Chinese flying taxi maker EHang rejects US short seller’s fraud accusations over firm’s 1,300-unit pre-orders

EHang blamed the short seller’s ‘cursory and incomplete understanding’ of its industry for a report that contained ‘misinterpretation of information’

Hindenburg Research claimed that most of EHang’s over 1,300-unit pre-orders are based on ‘dead’ or ‘abandoned’ deals and failed partnerships

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The latest fraud accusations against flying taxi maker EHang reflect lingering doubts over its long-term prospects in the capital-intensive aircraft manufacturing industry. Photo: Handout

Published: 7:00pm, 9 Nov 2023Updated: 10:04pm, 9 Nov 2023

Chinese flying taxi maker EHang Holdings has rejected allegations of fraud levelled against it by US short seller Hindenburg Research, which claimed in a report that the Guangzhou-based company was exaggerating the number of its orders and misleading investors.

EHang blamed the short seller’s “cursory and incomplete understanding” of its industry for a report that contained “untrue statements and misinterpretation of information” about the firm’s operations and financial condition, according to the Nasdaq-listed company’s statement on Tuesday, the same day Hindenburg Research published its findings.

The short seller’s report claimed that more than 92 per cent of EHang’s pre-order book, totalling over 1,300 units, are based on “dead” or “abandoned” deals, failed partnerships and newly formed customer entities with no discernible operations.

EHang’s largest deal is a 1,000-unit pre-order from one of its pre-initial public offering investors, a biotech company called United Therapeutics, which represents about 74 per cent of the Chinese passenger drone maker’s total pre-orders, according to the report. The deal was initially signed in 2016.

EHang conducts a demonstration flight of its model EH216-S autonomous aerial vehicle in the Bao’an district of tech hub Shenzhen, in southern Guangdong province, on July 13, 2023. Photo: Handout

In response, EHang’s statement asserted that the company’s orders are “based on signed contracts and [are] planned for delivery after obtaining regulatory approvals”.

The orders also showed “strong interest and genuine demand” in the market for its electric vertical take-off and landing (eVTOL) vehicles, EHang said. Without elaborating, it indicated that “appropriate actions’ will be taken to protect the interests of the company and its shareholders.