A. History and Development of the Company In December 2014, EHang Holdings Limited, or EHang Holdings, was incorporated in the Cayman Islands as our offshore holding company to facilitate offshore financing and listing. In the same month, Ehfly Technology Limited, or Ehfly Technology, was incorporated in Hong Kong as a direct, wholly-owned subsidiary of EHang Holdings. In addition, the following entities were incorporated to engage in the business of product manufacturing and sales and the provision of commercial solutions and related services: • In October 2015, Ehfly Technology established EHang Intelligent Equipment Co., Ltd. (formerly known as EHang Intelligent Equipment (Guangzhou) Co., Ltd.), or the WFOE, as a wholly-owned subsidiary in China. The WFOE is engaged in the research, development, manufacture and sale of pilotless eVTOL aircraft and UAVs, and the research and development of software, communication technology and UAV technologies related to air mobility and intelligent aviation. • In January 2016, we obtained a controlling financial interest in Guangzhou EHang Intelligent Technology Co., Ltd., or the VIE, because the WFOE entered into a series of contractual arrangements with the VIE and the VIE’s shareholders. The VIE is primarily engaged in the research, development, manufacture and sale of pilotless eVTOL aircraft for emergency rescue and firefighting and UAVs for drone shows, sale of software, and commercial services of eVTOL operations and drone shows. • In June 2020, the WFOE, jointly with two other shareholders, established Yunfu EHang Intelligent Technology Limited to manufacture mainly pilotless eVTOL aircraft. 62 Table of Contents • In March 2021, the VIE established Guangdong EHang General Aviation Co., Ltd., to provide operational flight services with pilotless eVTOL aircraft. Under PRC laws and regulations, our PRC subsidiaries may pay cash dividends to us out of their respective accumulated profits. However, the ability to our PRC subsidiaries to make such distribution to us is subject to various PRC laws and regulations, including the requirement to fund certain statutory funds, as well as potential restriction on currency exchange and capital controls imposed by the PRC government. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—We rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business” and “Item 4. Information on the Company—B. Business Overview—PRC Regulation—Dividend Distribution.” As a result of our contractual arrangements with the VIE and the VIE’s shareholders, we are regarded as the primary beneficiary of the VIE, and we treat the VIE and the VIE’s subsidiaries as our consolidated affiliated entities under U.S. GAAP. We have consolidated the financial results of the VIE and the VIE’s subsidiaries in our consolidated financial statements in accordance with U.S. GAAP. On December 12, 2019, the ADSs commenced trading on the Nasdaq Global Market under the symbol “EH.” We raised US$33.9 million in net proceeds from the issuance of new shares in our initial public offering after deducting underwriting commissions and the offering expenses payable by us. In January 2020, the underwriters exercised their over-allotment option and we raised US$1.0 million in net proceeds from the issuance of new shares after deducting underwriting discounts and offering expenses payable by us. On April 19, 2024, we entered into an At Market Issuance Sales Agreement with China Renaissance Securities (Hong Kong) Limited as the sales agent, or the Sales Agreement, in connection with our “at-the-market offering” program, or the ATM Program. Pursuant to the Sales Agreement, we may from time to time offer, issue and sell up to US$100 million of our Class A ordinary shares represented by ADSs. For the years ended of December 31, 2024 and 2025, we had sold 9,231,510 and 2,769,184 Class A ordinary shares for aggregate gross proceeds of US$76.2 million and US$23.8 million under the ATM Program, respectively. As of July 2025, we have sold 12,000,694 Class A ordinary shares for aggregate gross proceeds of US$100.0 million under the ATM Program, which constituted the entire amount of the ATM Program. Our principal executive offices are located at EHang Future City (Group Headquarters), No. 118 Dongjiang Avenue, Huangpu District, Guangzhou City, Guangdong Province, 510730, People’s Republic of China. Our telephone number at this address is +86 20 2902 8899. Our registered office is situated at the office of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC on www.sec.gov. You can also find information on our website www.ehang.com. The information on our website should not be deemed a part of this annual report. B. Business Overview We are a leading provider of electric vertical take-off and landing (“eVTOL”) aircraft products and services in the global advanced air mobility (“AAM”) industry and China’s low-altitude economy industry. Leveraging our proprietary, safe, autonomous, and eco-friendly eVTOL technologies, we offer a range of eVTOL products and integrated services for passenger transportation, aerial tourism, aerial logistics, and emergency response. Our commitment to technological innovation and operational excellence has enabled us to achieve several significant global industry firsts, establishing our first-mover advantage and leadership in the global AAM industry. As urban populations grow and vehicle numbers rise, existing roads are becoming increasingly congested, and expanding traditional road infrastructure is proving less effective at alleviating traffic bottlenecks. In response to the growing scarcity of urban space, the low-altitude space is emerging as a vital transportation resource, offering new mobility and logistics solutions that extend beyond traditional land, sea, and high-altitude airspace. The rapid development of the low-altitude economy industry is closely linked to the growth of the AAM industry, both fueled by technological innovation, supportive policies, and rising demand for new mobility and logistics solutions. The convergence of these favorable trends creates significant opportunities for growth, making the AAM market a key driver of future mobility. 63 Table of Contents Our expertise and industry leadership uniquely position us to capitalize on these favorable trends. We have developed and launched an array of pilotless eVTOL aircraft, equipped with proprietary technologies to deliver safe, intelligent, reliable and cost-efficient pilotless human-carrying flight solutions for air mobility. These aircraft feature lightweight, space-efficient design and advanced capabilities such as low noise operation, zero carbon emissions, autonomous flight, and intelligent systems. Their compact size and lightweight design make them particularly suitable for addressing the mobility challenges faced by increasingly crowded urban environments, providing scalable solutions for modern cities. Having successfully transitioned from the certification phase to commercial operations, we are well positioned to consistently leverage our first-mover advantage in the rapidly growing AAM industry. We strive to design safe, reliable and functional products. We adopt a full redundancy design approach for our eVTOL products to avoid single points of failure. During the airworthiness certification by the Civil Aviation Administration of China (the “CAAC”), the safety, airworthiness, performance, functionality, usability and reliability of our EH216-S have been thoroughly and rigorously validated through over 500 specific test items, more than 40,000 test flights for adjustments, and formal conformity validation tests encompassing 65 major categories and over 450 individual test items. These tests included but were not limited to main material performance, structural strength, flame resistance, crashworthiness, gas toxicity, environmental conditions of equipment and systems, software simulation, data links, ground control stations, overall system functionality, electromagnetic compatibility, flight performance and flight stability characteristics. In October 2023, we obtained the Type Certificate (the “TC”) for EH216-S from the CAAC, the world’s first of its kind for human-carrying pilotless eVTOL aircraft, demonstrating that the type design of our EH216-S complies with the CAAC’s safety standards and airworthiness requirements and is qualified for conducting human-carrying commercial operations. Since December 2023, our certified EH216-S with the Standard Airworthiness Certificate (the “AC”) issued by the CAAC began delivery to our customers. In March 2024, we further obtained the Production Certificate (the “PC”) issued by the CAAC allowing our mass production of the EH216-S. In March 2025, Guangdong EHang General Aviation Co., Ltd. and our joint venture company Hefei Heyi Aviation Co., Ltd. were granted the Air Operator Certificates (“OC”) for EH216-S commercial operations from the CAAC. As of December 31, 2025, the flight footprints of our pilotless eVTOL aircraft have accumulated more than 83,000 safe flights in 21 countries across Asia, Europe, the Americas and Africa, predominantly in China. Complementing the EH216 series are the VT35, a lift-and-cruise eVTOL aircraft under the VT series, engineered for longer-haul, higher-speed regional connectivity, and GD4.0, which features aerial media performance drones for large-scale aerial advertising and light shows. In addition to the manufacturing of eVTOL and other UAVs, we offer a comprehensive suite of services that strengthen our position as a fully integrated solution provider. These services include maintenance, repair and overhaul (“MRO”), eVTOL operation training, flight demonstration, and aerial media performances. We also provide a wide range of operation services, such as vertiport site planning and layout, flight operations and management, route design, and trial operations. Looking ahead, we plan to further expand our service offerings to include managed commercial operations and additional services. Our major source of revenue comes from our core business, air mobility solutions, from our continued deliveries of the EH216 series products since 2018. We delivered 169 units of the EH216 series and six units of VT35 in 2025. We had accumulatively delivered a total of 628 units of our eVTOL products, including 593 units of the EH216-S, 17 units of the EH216-F and 12 units of the EH216-L and six units of VT35, mainly operated on a limited trial basis in tourism locations in China, for testing, training, demonstration and trial operation purposes, and we had also delivered four command-and-control centers or systems for smart city management in China. Our revenues increased significantly from RMB117.4 million in 2023 to RMB456.2 million in 2024, and decreased to RMB418.0 million (US$59.8 million) in 2025. Our net loss decreased by 23.9% from RMB302.3 million in 2023 to RMB230.0 million in 2024, and increased to RMB276.4 million (US$39.5 million) in 2025. In 2025, revenues generated by air mobility solutions and others were RMB395.2 million (US$56.5 million) and RMB22.8 million (US$3.3 million), respectively, representing 94.5% and 5.5% of our total revenues, respectively. As of December 31, 2025, our accumulated deficit amounted to RMB2,262.4 million (US$323.5 million). 