2.39 million "air taxis" are on sale, is the low-altitude economy still hype? Which sectors will benefit the fastest?
Image source: Visual China
For only 2.39 million yuan, you can fly to work.
On March 18, eVTOL (electric Vertical Take-off and Landing) manufacturer EHang launched the world's first domestically developed "air taxi" with airworthiness certification on the Taobao platform - EHang EH216-S unmanned manned aircraft, which has two seats inside, adopts multi-rotor technology route, pure electric drive, and has a maximum flight speed of 130 km/ hours, the maximum range is 30 kilometers, and the price is 2.39 million yuan.
However, the EH216-S is currently on pre-order, and will be shipped from Yunfu City, Guangdong Province within 30 days after the order is placed, and the quantity sold is shown as "0". According to industry analysis, the main purpose of EHang's aircraft sales on Taobao is to publicize and enhance public awareness, and the marketing and publicity to the public will be of great help to the commercialization progress of its industry.
Image source: Taobao screenshot
The concept of "low-altitude economy" has been popular in the domestic market for a period of time, and this year's National People's Congress and the National People's Congress, "low-altitude economy" was written into the government work report for the first time, and as a "new growth engine". eVTOL is an important carrier for low-altitude economic development. In the broad sense of eVTOL, it covers all types of consumer drones, industrial drones, and new passenger and cargo transport aircraft, both unmanned and manned. A number of drone companies have also carried out test flight demonstrations this year, which has further boosted market enthusiasm.
In the secondary market, since March, the low-altitude economic concept stock Lihang Technology has risen by more than 80%, the vertical and horizontal shares have risen by more than 90%, and the shares of Wanfeng Aowei and Jindun have even risen by more than 110%.
This also attracted ridicule from many people, saying that it was a new concept of another round of harvesting leeks. What exactly is a low-altitude economy, is it just speculation at this stage? How far is the 2.39 million "air taxis" from our lives?
The low-altitude economy has been "grounded", and various places have rushed to become "cities in the sky"
Generally, we call the new economic form that integrates low-altitude aircraft and various industries around the airspace below 3,000 meters above true altitude as low-altitude economy, such as aircraft + agriculture, aircraft + fire fighting, aircraft + logistics, aircraft + tourism, etc. Among them, the development of the low-altitude economy in the field of agriculture is the fastest.
From the perspective of market structure, agriculture and forestry plant protection accounts for the highest proportion in the application of industrial drones in the mainland market, more than 30%. Compared with manual operations, plant protection drones are more efficient and convenient in sowing, fertilization, surveying and mapping, spraying pesticides, pest and disease monitoring, some studies say that in pesticide spraying operations, agricultural drones can save 90% of water consumption and 30%-50% of pesticide consumption, and the efficiency is 40 to 60 times that of manual work. And the operator does not need to be exposed to pesticides for a long time, which also ensures the safety of personnel. With the promotion of policies and the active participation of enterprises, plant protection drones have become the fastest growing category in the UAV market.
In 2014, the No. 1 document of the Central Committee clearly proposed to "strengthen the construction of agricultural aviation". At that time, drone companies were in a critical period of exploring the transformation from consumer to industrial applications. After the policy was issued, XAG Technology, which started from the model aircraft business, made up its mind to "All in" the research and development of agricultural plant protection machines, and got a $20 million Series A financing to become capital. In 2015, XAG released its first plant protection drone, the P20, and established XAG Agricultural Services, while its competitor DJI also announced its foray into agriculture in the same year and developed its first intelligent agricultural spraying control drone, the MG-1.
In 2017, the policy began to use "real money" to vigorously promote the application of drones in the agricultural field. The Ministry of Agriculture, the Ministry of Finance and the Civil Aviation Administration issued a notice, announcing the selection of Zhejiang, Anhui, Jiangxi, Hunan, Guangdong, Chongqing 6 provinces and cities to carry out plant protection drone subsidy pilot, the total amount of each pilot province is controlled within 10 million yuan, the subsidy amount of each product does not exceed 30% of the average market sales price of the product in 2017, and the maximum subsidy for a single machine does not exceed 30,000 yuan.
