Skepticism, legal action add drag to EHang’s air taxi launch effort

EHang continues to advance toward the introduction of air taxi services following the reception of the “Type Certificate” of its EH216-S electric vertical takeoff and landing (eVTOL) craft from China’s regulators, and most recently inaugurated its Urban Air Mobility (UAM) Operation Demonstration Center in Shenzhen’s Bao’an district. Yet despite – or perhaps because of – its continued progress, the startup’s US detractors appear bent on complicating its launch of passenger activity with repeated attacks.

This week, China-based EHang joined its various government and sector stakeholder partners in Bao’an to open the 4,600 square-meter UAM Center. Its wide range of air taxi operational features include a vertiport for the company’s EH216-S eVTOL, hangars, a command-and-control center, passenger waiting area, service center, and other facilities to enable future passenger flights. 

Opening of the demonstration center comes just three months after the EH216-S eVTOL received its “Type Certificate” from China’s aviation regulator – the first in the world for an air taxi. It also flows from the partnership EHang signed with Bao’an’s government in July to usher in initial sightseeing services in the area as soon as those are feasible. 

Though EHang has not announced a date for the launch of passenger flights, its certification gives it not only unmatchable bragging rights in the global sector, but potentially a big operational head start before US and European rivals can follow suit.

However, given the enormous national and worldwide economic stakes involved in nearing air taxi activity, it’s probably not surprising that efforts are afoot to clip EHang’s wings before its first eVTOL has gotten paying riders aloft. Both critics and skeptics of the company’s UAM accomplishments have been growing, and becoming more active and agressive.

Almost as soon as EHang announced its eVTOL’s certification, air taxi watchers began airing insinuations on social media that China – and its top-down government and regulation structure – may have facilitated the approval to assist the nation’s leading competitor. Those unsubstantiated remarks intimate vetting of the craft may not have used criteria for design, operational, systems, and safety categories that would be acceptable among the allegedly tighter standards in the US or Europe. 

Because of that, detractors have predicted the startup will largely be limited domestic trial air taxi activity, awaiting authorizations by what they say will be more demanding regulator scrutiny in other national airspaces. Those views have continued resounating online as a big, collective “meh” dismissing EHang’s precedent-setting eVTOL certification.

Were that not bad enough, publicly traded EHang is now under renewed legal attack by hostile observers on Wall Street. In the past that action has been led by hedge funds shorting the company’s stock, on claims the firm misled investors in both its accounting and business development announcements. 

Those revived allegations served as foundation for one class action lawsuit filed this week representing EHang shareholders who feel they were “adversely affected by alleged securities fraud between January 20, 2022 and November 6, 2023.” Topping those, the appeal to aggrieved parties notes, are statements EHang is said to have made about ongoing business with big US and UK firms that were purportedly terminated beforehand. 

It also states that announced contracts to buy its eVTOL air taxis were ascribed to clients “almost certainly not in a financial position to be able to afford their orders.”

In a similar move, San Francisco law firm Hagens Berman released an appeal to unhappy investors to join another class action suit it’s preparing against EHang. That includes the dramatic element of throwing doubt on the company’s air taxi “Type Certificate” in China, which it suspects will limit the eVTOL’s operation considerably more than let on.

“We are determining whether EHang hid flight restrictions that came with its highly touted certification issued by the Civil Aviation Administration of China,” said Reed Kathrein, the Hagens Berman partner leading the investigation. “We are also investigating whether the company lied to investors about its technology and book orders.” 

Earlier accusations by Wall Street critics have – it should again be noted – been loudest among hedge funds shorting EHang stock, notably activist Hindenburg Research. Those positions – by their very nature – give skeptics a financial incentive in the price of targeted shares tanking.

For that reason, many produce what can be skewed and ulterior motivated studies substantiating their doubts publicly, designed to send targeted stock prices downward. Even leading US air taxi startup Joby has come under repeated assaults by short traders.

EHang, for its part, has continually refuted past charges of misleading investors, and has yet to be found at fault by market or US government authorities, or those in Europe – with which it has been active in preparing future navigation systems. The company has not commented on the current suits being prepared.

Nevertheless, the media attention those attract, combined with continued murmuring about the credibility and scope of its eVTOL’s certification in China, is unwanted news for EHang as it takes additional steps toward air taxi launch. That negative grumbling also raises questions about when – or even whether – the UAM startup will be able to gain regulator approval for operation in the US and Europe, despite its world-first authorization in its domestic market.