64 Table of Contents The Emerging AAM Market Urban Transportation Faces Increasing Challenges with Ground Mobility Continued population growth and increased urbanization are adding pressure to urban transportation on the ground. Some 56% of the global population – 4.4 billion inhabitants – live in cities, according to the World Bank’s data in 2022. The urban population is projected to more than double by 2050, when almost 7 of 10 people will live in cities. Transportation is a nonnegligible part in this migration. The speed and scale of urbanization have led to unprecedented traffic congestion in megacities and could further exacerbate challenges faced by ground mobility, with growing demand for higher travel volume, frequency and efficiency across urban and suburban areas. Expanding ground-based urban transportation infrastructure requires significant investment, including increasing costs of time and money in building traffic systems and parking lots. It is also becoming increasingly difficult given how the constraints in ground mobility capacity cause complications in scaling networks across locations. Ultimately, a new, innovative and environmentally friendly transportation solution is needed in urban areas and in high demand. eVTOL Technologies Make AAM Possible The advancements in eVTOL technologies are enabling a new era of transportation with AAM, poised to revolutionize the way we move people and goods across intracity and intercity areas. One of the key drivers of eVTOL technology is the rapid development of battery technology driven by continued investment in ground-based electric vehicles. Lithium-ion batteries are becoming more efficient, with higher capacity and energy density, shorter charge times, and longer cycle life. These advancements are enabling eVTOL aircraft to fly longer distances and carry more passengers and cargo, while reducing the weight and cost of the overall system. Moreover, distributed electric propulsion (“DEP”), which uses multiple small electric motors instead of a single central engine, makes quiet and cost-effective eVTOL aircraft accessible. Other critical enablers include the development of advanced materials and manufacturing techniques, which are helping to reduce the weight and improve the performance of eVTOL aircraft, and the telecommunications and sensor technologies that are essential for safe and efficient operation of these aircraft. On the other hand, eVTOL technologies offer a range of advantages over traditional ground-based two-dimensional transportation options. It is a safe, efficient, simple and carbon-free mobility solution. With their ability to vertically take off and land, eVTOL aircraft require less infrastructure than traditional airports or helipads, and can utilize more of the three-dimensional urban airspace. Additionally, it also allows efficient direct point-to-point flights, reducing the time in travel and increasing productivity. As a result, eVTOL technologies are making AAM possible, unlocking greater freedom of mobility. eVTOL aircraft could become an important part of a three-dimensional mobility solution that connects the ground, the sea and the sky for future’s transportation. Pilotless eVTOL Aircraft Bring Revolutions to AAM Pilotless eVTOL aircraft are transforming the AAM landscape, bringing a host of benefits that were previously unattainable. The integration of artificial intelligence and autonomous systems into eVTOL aircraft enables them to reduce traffic congestion and accidents caused by human pilot errors. With an on-demand ridesharing network, pilotless air taxi can increase the utilization of vehicles, improving travel efficiency and convenience for commuters. The resulting reduction in traffic congestion and commute times can significantly enhance the quality of life for urban residents. 65 Table of Contents Additionally, pilotless aircraft can save costs on professional pilots, who are often scarce and expensive to train. With autonomous systems, it is also convenient to effectively manage large-scale aircraft fleets and flight routes. The ability to remotely monitor and control aircraft in emergencies makes them a reliable transportation option for emergency services and critical medical supplies. Furthermore, with their vertical take-off and landing capabilities, eVTOL aircraft can utilize more urban airspace and reduce the strain on ground transportation infrastructure. The introduction of pilotless eVTOL aircraft has the potential to change the way people live and travel, bringing social and economic revolutions in many conventional fields, including tourism and local transportation. Significant AAM Market Opportunities The potential of global AAM market is immense and is expected to grow exponentially over the next few decades. The opportunities presented by the AAM market extend beyond just transportation. The emergence of eVTOL aircraft offers an alternative travel solution that is more efficient and sustainable than traditional modes of transportation such as helicopters, cars, and airlines. They have the potential to enable faster and more convenient travel, reduce traffic congestion and carbon emissions, and increase economic growth through job creation and new business opportunities. China has positioned the low-altitude economy as one of the national strategic emerging pillar industries, and promoted increasingly favorable policies and regulations for the development and AAM operations of pilotless, electric, intelligent UAVs and eVTOL aircraft. In line with the national government’s strategic planning, local governments have introduced policies to support areas such as low-altitude aircraft vertiport construction, manufacturing, commercial operations, and technological innovation. As of July 2025, almost more than 90 cities in China have included low-altitude economy development in their work plans, creating a favorable environment for commercialization and industry growth. Based on its large populations and massive market demand, the China low-altitude economy market has great potential for our pilotless eVTOL aircraft with various use cases in aerial tourism, urban transportation, aerial logistics, emergency services, smart city management, etc. According to public information, it is estimated that the market size of the low-altitude economy will reach RMB2 trillion and there will be 100,000 units of eVTOL aircraft in China market by 2030. Besides, China’s efficient and cost-effective UAV and electric vehicle manufacturing and supply chain competence bolster up its AAM market growth potential. Our Competitive Strengths Pioneer and leader in the global AAM industry As the world’s leading AAM technology platform company, we are the pioneer and leader in the global AAM industry with prominent first-mover advantages. We unveiled the world’s first human-carrying pilotless eVTOL aircraft, the EH184, at CES in the U.S. in 2016, attracting worldwide interest and passion to this disruptive technological revolution and the emerging AAM industry. We developed and established the first command-and-control system and center at our headquarters in Guangzhou, China, in 2017, enabling cluster management of our pilotless eVTOL aircraft and UAVs through an intelligent system platform. In December 2019, EHang was successfully listed on Nasdaq following an initial public offering, becoming the world’s first publicly traded company in the AAM industry. As a first mover, we not only design, develop, manufacture and sell our pilotless eVTOL aircraft and UAV products, but also actively collaborate with our customers and partners to explore various practical use cases through operating our products globally. As of December 31, 2025, the flight footprints of our human-carrying pilotless eVTOL aircraft have accumulated more than 83,000 safe, autonomous flights in 21 countries across Asia, Europe, the Americas and Africa, predominantly in China. The industry-leading flight record demonstrated our product safety, reliability, adaptability and performance in different environments. 66 Table of Contents We are also a first mover in certification breakthrough in global eVTOL aircraft industry. In 2023, our EH216-S obtained the TC and standard AC from the CAAC, demonstrating that the EH216-S complies with the CAAC’s safety standards and airworthiness requirements and is qualified for conducting human-carrying commercial operations. In March 2024, we further obtained the PC from the CAAC, allowing our mass production of EH216-S. In March 2025, Guangdong EHang General Aviation Co., Ltd. and our joint venture company Hefei Heyi Aviation Co., Ltd. were granted the OC for EH216-S commercial operations from the CAAC. These certificates are not only the world’s first for the new type of human-carrying pilotless eVTOL aircraft, but also serves as an epoch-making milestone for commercial AAM operations. Proprietary and revolutionary pilotless eVTOL aircraft and UAV technologies With our mission to make safe, autonomous and eco-friendly air mobility accessible to everyone, we have proprietarily developed the revolutionary pilotless eVTOL aircraft and UAV technologies and products through deeply integrating our strong expertise in the fields of both aviation and software system. This makes our products different from and competitive than helicopters and piloted eVTOL aircraft and UAVs. Compared with fuel-powered piloted helicopters, our EH216-S eVTOL aircraft has much lower lifetime cost by greatly decreasing acquisition price, maintenance costs, and pilot expenses, while providing a safe, autonomous, eco-friendly and quieter new way of air mobility. With safety as the orientation as well as our first priority above anything else, we innovate and stick to three fundamental technological principles, which are redundancy design, autonomous flying, and cluster management that are reflected in all of our products. To ensure the safety, we adopt a full redundancy design and technologies in our products from day one in order to avoid single points of failure. Through the configuration of distributed electric propulsion, our pilotless eVTOL aircraft provide a safe and reliable propulsion system with backups for key components and sub-systems. If any would malfunction, the fail-safe system in our intelligent flight control systems can automatically monitor the situation in real time and quickly respond to restore the lost functionality through backups to ensure safety. For example, our EH216 series have 16 coaxial propellers driven by 16 independent motors mounted on eight arms. According to our tests, the aircraft could still land safely even if any three propellers were intendedly stopped in flight, although the probability of which happens is extremely rare in normal situations. Additionally, our redundancy design with multiple backups is also reflected in our electric systems, sensors, flight control systems, communication systems, etc. to strengthen safety and reliability of our products. Autonomous flying is also embedded in our genes from day one. Unlike other manually controlled UAVs or piloted eVTOL aircraft, our intelligent pilotless eVTOL aircraft and UAVs can fly without any human pilot onboard and operate autonomously from take-off to landing along pre-determined flight routes under the safe protection by electric fence within the pre-approved airspace. Cluster management is another key principle as well as our technological advantage to ensure flight safety and autonomy. Our proprietary airborne operating systems and on-the-ground command-and-control systems, or standalone smartphone-or-tablet-or-computer-based controller app, enable reliable and simultaneous management of aircraft fleets at scale. Through high-speed telecommunication networks, it allows real-time monitoring and warning of flight data and status of our products, route planning and fleet management, remote control in emergencies to take contingency measures, etc. to ensure flight safety and enhance intelligence and efficiency. With the three technological principles, we strive to make safe, reliable and functional products through strict tests. During the airworthiness certification by the CAAC, the safety, airworthiness, performance, functionality, usability and reliability of our EH216-S have been thoroughly and rigorously validated through over 500 specific test items, more than 40,000 test flights for adjustments, and formal conformity validation tests encompassing 65 major categories and over 450 individual test items. These tests included but were not limited to main material performance, structural strength, flame resistance, crashworthiness, gas toxicity, environmental conditions of equipment and systems, software simulation, data links, ground control stations, overall system functionality, electromagnetic compatibility, flight performance and flight stability characteristics. 