Since then, plant protection drones have been widely promoted. In the first year of the policy, 6 pilot provinces subsidized a total of 998 plant protection drones and completed the purchase subsidy of 15.88 million yuan, and the following year, the pilot provinces expanded to 17 provinces (autonomous regions and municipalities), completed the purchase subsidy of 38.6 million yuan and subsidized 2496 units, and by 2019, 20 provinces (autonomous regions and municipalities) have carried out purchase subsidy pilots. According to the statistics of local agricultural and rural departments and plant protection drone manufacturers, the coverage rate of drone agricultural spraying in many provinces in the east and central has exceeded 90%;China Digital Rural Development Report (2022)" shows that drone plant protection has reached 1.4 billion mu in 2022, equivalent to 70% of the total cultivated land area in the mainland.
There has also been a lot of progress in the commercialization of passenger eVTOLs, which is also a hot area today.
EHang is one of the fastest-commercializing companies in the industry. Previously, on February 27, Fengfei's self-developed eVTOL Sheng Shilong conducted its first public demonstration flight, simulating the travel scene from Shenzhen Shekou cruise home port to Zhuhai Jiuzhou Port Terminal, shortening the one-way ground drive from 2.5 to 3 hours to 20 minutes. According to Xie Jia, senior vice president of Fengfei, the cross-sea and cross-city flight uses a simulator instead of a real person, and the Shengshilong manned version is undergoing airworthiness certification related work, striving to obtain certification in 2026.
On March 8, the flying car Voyager X2 developed and produced by Xpeng Huitian, an ecological enterprise of Xpeng Motors, and GOVE, a flying car independently developed by Guangzhou Automobile Group, completed the attempt of low-altitude flight in the city on the same day. In addition, manufacturing giants such as large aircraft and automobiles, such as Airbus, Volkswagen, Geely, etc., are also actively deploying.
For short-distance commuting and intercity transportation, eVTOL is expected to replace helicopters and taxis. At the beginning of this year, China Southern Airlines General Aviation Co., Ltd. and eVTOL manufacturer Volant jointly released the "White Paper on the Application and Market of Passenger eVTOL", which discussed the economics of passenger eVTOL. According to the analysis of the route from Shanghai to Putuo Mountain, the total round-trip fee is 6,596 yuan based on 10% operating profit. At present, a typical 5-seater (passenger seat) twin-engine helicopter performs this task, and the round-trip fee is 94,000 yuan, and the luxury car is about 6,000 yuan.
In comparison, eVTOLs are as efficient as helicopters and 5.2 times more expensive than luxury cars, while eVTOLs are only 7% of helicopters and 1.09 times more expensive than luxury cars.
Image source: Deppon Research Institute
In addition, in terms of logistics and transportation, SF Express, as the first enterprise in China to obtain a drone operation (pilot) license, has been using its Fengyi Technology drone products to transport express delivery, and Meituan drone delivery also sent the first order in Shenzhen as early as 2021, as of November 2023, Meituan drone has opened 22 routes in 8 business districts in Shenzhen and other cities, and has completed more than 210,000 orders.
Today, there are cities and regions that have firmly grasped the low-altitude economy as an economic format and are ready to go. Last year, the Ministry of Industry and Information Technology and other four departments issued the "Green Aviation Manufacturing Industry Development Outline (2023~2035)", which proposed to encourage the Pearl River Delta, Yangtze River Delta, Bohai Rim, Chengdu-Chongqing and other advantageous areas to set up low-altitude economic demonstration zones. Among them, the Pearl River Delta region has developed rapidly, the region has developed economy, and the integration of urban agglomerations has brought high-density exchanges, and the demand for consumption, transportation, and logistics is strong. The improvement of low-altitude flight supporting policies and systems, as well as a good UAV industry foundation, have also boosted the acceleration of industrial development.
Taking Shenzhen as an example, in 2017, Shenzhen was approved by the National Development and Reform Commission to become the first batch of general aviation industry comprehensive demonstration zone;In 2019, the "Interim Measures for the Management of Civil Micro Light UAVs in Shenzhen" was released, delineating the airspace suitable for micro light UAVs. In 2023, the "low-altitude economy" will be written into the work report of the Shenzhen Municipal Government for the first time.
