is hoping to expand to other major cities in China, where crushing traffic congestion makes the prospect of an aerial alternative tantalizing, as well as internationally.
While it’s been developing its passenger vehicles, EHang has made a name for itself, and some money, by staging light shows with hundreds of coordinated small drones, as well as selling surveillance drone systems. According to Derrick Xiong, a cofounder of the company and its chief marketing officer, the light shows have given EHang valuable experience that is helping it to perfect software that will be capable of coordinating a large network of passenger-carrying vehicles. “When we build a three-dimensional transport system, we need to be able to control thousands of aircraft,” he told Forbes in a phone conversation last month.
Xiong says that in addition to air taxi services, the company has customers in China who want to use its passenger drones for sightseeing in scenic locations in the mountains or on the coast, as well as interest in Norway to use them to transport workers and supplies to offshore oil platforms.
Another market: speedy delivery of organs for transplant. In 2016, the U.S. biotech company United Therapeutics said it would order up to 1,000 of EHang’s first passenger drone, the one-seat EHang 184, to transport manufactured lungs and other organs its developing.
United Therapeutics and its subsidiary Lung Biotechnology have pumped $17 million into EHang in return for 2.9 million preferred shares, EHang’s F-1 filing says. The company has already delivered 38 passenger drones to customers and has a backlog of 28 orders, according to the filing.
EHang disclosed a net loss of $5.5 million for the first six months of 2019, up 42% from the same period in 2018, on $4.7 million in revenue, off 15.6%, as a rise in sales in its passenger and cargo drone businesses was undercut by a decline in its light show and surveillance drone operations. The company has raised $52 million in venture capital from funds including GGV Capital and ZhenFund.
EHang was founded in 2014 by Xiong, who had just returned to China after earning an MBA at Duke, and CEO Huazhi Hu, a software developer who had built an emergency dispatch system for the Beijing Olympics.
The EHang 216, which the company is manufacturing in Austria in collaboration with FACC, a maker of composite airframe parts, has a range of roughly 10 miles and a top speed of 99 mph. The company says it has safely conducted over 2,000 flight tests of the 216 and the 184, including in high winds.
Since June 2018, EHang has been operating a pilot drone food delivery service in Guangzhou the supermarket chain Yonghui within a roughly 6-mile radius of a store in the center of the city. Xiong said that the service had successfully completed 30,000 deliveries to distribution points where customers come to pick up their order.
It’s also launched a drone cargo delivery service with DHL-Sinotrans between an industrial park in Guangzhou and a DHL hub 5 miles away in Dongguan.
The share offering is being underwritten by Morgan Stanley, Credit Suisse, Needham & Co. and Tiger Brokers.