67 Table of Contents A rich set of product portfolio for diversified commercial solutions Based on our first priority of safety as well as our three fundamental technological principles, we have developed an accessible, scalable, integrated AAM technology platform. Adhering to the philosophy of designing reliable, compact, and efficient pilotless aerial vehicles that meet the evolving needs of urban transportation, we have a rich set of innovative products with differentiated advantages for diversified and immense market demands. Our proprietary products have multiple designs for different suitable uses, including the EH216 series multi-rotor eVTOL aircraft for low-altitude intra-city air mobility, VT series lift-and-cruise eVTOL aircraft for long-range inter-city air mobility, the medium-sized UAV Falcon B for industrial uses, and the small-sized GD series drones for aerial media performance. Additionally, we provide flexible and customized solutions for different customer demands for high-rise firefighting, and aerial logistics. The diversity of our product strategy will bring various commercial solutions suitable for our diversified customers and market demand, and will also generate extensive revenue streams from our multiple business lines of air mobility and other solutions. Strong in-house and collaborative research & development and production capabilities Our cutting-edge pilotless eVTOL aircraft technologies and products rely on our strong in-house R&D capabilities. Motivated by Mr. Huazhi Hu, our founder, chairman and chief executive officer, who has a life-time passion and strong technical expertise in both aviation and command-and-control systems, we value the engineer culture and talents, and keep focusing and investing in technology innovation and product R&D since day one. As of December 31, 2025, our R&D team accounted for 48.61% of our total employees. As of December 31, 2025, we had 506 issued patents, 324 pending patent applications, 698 registered trademarks, and 25 registered software copyrights, to protect our key technologies and intellectual property and maintain our core competitiveness in the long term. Moreover, we are in extensive cooperations with industry-leading enterprises and academic institutions, including Tsinghua University, Changan Automobile, Inx Technology, Gotion Hi-Tech, Enpower, Minth Group, etc. to jointly develop next-generation technology solutions, components and products for further enhancing our eVTOL product capabilities and portfolio. We are the first eVTOL company in the world having established a production base with production capabilities of pilotless eVTOL aircraft. Our Yunfu Production Facility ran into operation in June 2021, with an annual capacity of 300 units of eVTOL products at the Phase I plant. Since 2017, we have been certified to AS9100 or EN9100:2018, a globally recognized aerospace and aviation quality management system standard. Further, we obtained the PC from the CAAC in March 2024, allowing our mass production of the certified EH216-S pilotless eVTOL aircraft. Additionally, we can further increase our production capability by expanding the Phase II plant at the Yunfu Production Facility and more facilities in Hefei, Weihai, Beijing in China. This lays a solid cornerstone of our high-quality, efficient and sufficient product manufacturing and delivery capabilities. Strong customer base and wide partnership network across the value chain to enable AAM ecosystem and commercial operations With the first certified pilotless eVTOL aircraft available in the market ahead of our peers with years of the first mover advantage, we have accumulated a strong customer base and wide partnership network with key stakeholders worldwide including regulators, governments and public sectors, universities, aviation companies, tourism companies, infrastructure providers, telecommunication providers, industry associations, etc. We have also participated in a number of European Union’s AAM demonstration projects. Our joint efforts and collaborations across the value chain will empower the AAM ecosystem for commercial operations and sustainable development. In addition, the growing market demand for our products and solutions lays a solid foundation for our future revenue growth. 68 Table of Contents Our Leading Products and Solutions Adhering to the three fundamental technological principles to ensure safety, which are redundancy, autonomous flying, and cluster management, we have designed, developed and provided turnkey total solutions to our customers including our proprietary pilotless eVTOL aircraft and UAVs, related operating systems and infrastructures. Pilotless eVTOL Aircraft and UAVs Based on different designs and uses, our product portfolio mainly consists of the EH216 series, the VT series, and the GD4.0. • EH216 Series The EH216 series consists of the EH216-S (standard model), the EH216-F (firefighting model), and the EH216-L (logistics model). By a multirotor configuration with a compact and lightweight design, the EH216 series adopt a distributed electric propulsion with 16 propellers driven by 16 independent motors mounted on 8 arms, which not only ensures redundancy and flight safety, but also enables stable and accurate navigating, vertically takeoff and landing in urban airspace. With the eight arms folded, the size of the EH216 series is similar to a private car, taking minor space for storage and vertiports than helicopters and large-sized eVTOL aircraft, to provide higher flexibility and operation efficiency especially in urban areas. Our flagship product the EH216-S is an electric dual-seat human-carrying pilotless eVTOL aircraft launched in 2018. Designed for short-to-medium-range low-altitude intra-city air mobility, it has a suitable flight performance for urban environment, the current maximum flight range of 30km, a flight time of 25min, and a top speed of 130km/h. With no pilot onboard, it can fly autonomously from the origin to the destination along pre-determined flight routes. Through a large panoramic windshield for wide vision and an intuitive tablet interface in front of the seats, people can enjoy the bird’s eye view, check the real-time flight status, and communicate with ground crew for support if needed. The modularized structure with an upper cabin for passengers and a lower compartment to house major components and sub-systems ensures structural safety to better protect people on board. The EH216-F is a firefighting eVTOL aircraft launched in 2020. Customized for high-rise firefighting, it is equipped with customized firefighting devices, such as fire extinguishing projectiles and launchers, a firefighting foam tank and a high-pressure nozzle. It is capable of flying up to 600m height to distinguish high-rise fires accurately and efficiently, while traditional rescue ladders and fire nozzles cannot reach the height. In July 2021, the EH216-F has passed a comprehensive 10-month technical examination to prove its reliability and performance through 52 different types of tests by the China National Fire-Fighting Equipment Quality Supervision Testing Center, which is under the Ministry of Emergency Management of China. The EH216-L is an aerial logistics eVTOL aircraft launched in 2020, customized for cargo transportation with 250kg payload. • VT Series The VT series refers to a series of electric lift-and-cruise models we have designed and developed, consisting of the VT35, the VT20, and the VT10. They combine the advantages of both multirotor and fixed wings, enabling vertically takeoff and landing and longer flight range than multirotor aircraft, while with no requirement for large infrastructures such as runways. The VT35 is a dual-seat passenger-carrying pilotless eVTOL aircraft, expanding our product portfolio into intercity mobility scenarios. VT35 features a lift-and-cruise layout with eight distributed lift propellers for vertical take-off and landing, transitioning to a pusher propeller and tandem fixed wings for efficient cruise flight. With a fully loaded design range of approximately 200 kilometers, VT35 delivers both long-range capability and compact versatility. Compared to its predecessor VT30, VT35 maintains superior aerodynamic efficiency and flight stability while achieving a more compact footprint – measuring approximately 8 meters in length and wingspan, and 3 meters in height, with a maximum takeoff weight of 950 kg. This compact design reduces ground operational risks and enhances cost-effectiveness. Notably, VT35 is compatible with existing EH216-S vertiports and can utilize a wide range of urban takeoff and landing sites, including parks, rooftops, parking lots, etc. This interoperability greatly enhances infrastructure utilization and supports seamless intercity air mobility directly between city centers. 69 Table of Contents The VT20 and the VT10 are electric medium-sized lift-and-cruise models with four propellers and fixed wings. They are designed for long-range surveillance, power line inspection, air delivery, and others. • GD4.0 The GD4.0 is our electric small-sized quadrotor UAV, which features aerial media performance drones for large-scale aerial advertising and light shows. With up to 45 minutes of flight time, centimeter-level positioning accuracy, robust performance in complex environments, and dynamic performance, the GD4.0 deeply integrates large-scale fleet management technology, precision navigation, and intelligent coordination. These capabilities enable the reliable execution of complex aerial formations by more than 20,000 drones, even under challenging low-temperature nighttime conditions. Supported by box-launch ability for rapid deployment, autonomous flight and reduced manpower requirements, the GD4.0 significantly enhances operational efficiency of aerial media performances. Operating Systems We have proprietarily designed and developed an integrated and digitalized operating platform with airborne operating systems installed in our eVTOL aircraft and UAV products, the command-and-control system, the UAM flight operation and management platform, and related infrastructure to allow our products to operate in various scenarios safely and efficiently. The operating systems for different commercial solutions share the same underlying technological architecture. Our airborne operating systems include an autopilot and flight control system, a communication system, a battery management system and a safety management system, among other things. They are installed on each of our products to enable autopilot, navigation, real-time monitoring, control and performance adjustment. Human control can be exercised from the ground using smartphones, tablets or computers as well as through our command-and-control system, meeting the varied demands of our customers or passengers and contingencies. • Autopilot and Flight Control System The autopilot and flight control system enables the autonomous operation of our products without any human pilot onboard and helps to ensure that our products fly in pre-determined routes from the origin to the destination with precise vertical take-off and landing. • Communication System We have developed proprietary network protocols based on advanced communication technologies to support high-speed wireless networks between our products and ground command-and-control system. Our communication system is secured with data-encryption technologies for data security. We also use redundant data transmission links, which enable us to switch to a backup communication system if the primary system is breached. • Battery Management System Our intelligent battery management system, or BMS, is an industrial-grade solution that monitors all parameters of our products’ batteries, including temperature, capacity and voltage. The core of our BMS is the self-adaptive smart battery management algorithm that optimizes the balance between performance and battery life and provides accurate predictions based on data and analysis of flight status. To ensure effective management of battery performance and battery life, an onboard battery management unit transmits real-time BMS data to the flight control system and command-and-control system. 