In terms of the construction of supporting systems, according to the statistics of the Shenzhen Municipal Transportation Bureau, in 2023, Shenzhen will open 77 new drone routes, with a total of 156 routes, complete more than 600,000 cargo drone flights, and build 73 new drone take-off and landing points.
On the industrial basis, by the end of 2023, there will be more than 1,700 drone companies in Shenzhen, with an annual output value of 96 billion yuan, and it has become the world's most important production base for civilian drones. Autel Aviation, DJI, Meituan UAV, CITIC Haizhi, Fengyi Technology and other UAV R&D and manufacturing companies and low-altitude application enterprises are stationed in Shenzhen, and the world-renowned eVTOL R&D manufacturer Lilium of Germany also announced that it will land its Chinese headquarters in Shenzhen.
Guangdong and Hefei, a "dark horse city of science and technology", have similar development conditions, and both places are actively improving supporting policies and infrastructure, guiding relevant industrial chain enterprises to settle in the local area, and seizing the "emerging growth point" of low-altitude economy.
It can be seen that the commercial value of the low-altitude economy has been basically verified, and there is already a suitable soil for cultivation and development in the mainland.
"Crossing the river by feeling the stones", the bottleneck of the low-altitude economy needs to be solved
Nowadays, the use of light and small UAVs flying in 100-meter airspace has gradually matured, as mentioned above, plant protection UAVs, and manned and cargo eVTOL for transportation is still in the exploration stage, and the current endurance is the biggest technical difficulty in the short-term large-scale landing of this type of eVTOL.
There are two main types of eVTOL new energy power systems: pure electric propulsion and hybrid electric propulsion. At present, more than 60% of the projects on the market are pure electric technology. Pure electricity has a lower cost, low structural complexity, and a faster response time to the system than fuel-powered machinery.
However, the cost of pure electric propulsion is short battery life. Generally, the range of pure electric eVTOL is less than 100km, and after the improvement of the propulsion mode, some models also have a longer endurance, such as Fengfei's Shengshilong No. 4 aircraft with a range of 250.3km. And the range of more than 300km is basically the world of hybrid electricity.
Image source: Tianfeng Securities
This is mainly limited by the energy density of the battery. At present, the energy density of mainstream ternary lithium batteries is about 250Wh/kg, and the energy density of lithium iron phosphate batteries is basically 180Wh/kg, which is much lower than the energy density of gasoline at 12000Wh/kg. Therefore, improving battery energy density is very important to break through the endurance of eVTOL, and industry insiders say that this determines whether the eVTOL market can achieve a breakthrough from 1 to 100. The Ministry of Industry and Information Technology and other four ministries and commissions also proposed in the "Green Aviation Manufacturing Industry Development Outline (2023-2035)" released in October last year that 400Wh/kg aviation lithium battery products to meet the needs of electric aircraft use and airworthiness requirements will be put into mass production, and 500Wh/kg products will be verified on a small scale.
Many battery companies and electric aircraft companies are trying to develop power batteries suitable for aircraft. In April 2023, CATL released an innovative and cutting-edge battery technology, the condensed matter battery, with a single energy density of up to 500Wh/kg, and recently disclosed that it is working with partners to develop a civil electric manned aircraft project.
In May 2023, Zhengli New Energy launched a power battery with an energy density of 320Wh/kg for the eVTOL market, and the company has carried out in-depth cooperation with many leading electric aircraft companies at home and abroad and carried out aviation airworthiness certification.
At the end of last year, Gotion Hi-Tech signed a strategic cooperation agreement with EHang to jointly customize and develop EHang's unmanned eVTOL products, and tailor eVTOL power battery solutions that meet the airworthiness standards of the Civil Aviation Administration of China and meet the airworthiness standards of the Civil Aviation Administration of China.
In January this year, Lishen Battery launched a new generation of 402Wh/kg semi-solid-state battery, which the company said has both high energy density and high safety performance, and can be applied to eVTOL and other fields. Previously, Lishen Battery has realized the application of 325Wh/kg batteries with energy density to eVTOL.
