EHang inks up to $20 million AAM equity deal with China ‘new area’

China-based advanced air mobility (AAM) aircraft manufacturer EHang has struck an investment deal worth up to $20 million with a Chinese state-backed urban and economic development zone, suggesting the publicly listed company needs more cash than it possesses to continue working toward certification and production.

EHang said it has inked a strategic partnership accord with Shandong province’s Qingdao West Coast New Area, which involves a binding $10 million capital stake in the AAM company, and the option for another $10 million purchase in the future. 

In addition to the ownership position, EHang said the agreement calls for it to develop Qingdao West Coast New Area as an international showcase of its AAM vehicles and services, and to establish a national center there for its aerial firefighting activities.

Qingdao West Coast New Area is one of China’s designated new urban districts that receive state or regional financing and other support to nurture various business and economic objectives. As such they are not dissimilar to the kinds of priority growth zones in Western nations, where mixes of targeted development programs, favorable tax policies, and publicly assisted partnership deals with private business encourage outside investment into prioritized growth activities.

Read: EHang stages EH216 UAM demo flights in Japan ahead of Expo 2025 

If the equity deal between EHang and Qingdao West Coast New Area clearly seeks to give both partners a stake in developing AAM activities in the zone – and using those to demonstrate their utility to urban areas around the world – it also apparently reflects the publicly traded company now requires more cash than it has to continue development. 

EHang was among the earliest AAM companies to float its stock. It did so in a 2019 initial public offering that raised $40 million, and valued the company at around $662 million. Both figures were significantly lower than the company’s projected targets. Since then its shares have been repeatedly been subjected to downward pressure among investor worries – especially after a hedge fund’s allegations of doctored accounts that EHang has energetically denied. 

Of course, other AAM rivals that went public have also weathered the vexing vagaries of market investors following their IPOs – including Joby, Archer, Lilium, Eve Air Mobility, and Volocopter. 

Meanwhile, EHang isn’t the only listed company seeking new infusions, with Eve also announcing it has just negotiated a new $92.5 million line of credit with Brazil’s National Development Bank. Yet to be seen is whether other rivals in the still developing sector similarly turn to new investment deals to bridge financing gaps to certification and launch, or if EHang and Eve wind up as outliers.