70 Table of Contents • Safety Management System Our products use full-redundancy safety technologies in their flight control system, sensors, propulsion system and battery management system. Our proprietary redundancy control algorithms are based on a real-time voting mechanism. Our products are designed with distributed electric propulsion, with an aim of achieving the highest level of safety through redundancy and efficiency. In the event of malfunction of certain parts of our products, the operating systems utilize the backup components to ensure proper functioning and performance of our products. • Command-and-Control System We have extensive expertise in command-and-control system. Our proprietary command-and-control system can accurately monitor in-flight status, dispatch aircraft, effect pre-warning and contingency measures, etc. The system ensures that our products fly in pre-determined routes and maintain smooth and efficient operation. It also has the capability to monitor and detect irregularity in the status and operation of our products and to activate contingency measures to restrict and limit actions or movements of our products in emergency situations. Powered by advanced technologies, our command-and-control system allows for adaptability and scalability. Through continuous uplinks maintained between aircraft and the ground command-and-control system, we are able to simultaneously manage up to 22,580 units of UAVs with precision and accuracy to complete pre-defined actions and movements in the air for aerial media shows. Besides the command-and-control system for large-scale operations and management, we have also developed an app to enable standalone operations through portable smartphones, tablets or computers to individually monitor and control our products. As of December 31, 2025, except for the first UAV command-and-control center established in Guangzhou for our own use, we had delivered four command-and-control centers or systems along with suitable models as integrated packages for smart city management solutions to our customers in Shaoguan, Lianyungang, Hezhou and Shenzhen, China. These delivered command-and-control centers or systems are currently operated by our customers, while we provide related required trainings and technical supports. Besides, we sell UAVs to some smart city management customers on a standalone basis, which can be controlled by our app. • UAM Operational Platform Digitization is essential for UAM flight operation and safety management. We have built a digital UAM operational platform architecture and established a visualized flight operation module for managing our pilotless eVTOL flight schedule, ground crew, availability of vertiports and landing pads, and other factors across the entire front-line UAM operational process. This platform, which has been put into trial running internally, is designed to connect and interact with the back-end command-and-control system, as well as the future front-end flight booking and payment service windows through either our own app or third-party apps, in order to provide the operation team with a clear and efficient management platform, and offer consumers a smooth flight booking and riding experience. Infrastructures • Vertiports Vertiports are also essential for eVTOL aircraft operations and mobility efficiency. We have developed a set of requirements and different concept of vertiport designs for our eVTOL aircraft, and we call it E-Ports. Taking the EH216-S as an example, each E-Port is identified and registered in our UAM flight operation and management platform, therefore our eVTOL aircraft can serve for on-demand flights only within E-Port network to ensure safety and autonomy. Our E-Ports can locate flexibly at the rooftop, on mountains, near to parking lots, subway or railway stations, airports or harbors, so as to seamlessly connect with other transportation nodes to expand the three-dimensional travel networks. 71 Table of Contents The scale of each E-Port is determined by the customer demands, density of flight routes and traffic volumes. It could be either a simple landing pad, or a hub station with several landing pads, charging piles, passenger service areas, hangars for storage and maintenance, and more facilities. Leveraging the advantages of EH216-S’s smaller size, lighter weight, lower noise, higher flexibility compared with helicopters or larger eVTOL aircraft, the E-Port network is easier to be deployed, established and expanded by operators in urban areas with lesser costs and time. Usually, our customers and partners take the role to build E-Ports, while we provide designs and requirements. • Charging Piles We have developed efficient and intelligent charging piles for our eVTOL aircraft, and have delivered to our customers along with our products. They can monitor real-time charging status and battery health. Our Business Solutions Air Mobility Air mobility is our main business solution. We aim to provide customers with safe, autonomous, eco-friendly and efficient eVTOL aircraft products, solutions and services for aerial tourism, air transportations of passengers, cargos, emergencies, etc. Currently, we focus on providing low-altitude urban air mobility solutions to our customers mainly through the sale of our EH216 series eVTOL products and related services including preparation for commercial operations, personnel training, maintenance and repair, etc. In addition, we intent to extent to long-range inter-city air transportation with our VT series eVTOL aircraft for the regional air mobility market in the future. We have delivered six units of the VT35 in 2025, for testing, demonstration and certification purposes. To take aviation safety as our top priority and the social responsibilities as the first mover entering the emerging commercial market, we will take a prudent approach and business strategy to gradually expand commercial operation scenarios of our certified EH216-S human-carrying pilotless eVTOL aircraft in a safe, progressive manner. Starting from aerial sightseeing and flight experience in the tourism area, we will expand stage by stage under the regulator’s guidance to air transportation and on-demand air taxi travel in the long term. China is our principal market. Driven by increasingly favorable policies and regulations for civil unmanned aviation and low-altitude economy in recent years, the massive local market demand for various commercial applications, and the TC, PC, AC and OC for our EH216-S from the CAAC, our total delivery volume for EH216 series eVTOL aircraft in 2025 was 169 units, including 164 units in China market, and five units in overseas markets. Apart from delivery, we also actively prepare for the EH216-S commercial operations. In March 2025, our subsidiary Guangdong EHang General Aviation Co., Ltd. and our joint venture company Hefei HeYi Aviation Co., Ltd. were simultaneously granted the first batch of OCs by the CAAC, approving them as commercial operators to provide human-carrying pilotless eVTOL flight services with the certified EH216-S starting from their current operation sites in Guangzhou and Hefei. Meanwhile, we assist our customers in setting up for their flight operations, including planning operation sites, vertiports and flight routes, training operating ground crew team and maintenance staff, preparing for their OC application, and conducting trial operations at more than 40 sites across China. In addition, we actively extend our partnership with industry stakeholders to pave the way for a long-term sustainable development of the AAM market. For instance, we partnered with China Communications Information & Technology Group and local governments in December 2024 for co-developing digital UAM infrastructure and low-altitude flight hubs across China. We partnered with the Civil Aviation Flight University of China in October 2024 to train skilled professionals for eVTOL operations and maintenance and address the estimated demand for millions of talents of the low-altitude economy sector in China. We partnered with Tsinghua University in July 2025 for establishing a world-class research center for scientific research, technology innovation and talent development in the low-altitude aviation field. We also partnered with the China Academy of Civil Aviation Science and Technology to deepen cooperation in resource sharing, joint innovation, key project collaboration, breakthrough research and development, standards system development and high-level talent cultivation, and accelerate the commercialization of the low-altitude economy and jointly promote the high-quality development of civil UAVs and eVTOL technologies. 72 Table of Contents Meanwhile, we are actively exploring and expanding international markets. We delivered a total of five units of EH216 series eVTOL aircraft to customers in Japan, Korea, Malaysia and Thailand in 2025. Additionally, in collaboration with our global customers and partners, we have expanded our eVTOL flights in Spain, Japan, Thailand, Rwanda, Indonesia and Qatar in 2025. As of December 31, 2025, the flight footprints of our pilotless eVTOL aircraft have accumulated more than 83,000 safe flights in 21 countries globally. Meanwhile, we have been working with the aviation regulators in multiple countries for local certifications or approvals of our eVTOL trial flights, validation of TC, and commercial operations in the future. In October 2025, we launched a pioneering AAM Sandbox Initiative in Thailand, which is designed to accelerate the pathway toward future commercial operations of our EH216-S pilotless eVTOL aircraft there. Others Smart City Management We believe we are the first company having developed and delivered the smart city management solutions with integrated and intelligent command-and-control systems or centers that can centralize and coordinate a wide range of UAV applications simultaneously. We customize and adapt our UAVs to capture live videos, images and data generated by attached modules such as cameras, electro-optical, infrared or other sensors, and loudspeakers as our customers’ requirements. The signals and instructions are wirelessly transmitted through high-speed telecommunication network between UAVs and the command-and-control systems we develop for our customers, enabling our customers to receive and send crucial information in real time remotely and safely. The main customers of our smart city management solutions are public sectors. We provide an integrated and efficient digital platform with customized UAV models as turn-key solutions for monitoring and management across many ordinary municipal functions and public utilities, such as traffic management, powerline inspection, environmental monitoring, firefighting, emergency rescue, aerial mapping, etc. Compared with the traditional manpower-and-time-consuming working mode, the cost-effectiveness and efficiency are greatly improved. As of December 31, 2025, except for the first UAV command-and-control center established in Guangzhou for our own use, we had delivered four command-and-control centers or systems along with suitable models as integrated packages for smart city management solutions to our customers in Shaoguan, Lianyungang, Hezhou and Shenzhen, China. These delivered command-and-control centers or systems are currently operated by our customers, while we provide related required trainings and technical supports. Besides, we sell UAVs to some smart city management customers on a standalone basis, which can be controlled by our app. Aerial Media We were the first company to launch the aerial media solutions in 2016 and are a leading player in providing aerial media performances, also known as drone light shows. Our services involve managing and choreographing a fleet of UAVs that are equipped with LED lights into a series of moving images. We utilize a range of proprietary navigation technologies, operating systems, and infrastructure to deliver smooth and mesmerizing UAV formations, synchronized movement and accurate display of two-dimensional and three-dimensional patterns, brand logos, or messages. Our remote command-and-control capacity and auto formation flight system enable us to support diverse flight missions and light effects with varying degrees of difficulties. We also use real-time kinematic satellite-based navigation technology (RTK-GPS) to achieve centimeter-level positioning precision for our UAVs. We not only provide large-scale aerial media performance services for outdoor events such as celebrations, festivals, and brand campaigns, but also offer aerial media packages that includes our proprietary GD4.0 UAVs and relevant software to our customers who are able to design and carry out performances themselves with our products. 