The imperfect supporting system is also one of the obstacles to the development of low-altitude economy. The first is UAM (urban air mobility) management, Wei Jinwu, vice president of China Unicom Research Institute, said that the regulatory problem is the core bottleneck of the current low-altitude economic development, he believes that low-altitude intelligent networking is an inevitable requirement for the high-quality development of low-altitude economy, facing large-scale, large-scale, intensive application needs, the establishment of a unique identification code, a complete management system for equipment registration is imminent.
The second is the construction of low-altitude infrastructure, including ground infrastructure, low-altitude public routes, operational infrastructure, etc. Huatai Securities pointed out that UAM operation must be kept within the effective range of communication, navigation and surveillance, and in view of the characteristics of low-altitude airspace management on the mainland, through the combination of Beidou and 5G technology, the construction of air traffic service network is a beneficial technical support idea and means, while ADS-B monitoring technology can obtain eVTOL all-round information in real time, and accurately improve the safety of low-altitude airspace.
Airworthiness certification and regulatory standards also need to be improved. eVTOL is a new type of aircraft, lacking ready-made airworthiness certification standards, aircraft companies can only "cross the river by feeling the stones", which is related to the safety of passengers, and the civil aviation regulatory authorities must also carefully and cautiously formulate relevant standards and rules while exploring.
He Tianxing, Vice President of EHang, previously revealed that the process of obtaining airworthiness certification is the biggest challenge in the process of aircraft development, and the Civil Aviation Administration of China has formulated special conditions for each project in accordance with the principle of "one thing, one discussion".
Therefore, the R&D and certification cycle of eVTOL at this stage is long. In order for a civil aircraft to be put into production and operation, it is necessary to obtain a Type Certificate (TC), a Production License (PC) and an Airworthiness Certificate (AC), which respectively represent that the product design complies with the corresponding airworthiness regulations, the manufacturer has the ability to repeatedly manufacture the qualified aircraft, and the aircraft has the ability to put into operation.
Image source: Deppon Research Institute
EHang's EH216-S aircraft project was established in 2013 and lasted for ten years, and it was not until the fourth quarter of 2023 that it obtained the Type Certificate (TC) and Airworthiness Certificate (AC). Hu Huazhi, founder, chairman and CEO of EHang, said in a recent earnings call that the certification of EH216-S production license (PC) has entered the final stage and is expected to be obtained in the near future.
In addition, in the urban environment, eVTOL also has a lack of sensitivity, imperfect obstacle avoidance technology, and is difficult to cope with technical problems such as tall buildings, bird flocks, and changing local meteorological conditions. The verification of safety and reliability also requires the accumulation of a large amount of operational data.
Hu Huazhi has said that at this stage, the technology about eVTOL has been relatively mature, and gaining public recognition is the prospect of the development of this industry, and the premise of public recognition is to conduct as many manned test flights as possible to prove the reliability and safety of the product and dispel everyone's doubts and worries. "Public trust will be the biggest driving force for the faster implementation of urban air mobility," Hu said.
Low-altitude economic concept stocks have skyrocketed, which sectors will benefit the fastest?
Nowadays, the eVTOL track is in full swing. According to the "Low-altitude Economic Development Including Display" released by Qichacha, the number of low-altitude economy-related enterprises in the mainland will reach 8,800 in 2023, a year-on-year increase of 36.24%, and as of February this year, there are 69,600 low-altitude economy-related enterprises in the mainland. In 2023, 9 eVTOL companies, including Shishi Technology, Yufeng Future, Boundary Intelligent Control, Zero Gravity, Wofei Changkong, Yiweite and Dream Chasing Sky, will have accumulated public financing of more than hundreds of millions of yuan.
The low-altitude economy has a long industrial chain and a wide radiation area. It can be broadly divided into raw materials and parts, complete machine assembly, and low-altitude infrastructure (air traffic control, operation, maintenance, etc.). Nowadays, a more mature representative enterprise has grown in all links of the industrial chain.
