Developer of the autonomous air taxi and advanced air mobility (AAM) vehicle EH216S, EHang, has struck a long-term partnership with the Guangzhou Branch of the Agricultural Bank of China, bringing with it a credit line of nearly $150 million.
EHang said the agreement involves Guangzhou Branch of the Agricultural Bank of China providing a comprehensive range of banking services for its future air taxi and other AAM activities, including $149 million in “indicative credit facilities” as it works toward launching services. The deal with the Guangzhou Branch – ranked solidly within the world’s top 10 commercial banks in most lists – is intended to secure sufficient financing for EHang’s research and development, testing, certification, manufacturing, sales, and operation of the EH216S for passenger transportation.
Addition of that sizeable financial ballast may help quell occasional jitters markets and observers have experienced about EHang’s ability to bring the EH216S air taxi to market in a timely fashion, and broaden its AAM deployment beyond the company’s domestic China market.
EHang was among the first next -generation aircraft developers to go public through a 2019 flotation on Nasdaq. Its stock has since suffered the vagaries of investors in relatively young tech startups creating entirely new products and sectors – uncharted territory that by turns thrills and spooks markets with their lack of visibility.
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EHang has also occasionally fallen victim to short trading by funds skeptical about its ability to deliver aicraft and services as promised, or distrusting the veracity of the company’s accounts. Indeed, as a growth-dependent startup with no income and a decent store of debt, EHang has been particularly vulnerable to pessimists doubting its ability to finance full development of the EH216 two-passenger air taxi, and launch AAM services in time to generate profits.
Some degree of anti-China sentiment gripping the US may play into that, however, since its ledgers don’t look all that concerning.
With a market capitalization of $1.4 billion, EHang has accumulated $4.75 billion in debt – nearly double the amount of a year ago. However, it also boasts $53 billion in cash that far offsets those liabilities, along with the new $149 million in credit from Guangzhou Branch of the Agricultural Bank of China. That will give the company more flexibility to finance loans that will soon mature, and push toward what EHang still hopes may be launch of limited commercial air taxi services in China later this year.
“We are very pleased to enter into a strategic partnership with ABC Guangzhou Branch,” said Huazhi Hu, EHang CEO. “The (credit) indicative facilities for cooperation will further diversify our funding channels and facilitate our financial flexibility and liquidity to support the continuous execution of our strategic plans and drive our growth momentum in the long run.”
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About the same time that EHang announced its banking partnership, the company revealed it had inked a deal Tianxingjian Cultural Tourism Investment and Development to purchase five EH216S air taxis for AAM use in the Hunan city of Jishou. That agreement contains a clause for potential sale of an additional 25 craft in the future.