73 Table of Contents As of December 31, 2025, we, together with our customers and partners, had completed over 480 aerial media performances by our UAVs in Asia, Africa and Europe. Moreover, we broke the Guinness World Records with our aerial media performances for several times, including the recent record of “the most multirotor/drones airborne simultaneously from a single computer” by 22,580 units of our GD4.0 formation drones at the CMG 2026 China Spring Festival Gala Hefei venue in February 2026. Our Business Strategies Extend our technological leadership We plan to continue to invest in technological innovation to cement our leadership in pilotless eVTOL aircraft technologies and establish ourselves as the industry benchmark for AAM commercial solutions. We will continue to expand our talent pool and intellectual property, and drive innovation. Expand our product portfolio and strengthen our platform We plan to continue to optimize our existing models, expand our product portfolio, and obtain required certificates for commercial applications. We will continue to develop and certify more models for different uses. We will continue to develop our technology platform and ancillary products and services to strengthen our ability to provide end-to-end AAM commercial solutions that address the growing needs of our customers. Take advantage of the first eVTOL aircraft certifications for entry into market Our EH216-S has obtained the world’s first TC, Standard AC and PC for pilotless eVTOL aircraft from the CAAC, demonstrating it is qualified for human-carrying commercial operations and mass production. Moreover, the EH216-S operators have obtained the OCs for their commercial flight operations in China. On this basis, we plan to further extend to more countries in Asia and other regions worldwide by potential bilateral agreements between aviation regulators and required local certifications. Capitalize our first mover advantages to continue commercialization and promote adoption We will capitalize our first mover advantages ahead of our peers and our uniqueness of pilotless eVTOL aircraft in the commercial market to accelerate the commercialization pace for both product sales and flight operational services. As we continue collaborating with governments, our customers and partners to promote the regulatory and social acceptance, infrastructure establishment, and industrial deployment, we will pilot air mobility services with our pilotless eVTOL aircraft in pre-determined routes as a precursor for more flexible, on-demand services networks starting from scenic areas gradually to urban areas. Keep enhancing commercial operation capabilities We will keep developing and improving our AAM digital operational platform for an effective and efficient management of aircraft, flight schedule and routes, ground crew, vertiports, air traffic, and approved airspace. In addition, we will continue to enhance commercial operation capabilities by expanding air mobility operation team, improving operational standards and rules, and exploring feasible and replicable commercial operational mode together with our business partners. Explore new monetization opportunities and develop diversified revenue streams We plan to explore new monetization opportunities and develop diversified revenue streams by leveraging our fundamental technology platform to pursuit operating synergies across our business lines and better economic efficiency. For example, we may charge recurring fees for our software system licenses, operational and maintenance services for our products. We may also enter into revenue sharing, financial leasing, strategic investment arrangements with customers to capture flexible and greater business opportunities. 74 Table of Contents Expand strategic partnerships across the value chain to develop a sustainable AAM ecosystem We plan to continue to expand our partnership network across the value chain in the global AAM industry with business partners and regulatory agencies to foster and grow the commercial eVTOL aircraft market and develop a sustainable AAM ecosystem. Research and Development Capabilities Our in-house design, development and engineering capabilities underpin our leadership and support the advancement of our platform. Our design is characterized by unabated efforts to improve safety, reliability and functionality. We have a dedicated research, design and development team in Guangzhou. The team consists of members with strong backgrounds in the fields of electrical engineering, aerospace engineering, mechanical engineering, automation, material engineering and software development. The key R&D team members are mainly graduates of top universities. Our research and development team focuses on core research development, engineering technology, hardware development, and command-and-control systems. We have a dedicated software technology group to lead the research and development of software and algorithms. Our success has been driven by a passionate, visionary, tech-savvy and entrepreneurial management team with a unique combination of aviation, internet and software expertise. Our founder, chairman and chief executive officer, Mr. Huazhi Hu is one of the pioneers and leaders in the global pilotless eVTOL aircraft industry, who was awarded the Technology Innovation Award by the Living Legends of Aviation Europe in 2019 and ranked the Top one inventor at air taxi firms, who personally took 10% share of all patents filed globally as of August 11, 2022 according to a Roland Berger analyst’s research. As a Tsinghua University-trained software engineer, Mr. Hu has amassed substantial experience in the development of command-and-control systems. He was one of the key architects and lead developers behind certain large-scale command-and-control systems, such as that for the 2008 Summer Olympics Games in Beijing. During the airworthiness certification by the CAAC, our R&D and certification team have well demonstrated their professionalism, comprehensive expertise and innovation spirit, and thoroughly and rigorously validated the safety, airworthiness, performance, functionality, usability and reliability of our EH216-S through over 500 specific test items, more than 40,000 test flights for adjustments, and formal conformity validation tests encompassing 65 major categories and over 450 individual test items. These tests included but were not limited to main material performance, structural strength, flame resistance, crashworthiness, gas toxicity, environmental conditions of equipment and systems, software simulation, data links, ground control stations, overall system functionality, electromagnetic compatibility, flight performance and flight stability characteristics. As of December 31, 2025, the flight footprints of our human-carrying pilotless eVTOL aircraft have accumulated more than 83,000 safe flights in 21 countries across Asia, Europe, the Americas and Africa. The industry-leading flight record demonstrated our technology and product safety, reliability, adaptability and performance in diversified environments. Manufacturing, Quality Control and Supply Chain As an original equipment manufacturer of eVTOL aircraft and UAVs, we adopt a safe, compliant, lean and efficient production strategy across our business, focusing on effective prototyping, manufacturing, supply chain management, final assembly, integration, quality control and final acceptance testing. Manufacturing We currently have a production facility in Yunfu city, Guangdong province, China, which commenced operation in June 2021. It has a total gross floor area of approximately 48,000 square meters, equipped with a series of function areas across the production processes for different types of our products from manufacturing of key components and carbon fiber composite airframes to aircraft assembling and flight testing. In 2025, the Yunfu facility reached an annual production capability of 1,000 units of eVTOL aircraft and related components following the completion of the Phase II plant. The Phase II plant entered trial operations and was engineered to enhance production quality and efficiency by smart manufacturing, featuring a full-process Manufacturing Execution System, paperless operations, Automated Guided Vehicles for automated material calling and delivery, and visual error-proofing systems. As of December 31, 2025, there were 310 contract workers from an independent third-party entity who were involved in the manufacturing of our products in the Yunfu production facility. In addition, we are preparing two additional production facilities in Heifei city, Anhui province, China and Weihai city, Shandong province, China. We also plan to establish a production hub in Beijing focused on emergency rescue equipment, including the EH216-F firefighting aircraft. We expect the production of the Hefei and Weihai facilities to commence following the receipt of relevant PCs. 75 Table of Contents To ensure high levels of quality and reliability, our dedicated manufacturing team, in close collaboration with our design and engineering arm, manages and conducts the design, engineering and production of key proprietary components, such as flight control system units, communication system units, battery management system units and motor drivers, and performs in-house final assembly of our products. Our production partners are subject to rigorous selection and review procedures. All of our production system operations incorporate internal and external quality programs and processes to ensure our required standards for acceptance rates, reduce lead times and lower cost. Quality Control Our quality control efforts focus on designing and producing products and implementing processes that will ensure high levels of safety and reliability. We have a dedicated quality control team that works with our engineering arm and our suppliers to ensure that the product designs meet safety requirements and functional specifications. Together with our supplier review committee, our quality control team also collaborates with our suppliers to ensure that their processes and systems are capable of delivering the parts and components we need at the required quality levels, on time and within budgets. Our products are produced with strict product quality control. Our quality control team undertakes robust inspections of our production lines in accordance with internal guidelines and assessment criteria. We also conduct licensed flight tests for our products under a variety of conditions, which have proven to be an efficient and effective means for us to assess the quality and airworthiness of our products. Data and results generated from flight tests are carefully studied and analyzed to inform any process of alteration or improvement that may follow. In conjunction with our provision of a broad range of after-sales services and assistance to our customers, our product quality control management extends beyond the point of sale as we continue tracking the performance and quality of our products. We are committed to a high level of quality assurance. Since 2017, we have been certified to AS9100 or EN9100:2018, a globally recognized aerospace and aviation quality management system standard. Further, we obtained the PC from the CAAC in March 2024, allowing our continued mass production of the certified EH216-S. During the PC certification process, our mass production capabilities and quality management system, which encompasses raw materials, supplier management, production organization, production quality control, aircraft pre-delivery test, after-sales repair and maintenance, etc., have been thoroughly validated by the CAAC. Supply Chain We adopt a strict reviewing mechanism to ensure quality and stability of our supply chain. We also aim to fully engage with our suppliers to foster long-standing and strong partnership with qualified suppliers. Our Yunfu production facility is located in the Pearl River Delta area, a world-leading manufacturing hub, giving us easy access to a large number of high-quality suppliers in an efficient manner. Our products are generally manufactured on specific orders and we have been able to effectively manage our inventory level. Historically, we have not experienced significant delays in the supply or availability of our key raw materials or components provided by our suppliers, nor have we experienced a significant price increase for raw materials or components. We require our suppliers to maintain high-quality deliverables and to comply with specified industry standards. Parts and components sourced from our suppliers must be certified by the China Compulsory Certification or the Underwriters Laboratory, and/or certified with the ISO 9001. Our suppliers of key parts and components are additionally required to be certified with AS9100 or alternative equivalent certificates. We regularly monitor the performance of our suppliers using parameters such as supplier defect rates, production and delivery performance, as well as inventory management. 