Figure: Low-altitude economic industry chain
Most of these companies do not focus on the low-altitude economy, and eVTOL manufacturers are just one of their customers. At this stage, the demand is expected to grow significantly under the stimulation of the low-altitude economy is limited, first of all, the eVTOL companies standing in the "spotlight", the current eVTOL manufacturers have not yet entered the profitability stage, but the delivery volume and revenue of the head enterprises have increased, and the losses are also narrowing at the same time.
According to EHang's recently released financial report for the fourth quarter and full year of 2023, the company's total revenue in the fourth quarter of 2023 was 56.6 million yuan, a year-on-year increase of 260.9%, and the net loss was 72.5 million yuan, a year-on-year decrease of 34.2%. For the full year of 2023, the total revenue was 117.4 million yuan, a year-on-year increase of 165.0%, and the net loss was 302.3 million yuan, a year-on-year decrease of 8.2%. EHang's flagship EH216 series products sold and delivered 52 units in 2023, compared to 21 units in the same period last year. Among them, the official guide price of EH216-S in China is 2.39 million yuan/unit, and the overseas guide price is 410,000 US dollars/aircraft.
A number of domestic eVTOL companies are accelerating the commercialization process, A-share listed Wanfeng Aowei has completed the first flight of the diamond eDA40 pure electric aircraft, the company's products involve training aircraft, private consumption aircraft and other aircraft, according to the company's disclosure of its diamond series of products orders have been scheduled to 2025. On March 20, Shangluo Electronics introduced on the interactive platform that the company's shareholding of the Yiwei T prototype is being tested before the first flight as planned, and will be selected for the first flight in the near future; Wofei Changkong AE200, Yufeng Future Matrix1 and other models have entered the airworthiness certification stage, Fengfei Aviation V1500M aims to obtain airworthiness certification within this year, and the technology E20 and Volant VE25 X1 have submitted TC applications.
In addition, energy and materials are critical links in the eVTOL production process. In addition to the power batteries that have been applied to eVTOLs, energy companies have also cooperated with eVTOL manufacturers to develop better aviation battery products and start a technical war. For example, China Innovation Airlines has cooperated with Xpeng Motors to develop a cutting-edge 9 series of high-nickel/silicon system batteries suitable for low-altitude travel, Gotion Hi-Tech has signed a cooperation agreement with EHang to jointly develop power cells and battery packs, and CATL has also revealed that it is cooperating in the development of civil electric manned aircraft projects......
The development of the low-altitude economy will also stimulate the release of demand for composite materials. eVTOL has high requirements for lightweight, with the amount of composite materials about 70%, and the amount of carbon fiber accounting for more than 90% of composite materials. Carbon fiber is known as "black gold" in the industry, the weight is only 1/4 of steel, the strength is 5-8 times that of steel, and has the characteristics of high temperature resistance and corrosion resistance. The use of carbon fiber also greatly helps the eVTOL to reduce energy loss during flight and improve the range. Guangwei Composites, Seiko Technology, and Zhongfu Shenying are all major suppliers in this field.
According to Wind statistics, since March 2024, 18 concept stocks have risen by more than 30%, of which Jindun shares, Rice Information, Wanfeng Aowei and Zongheng shares have risen by more than 110%. During the same period, the financing funds bought 5.437 billion yuan of Jingjiawei, 4.489 billion yuan of Wanfeng Aowei, 3.121 billion yuan of Huali Chuangtong, and 2.087 billion yuan of CITIC Haizhi.
Chart: Major companies of A-share low-altitude economic concept Data as of March 20
The report by Marketsand Markets predicts that the global eVTOL market size will rise from $1.2 billion in 2023 to $23.4 billion in 2030, at a compound annual growth rate (CAGR) of 52%. According to the analysis, at present, all countries are actively developing the low-altitude economy, based on the mainland's policy side attaches great importance to the low-altitude economy, as well as the technology in the field of new energy vehicles as a foreshadowing, eVTOL will be a rare opportunity for the domestic aviation industry to overtake in corners. (This article was first published on the Titanium Media App, author: Li Jian)