Autonomous aerial vehicle (AAV) technology platform company EHang announced a strategic partnership with Qingdao West Coast New Area, one of China’s national new areas in Shandong province. This partnership comes with a binding US$10 million equity investment and a potential additional investment of US$10 million in the future.
Through this strategic partnership, EHang plans to develop its AAV business and the urban air mobility (UAM) industry and market in Qingdao with the goal to make Qingdao a world-class UAM application demonstration area. Additionally, EHang intends to establish a Northeast Asia regional headquarters as well as a national firefighting business center in Qingdao West Coast New Area. Qingdao West Coast New Area will facilitate the local governments’ applications of EHang’s full range of products while providing comprehensive support to the Company’s local business operations, sales and services, production and infrastructure construction, among other things.
As part of this partnership, Qingdao West Coast New Area’s investment arm will initially invest a total of US$10 million in the company through a private placement of newly issued Class A ordinary shares of the company. The purchase price for each Class A ordinary share is calculated based on the average of the closing sales prices of the Company’s American depositary shares (ADS) for the 30 trading days immediately preceding the signing of the share subscription agreement on 21 December. Each ADS represents two Class A ordinary shares of the company. The company intends to use the proceeds for its working capital and general corporate purposes.
The private placement is expected to close in the first quarter of 2023, subject to the receipt of certain investment-related regulatory approvals and clearances in China and the satisfaction of other customary closing conditions. Pending the closing of the private placement, the investor has made available to the company the RMB equivalent of the purchase price as interim funding at no cost, and the company intends to use such funds for its working capital and general corporate purposes until closing. The issuance of the Class A ordinary shares will be made in reliance on, and in compliance with Regulation S under the Securities Act of 1933, as amended.
In addition, Qingdao West Coast New Area and/or certain of its affiliates have indicated an interest in subscribing for additional Class A ordinary shares of the company for an aggregate purchase price of up to US$10 million on such terms and conditions (including subscription price) as the parties shall further discuss and agree upon in the future. However, because indications of interest are not binding agreements or commitments to purchase, Qingdao West Coast New Area and/or certain of its affiliates may determine to purchase fewer securities than they indicate an interest in purchasing or not to purchase any securities at all.
“EHang is a global leader in the eVTOL sector ranging from hardware to software. Its AAV products and fleet operations are fully in line with Qingdao’s development requirements for smart, eco-friendly and highly efficient UAM solutions. We believe it will be a ‘win-win’ cooperation with our joint efforts to advance high-end industries and aviation sectors in Qingdao and to create a beneficial UAM industrial ecosystem,” said Guilong Shi, Deputy Director of the Administrative Committee of Qingdao West Coast New Area.
Xin Fang, Chief Operating Officer of EHang, commented, “This strategic investment and business partnership is a significant milestone for EHang’s long-term growth. With more funding and strong product demands in the Qingdao local market, which is estimated to reach the level of RMB100 million in two years, EHang expects to accelerate the development of Qingdao’s AAV industry through new aviation business and low-altitude economy. We believe our cooperation will propel Qingdao to be a world-class, innovative UAM application demonstration area with comprehensive AAV industrial chains and commercial operations.”