76 Table of Contents Marketing, Sales and After-Sales Services Marketing As the first mover in the emerging AAM industry, we have spent years dedicated to educating the stakeholders of regulators, partners, customers and end users with our innovative and cutting-edge pilotless eVTOL aircraft technologies and knowledges, to increase social acceptance of this new way of air mobility, and to promote the visibility of our EHang brand and products globally. We believe these are necessary and significant efforts to accumulate our customer base and partner network, to cultivate the new market from the infancy stage evolving to the mature period, and to catalyze the establishment of AAM ecosystem for the commercial operations. We kept communicating with our customers, investors and followers through multiple domestic and international online and offline channels and activities, including but not limited to our website, various social media and video platforms, e-commerce platforms, hotlines and emails, mainstream media coverages, brand and product launch events, high-profile exhibitions and industry conferences, worldwide trial and demonstration autonomous flights, etc. The consistent exposures and marketing efforts contributed to our brand awareness, reputation and sales leads. Sales We adopted the direct sales model to sell our products and solutions to our customers, which currently are mainly corporate clients. We have established an in-house direct sales team based in the PRC and Europe to serve our customers from around the world. We are also in discussion with existing and potential business partners in the PRC and abroad to complement our direct sales efforts with sales to distributors and franchise arrangements. On top of our sales in the PRC, we have exported our products to Asia, Europe, Africa, North America and South America. In 2023, we delivered our EH216 series products to customers in Japan, Brazil, Colombia, Saudi Arabia and Qatar. In 2024, we delivered our EH216 series products to customers in Japan, Brazil, the United Arab Emirates and the Dominican Republic. In 2025, we delivered five units of the EH216 series products to customers in Japan, Malaysia, Thailand and Korea. We strive to ensure that our exported products comply with the regulatory and safety standards of the local markets. Our customers place purchase orders taking into account the terms of the relevant framework agreement, if applicable, and the customer’s procurement requirements. We start production after the purchase order from customers is made, and production generally takes three months to deliver. Customers are contractually required to make upfront payment to us. Except for purchase orders, we have also entered into a number of long-term framework and conditional agreements time to time with our customers and business partners relating to preorder or distribution of our products and solutions. These non-binding agreements do not obligate the customers to purchase the products unless certain conditions are satisfied. Fulfillment is expected to take several years and is conditional upon, among other things, achievement of performance milestones and receipt of regulatory approvals. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—Our framework and conditional agreements may not result in material sales of our products.” After-Sales Services and Warranty We provide after-sales services for customers of our products. We currently offer free installation and training programs thereafter to prepare our customers for its safe operation. The term of our warranty for the EH216 series products is six months to three years depending on the specific parts and components, and the term of our warranty for our small-and-medium-sized UAVs is from six to twelve months depending on the product line and the specific parts and components. Within the warranty period, customers are entitled to free repair and maintenance services, while costs for accessories and maintenance fees beyond the warranty will be charged separately. The warranty on certain components of our products, such as batteries, is covered by our suppliers’ back-to-back warranty and we are entitled to have the suppliers replace or repair these defective components at their costs. We also provide our customers with lifetime consulting services on maintenance and operation through our website, over the telephone and via email. 77 Table of Contents For our commercial solutions, we provide a full spectrum of services. To facilitate the efficient operation of our command-and-control systems, we provide, among others, system operation and maintenance training, service support, engineering support, inspection and repair, and technical consulting support. Our customers enjoy services throughout the operational life of our command-and-control systems. Most of these services are performed on-site. We continue to maintain and upgrade our airborne software infrastructure to enhance the functionality, reliability and safety of our products. We regularly inspect, maintain and upgrade the fundamental communication network and transmission system to ensure the smooth communication between our aircraft and the command-and-control systems. Operational Services With our strategic positioning to be a AAM platform operator, we adopt an integrated business model by selling products and solutions and providing operational services. For commercial operations, we have established a well-trained in-house air mobility operation team specifically for flight operations of our pilotless eVTOL aircraft, including the staff for route planning, flight operations, safety management, regulatory compliance, digital operational platform, sales and marketing. As of December 31, 2025, we and our customers have completed about 83,000 safe flights in 21 countries across Asia, Europe, the Americas and Africa, predominantly with the EH216 series pilotless eVTOL aircraft in China, mainly for aerial sightseeing and tourism applications. In this process, we have been exploring and improving operational procedures and safety rules, running our digital UAM operational platform on a trial basis, and developing feasible, replicable operational expertise and mode. It lays a solid foundation for our eVTOL operators to initiate commercial operations after required certifications and approvals are completed. Competition We operate in the emerging AAM industry, and provide various commercial solutions, including air mobility, smart city management and aerial media solutions. Our air mobility solutions may be alternatives with better efficiency and economics to those offered by traditional industry players, such as helicopters and ground transportation service providers. We believe the primary competitive factors in our markets include technological innovation, safety, certification, quality, user experience, and operational and manufacturing efficiency. We believe we are the first mover and a leader in air mobility solutions. We are the world’s first company to secure the TC, PC, standard AC and OC for human-carrying pilotless eVTOL aircraft from the aviation authority, allowing for commercial operations and mass production of our eVTOL aircraft. In comparison, according to our knowledge, most of our domestic and foreign peer companies have no such certificates yet and may still need years for them to obtain. In addition, our eVTOL aircraft’s unique features of compact, lightweight design, and autonomous flying and cluster management technologies enable higher safety, efficiency and economics for air taxi commercial operations in urban areas compared with other larger-sized, heavier, human-piloted, higher-cost aircraft products. In other areas of our business, including aerial logistics, smart city management and aerial media solutions, we also face several major competitors in separate field. We believe that we are strategically positioned in the commercial AAM market with exceptional pilotless eVTOL aircraft technologies, innovation capabilities, certifications, broad use cases and leading positions in providing integrated smart city management solutions and aerial media solutions. Intellectual Property We have significant capabilities in the areas of engineering, development and design and have developed a number of proprietary products, systems and technologies. Our success depends in part on our ability to protect our core technologies and intellectual property. We rely on a combination of patents, patent applications, trade secrets, know-how, copyrights, trademarks, intellectual property licenses and other contractual rights to establish and protect our proprietary rights in our technologies. In addition, we have entered into confidentiality and non-disclosure agreements with our employees and business partners. The agreements we entered into with employees provide that all software, inventions, developments, works of authorship and trade secrets created by them during the course of their employment are our property. 78 Table of Contents As of December 31, 2025, we had 506 issued patents, 324 pending patent applications, 698 registered trademarks, and 25 registered software copyrights. We will continue to expand our intellectual property portfolio. Seasonality Because of the nature of our business model, our overall business may experience a pattern of seasonality. For instance, some of our specific businesses such as aerial media solutions have showed seasonality in which we may receive more revenues from such business in major holidays. We may also have a lower number of deliveries of our products in the first quarter of each fiscal year due to holiday seasons. We may experience more pronounced seasonality as our business continues to expand. Insurance We maintain various types of insurance, employer’s liability insurance, to protect assets in the event of any accident that might cause significant losses. We also purchase insurance policies that are either legally compulsory or required by our customers. For example, we maintain third-party liability insurance for UAVs, which is required for our commercial operation license. We have liability insurances with coverage and conditions that we consider appropriate. For example, we maintain aviation product liability insurance, which covers bodily injury or property damage caused by defects in our products. In relation to our human-carrying pilotless eVTOL aircraft in operation, we have maintained airplane body and flight insurance to cover damages to passengers and third-party liabilities. We believe that our insurance coverage is adequate to cover our key assets, facilities and liabilities. PRC Regulation This section sets forth a summary of the most significant rules and regulations that affect our business activities in China. General Laws and Regulations Relating to Civil Aviation Administration On October 30, 1995, the Standing Committee of the National People’s Congress of the People’s Republic of China adopted the Civil Aviation Law of the People’s Republic of China (hereinafter referred to as the “Civil Aviation Law”), which was subsequently amended on August 27, 2009, April 24, 2015, November 7, 2016, November 4, 2017, December 29, 2018 and April 29, 2021. The Civil Aviation Law establishes the general principles and rules for civil aviation administration and domestic airspace management. Pursuant to the Civil Aviation Law, the State has absolute and exclusive sovereignty over its territorial airspace. The division of airspace must take into consideration the needs of both civil aviation and national defense and security, as well as the interests of the public, with a view to effect a rational, full and efficient use of the airspace. Detailed measures for airspace control will be formulated by the State Council and the Central Military Commission. The State Council’s department in charge of civil aviation will exercise uniform supervision and administration of civil aviation activities nationwide and will, in accordance with the law and the decisions of the State Council and within the limits of its authority, promulgate regulations and decisions concerning civil aviation activities. Regional civil aviation administration office established by the State Council’s department in charge of civil aviation will supervise and administer civil aviation activities within their respective regions in accordance with the authority delegated by the State Council’s department in charge of civil aviation. In addition, where it is otherwise provided for by the State Council or the Central Military Commission on the administration of unmanned aircrafts, such provisions shall prevail. On May 24, 2017, the Ministry of Transport promulgated the Civil Aviation Product and Parts Certification Regulations (hereinafter referred to as “CCAR-21”), which came into force on July 1, 2017. The purpose of these Regulations is to ensure the airworthiness of civil aviation products and parts, and they apply to the type certification, production certification and airworthiness certification of civil aviation products and parts. 79 Table of Contents On February 11, 2022, the Ministry of Transport promulgated the Certificate Rules on Civil Aircraft Maintenance Organization (hereinafter referred to as “CCAR-145”), which came into force on July 1, 2022. The purpose of these Rules is to regulate the issuance and administration of civil aircraft maintenance organization certificates and ensure the continued airworthiness and flight safety of civil aircrafts, and apply to the qualification certification, supervision and administration of organizations which have obtained civil aircraft maintenance organization certificates (hereinafter referred to as the “MO”). MO include Independent MO and Operator’s MO; Independent MO shall include Domestic MO and Foreign MO. On May 31, 2023, the State Council and the Central Military Commission jointly promulgated the Interim Regulations on the Operation Management of Unmanned Aerial Vehicle (hereinafter referred to as the “Interim Regulations on UAV”), which entered into force on January 1, 2024. The Interim Regulations on UAV classify UAV into five categories (micro, light, small, medium and large) based on performance indicators, and establish a full-chain management system covering airworthiness certification, registration management, operation requirements, airspace and flight activity management, operator management, liability insurance, etc. As China’s first administrative regulation comprehensively regulating the flight management of UAV, the Interim Regulations on UAV clarify the management system, objects and contents, realize the legalization of classification, scope, authority, procedures and responsibilities, and provide important guidelines for the high-quality implementation of low-altitude safety management. On January 1, 2024, the Ministry of Transport promulgated the Rules for the Administration of Operational Safety of Civil Unmanned Aerial Vehicle (hereinafter referred to as the “UAV Safety Rules” or “CCAR-92”), which entered into force on the same day. The UAV Safety Rules require real-name registration and risk-based operational classification of UAVs, clarify the basic requirements, scope of application, application and review procedures for airworthiness management, airspace management and operation management, and specify safety operation requirements for operators. Its promulgation marks PRC’s entry into an era of standardized and legalized unmanned aircraft supervision, and has become a milestone in maintaining aviation order, ensuring public safety, and promoting the healthy and orderly development of the AAM industry. Regulations on Airworthiness Management of UAV • Design Approval Design approval refers to a certificate issued by the Civil Aviation Administration of China (the “CAAC”) to confirm that the design of a model of aviation product complies with relevant airworthiness regulations and requirements. Forms of design approval include Type Certificates (“TC”) and Supplemental Type Certificates. A civil aircraft can only be put into production and use after passing type certification. Pursuant to the Civil Aviation Law, application shall be filed with the competent civil aviation authority under the State Council for type certificate for the design of civil aircraft and is engines, propellers and on-board equipment. A type certificate shall be issued accordingly if found qualified through examination. Pursuant to the relevant provisions of the Interim Regulations on UAV, CCAR-92 and CCAR-21, entities engaged in the design of medium and large unmanned aircraft systems (including unmanned aircraft and their remote-control stations, etc.) shall apply to the competent civil aviation authority of the State Council for design approval of civil unmanned aircraft in accordance with the law. The “Design Approval” chapter of CCAR-92 specifies the application and issuance of Type Certificates and Supplemental Type Certificates, the administration of certificate holders, and the basic requirements for the design assurance systems of applicants and holders. The Airworthiness Certification Management Procedure for Civil Unmanned Aircraft System (hereinafter referred to as the “Airworthiness Certification Management Procedure”) issued by CAAC on December 19, 2022, specifies the certification principles for design approval, specific requirements for design assurance systems, type certification processes, and the administration of design approval. In addition, CCAR-92 clearly sets out the eligibility requirements for applicants for design approval: applicants shall have established or be in the process of establishing a design assurance system that meets the requirements, formulated a design assurance manual in compliance with CAAC’s requirements, and further specifies the application documents and applicable requirements for the corresponding civil unmanned aircraft systems. 80 Table of Contents Pursuant to CCAR-92, an applicant may obtain a Type Certificate for the corresponding civil unmanned aircraft system if it has established a design assurance system that meets the requirements, and the corresponding civil unmanned aircraft system complies with the applicable requirements and conditions confirmed by CAAC. For design modifications to civil unmanned aircraft systems, CAAC may issue a Supplemental Type Certificate to the applicant if it confirms that the applicant has a design assurance system that meets the requirements and the design modification applied for approval complies with the applicable requirements. Unless otherwise specified by laws, regulations and rules, Type Certificates and Supplemental Type Certificates shall be valid for a long term. • Production Approval Production approval refers to a certificate issued by CAAC to entity to authorize the production of civil aviation products in accordance with the approved design and quality system. For an entity engaging the business of manufacturing civil aircraft products, this certificate is the Production Certificate (“PC”). Pursuant to the Civil Aviation Law, application shall be filed with the competent civil aviation authority under the State Council for production certificate for the production of civil aircraft and is engines, propellers and on-board equipment. A production certificate shall be issued accordingly if found qualified through examination. Pursuant to the relevant provisions of the Interim Regulations on UAV, CCAR-92 and CCAR-21, entities engaged in the production of medium and large civil unmanned aircraft systems shall apply to the competent civil aviation authority of the State Council for production approval of civil unmanned aircraft in accordance with the law. The “Production Approval” chapter of CCAR-92 specifies the application and issuance of Production Certificates, the administration of Production Certificate holders, and the management of production based on Type Certificates. CCAR-92 clearly sets out the eligibility and requirements for Production Certificate applicants: applicants for Production Certificates must hold or have applied for a Type Certificate or Supplemental Type Certificate, and shall establish and document a quality system that meets CAAC’s regulations and provide a quality manual. In addition, the Production Approval and Supervision Procedure issued by CAAC on December 6, 2023, further specifies the specific requirements and review processes for production approval, as well as the supervision requirements for Type Certificates holders and product-based system review requirements. Pursuant to CCAR-92, after confirming that the applicant meets the relevant requirements, CAAC shall issue a Production Certificate to the applicant, authorizing it to conduct production activities in accordance with the specified quality manual. The issuance of a Production Certificate indicates that the applicant has established a complete quality system that meets the requirements, ensuring that each civil unmanned aircraft and its components produced comply with the approved design and are in a safe and usable condition. If civil unmanned aircraft systems have similar production characteristics, more than one type of civil unmanned aircraft system may be produced under a single Production Certificate. The Production Limitation Record is part of the Production Certificate, which lists the serial numbers and types of the Type Certificates or Supplemental Type Certificates of each civil unmanned aircraft system permitted to be produced by the Production Certificates holder. Unless otherwise specified by laws, regulations and rules, Production Certificates shall be valid for a long term. If the location of production facilities is changed, additional Type Certificates or Supplemental Type Certificates are added, additional product types of civil unmanned aircraft are added, or both design approval and product types are added, the applicant shall apply to CAAC for modification of the Production Certificate. 81 Table of Contents In addition, pursuant to the Several Provisions on the Administration of the Production of Civil Unmanned Aerial Vehicle promulgated by the Ministry of Industry and Information Technology on December 18, 2023 and effective as of January 1, 2024, civil UAV producers shall assign a unique product identification code to each civil UAV they produce, which shall include the producer’s name code, product model code and serial number. Civil UAV producers shall file the information of the unique product identification code with the Ministry of Industry and Information Technology before putting the civil UAV into the market. Civil UAV producers shall not install malicious programs in civil UAV; if they discover defect or loophole etc. in network or data security in UAV, they shall immediately take remedial measures, promptly inform users in accordance with relevant national regulations, and report to the competent industry and information technology department of the local people’s government at or above the county level at its domicile or to the competent department of communications at the provincial level. The State encourages producers of civil unmanned aircraft to protect cyber and information security by using commercial passwords and other technical means according to the law. • Airworthiness Approval Airworthiness approval refers to a certificate issued by CAAC for certain product of an aircraft, aircraft engine, propeller or component to confirm that such aircraft, aircraft engine, propeller or component complies with the approved design and is in a safe and usable condition. Pursuant to the Civil Aviation Law, a civil aircraft possessing the nationality of the PRC may fly only if it holds an Airworthiness Certificate (“AC”) issued by the competent civil aviation authority of the State Council. Pursuant to the relevant provisions of the Interim Regulations on UAV, CCAR-92 and CCAR-21, airworthiness approval applies to medium and large civil unmanned aircraft systems engaged in specific category operations and certified category operations. The “Airworthiness Approval” chapter of CCAR-92 specifies the application, issuance and administration of Airworthiness Certificates such as Standard Airworthiness Certificates, Special Airworthiness Certificates, Special Flight Permits and Export Airworthiness Certificates, among which: Standard Airworthiness Certificates apply to normal and transport category civil unmanned aircraft systems that have obtained Type Certificates; Special Airworthiness Certificates apply to restricted category civil unmanned aircraft systems that have obtained Type Certificates; Special Flight Permits apply to civil unmanned aircraft systems that have not obtained valid Airworthiness Certificates or may not meet relevant airworthiness requirements but can safely conduct relevant flight activities under certain restrictive conditions. In addition, for civil unmanned aircraft systems intended for export overseas, if the importing country has special requirements, the exporter or its authorized representative shall apply for an Export Airworthiness Certificate for the system in accordance with the relevant requirements proposed by the importing country. However, the Export Airworthiness Certificate shall not serve as a document approving the operation of the civil unmanned aircraft system. Pursuant to CCAR-92 and the Airworthiness Certification Management Procedure, the owner or possessor of a civil unmanned aircraft system that has completed real-name registration in accordance with relevant requirements may apply for an Airworthiness Certificate for the civil unmanned aircraft system. The applicant shall submit an application form and relevant documents proving the airworthiness of the aircraft system, and accept the airworthiness inspection of the aircraft system by CAAC. CAAC shall issue the Airworthiness Certificate after completing the airworthiness inspection and confirming that the applicant meets the requirements. However, for new civil unmanned aircraft systems manufactured in accordance with Production Certificates, CAAC may issue the Airworthiness Certificate without conducting an airworthiness inspection after verifying the application materials submitted by the applicant. Any modification to the Airworthiness Certificate of a civil unmanned aircraft system shall be applied for to CAAC. During the registration of a civil unmanned aircraft in the PRC, unless the Airworthiness Certificate is suspended, revoked, or CAAC specifies an expiration date otherwise, the Airworthiness Certificate shall remain valid for a long term if the civil unmanned aircraft is maintained in accordance with relevant regulations and operated in compliance with operational restrictions. 82 Table of Contents • Ensuring Continuous Airworthiness Pursuant to the Civil Aviation Law, the owner or lessee of a civil aircraft shall use the aircraft in accordance with the scope of use prescribed in airworthiness certificate, conscientiously carry out the maintenance of aircraft, and ensure its airworthiness. Pursuant to the CCAR-145, Independent MO and Operator’s MO (including Domestic MO and Foreign MO) engaged in the maintenance of civil aircraft, their engines, propellers and on-board equipment shall apply for and obtain a Maintenance Certificate. The Independent MO refers to a MO which is independent from aircraft operators; the Operator’s MO refers to the MO set up by an operator or jointly with others, but controlled or actually managed by the operator, and designated to provide maintenance services for the aircraft or aircraft components of the operator itself. The operator’s MO shall be treated as an independent MO while providing maintenance services for the third-party organizations. The Maintenance Certificate is applicable for enterprises commercial routes and perform maintenance work in-house, but it remains unclear under the requirement set forth in the CCAR-145 that whether manufacturers that provide repair and maintenance services are required to obtain the Maintenance Certificate. In addition, given that we are a manufacturer of civil aircraft, whose corresponding maintenance business is not segregated from the production line and who does not provide maintenance services for civil aircraft products produced by third-party manufacturers, we are therefore not considered an Independent MO, nor do we need to obtain Maintenance Certificate at the present stage. Pursuant to CCAR-92, to ensure the airworthiness of civil unmanned aircraft systems, operators shall designate maintenance personnel or organizations with specific qualifications to perform the following maintenance work. Except that the qualifications of maintenance personnel or organizations for civil unmanned aircraft based on traditional aircraft design shall comply with the relevant requirements of the General Operating and Flight Rules (hereinafter referred to as “CCAR-91”), the qualification requirements for personnel or organizations performing maintenance work on civil unmanned aircraft systems are as follows: (i) for non-complex maintenance work on medium and large civil unmanned aircraft and their components, the work shall be performed by at least personnel who have passed the model-specific maintenance training in accordance with the specifications recommended by the manufacturer; (ii) for maintenance work on small civil unmanned aircraft, the work shall be performed by at least personnel who have passed the necessary unmanned aircraft maintenance knowledge and model-specific maintenance training; (iii) any personnel who have obtained a maintenance personnel license in accordance with the Civil Aircraft Maintenance Personnel License Management Rules (hereinafter referred to as “CCAR-66”) shall be deemed to meet the qualification requirements of the aforementioned personnel; (iv) for complex maintenance work on medium and large civil unmanned aircraft and their components, the work shall be performed by MO approved in accordance with the CCAR-145; (v) for maintenance work on remote control stations and control links, the work shall be performed by personnel who have passed the special training recommended by the manufacturer of the civil unmanned aircraft system or its service provider. The Aircraft Evaluation Group (AEG) of CAAC issued the EH216-S Aircraft Evaluation Report (AER.080E—Initial Version) on June 15, 2024, confirming that the content specified in the “Maintenance Personnel Qualification Specifications” chapter of the report will serve as the qualification requirements for maintenance personnel under the framework of China’s civil aviation regulations. The report clarifies that, given that the EH216-S unmanned aircraft is not based on traditional aircraft design, there is no requirement for maintenance personnel to hold an aircraft maintenance personnel license or model endorsement, but they shall complete the training in accordance with the EH216-S Unmanned Aircraft System Model-Specific Maintenance Training Specifications (Document No.: S-942TD521, Version A and subsequent revisions). The aforementioned training specifications mainly target the non-complex maintenance work of the EH216-S unmanned aircraft and its components and note that the EH216-S unmanned aircraft system does not involve complex maintenance work at present. The operational and continuous airworthiness documents recognized by AEG, including but not limited to the EH216-S Flight Manual, EH216-S Maintenance Manual and EH216-S Remote Operator Manual, and their revisions, will be directly provided by EHang to aviation operators or MO. In addition, EHang may provide model- specific maintenance training for maintenance personnel of the EH216-S unmanned aircraft system. Regulations on Registration Management of UAV Pursuant to the relevant provisions of the Interim Regulations on UAV and CCAR-92, the owner of a civil unmanned aircraft shall conduct real-name registration in accordance with the law, and the specific measures shall be formulated by the competent civil aviation authority under the State Council jointly with other relevant departments. Civil unmanned aircraft used for overseas flights shall make nationality registration pursuant to the law. 83 Table of Contents • Real-Name Registration Pursuant to the relevant provisions of the Measures for the Administration of Real-Name Registration of Civil Unmanned Aircraft issued and implemented by CAAC on May 16, 2017, owners of civil unmanned aircraft must conduct real-name registration in accordance with the requirements as of June 1, 2017. Pursuant to CCAR-92, the owner of a civil unmanned aircraft shall conduct real-name registration on the Civil Unmanned Aircraft Comprehensive Management Platform (UOM) in accordance with the provisions and obtain a registration mark before activating and using the civil unmanned aircraft. As of January 1, 2024, producers of civil unmanned aircraft shall ensure that the unmanned aircraft they produce are equipped with the function of being activated and used only after real-name registration and shall register the model information of their produced products on the UOM. If the contact information or other information of the owner or possessor changes or the use of the civil unmanned aircraft changes, the owner shall update the information. The validity period of real-name registration shall be from the date of issuance to the date of cancelation of registration. • Nationality Registration Pursuant to CCAR-92 and the Civil Unmanned Aircraft Nationality Registration Management Procedure issued by CAAC on January 20, 2023, civil unmanned aircraft involved in overseas flights or manned flights shall apply for the nationality of civil unmanned aircraft of the PRC in accordance with the requirements. A civil unmanned aircraft shall not have dual nationalities. The applicant shall fill in an application form for a nationality registration certificate. If the application is deemed to comply with the provisions after review, CAAC shall issue a nationality registration certificate and register it in the Nationality Register of Civil Unmanned Aircraft of the PRC. The validity period of the nationality registration certificate of a civil unmanned aircraft shall be from the date of issuance to the date of modification or cancelation of registration. Operators operating civil unmanned aircraft with the nationality registration of the PRC outside the territory of the PRC shall comply with the following provisions: (i) over the high seas, comply with the annexes to the Convention on International Civil Aviation and relevant rules; (ii) within the territory of other countries, comply with the effective laws, regulations and procedures of the host country concerning the operation of civil unmanned aircraft. Regulations on Operation Management of UAV • Operation Approval Management Pursuant to the Civil Aviation Law, general aviation refers to civil aviation operations other than public air transport with civil aircraft, including aerial work in the fields of industry, agriculture, forestry, fishery and building industry, as well as flight operations in medical and health work, emergency and disaster relief, meteorological service, ocean monitoring, scientific experiments, education and training, culture and sports. Organizations which engage in general purpose aviation of a non-business nature shall file with the State Council’s department in charge of civil aviation for the record. An organization which engages in general purpose aviation of a business nature must apply for a Business Permit For General Purpose Aviation with the State Council’s department in charge of civil aviation. On August 4, 2020, the Ministry of Transport promulgated the Measures for the Administration of General Aviation Operation Approval (hereinafter referred to as “CCAR-290”), which came into force on January 1, 2021. Pursuant to which, enterprises engaged in commercial general aviation activities shall obtain a Business Permit for General Purpose Aviation. Civil aircraft include manned aircraft and unmanned aircraft. Therefore, prior to the entry into force of the Interim Regulations on UAV, enterprises engaged in general aviation operations were required to apply for a Business Permit for General Purpose Aviation. Pursuant to the relevant provisions of the Interim Regulations on UAV and CCAR-92, units using civil unmanned aircraft other than micro civil unmanned aircraft for flight activities shall meet the following conditions and apply to the competent civil aviation authority of the State Council or the regional civil aviation administrative agency for a Remotely Piloted Aircraft Systems (RPAS) Air Operator Certificate (hereinafter referred to as “Operator Certificate” or “OC”): (i) have the management institutions, management personnel and operators meeting the requirements of these Regulations for the implementation of safe operations; (ii) have unmanned aircraft and relevant facilities and equipment meeting the requirements of safe operations;(iii) have the management systems and operating procedures required for the implementation of safe operations to ensure the continuous ability to implement safe operations in accordance with the systems and procedures; (iv) for units engaged in commercial activities, they shall also be profit-making legal persons. After receiving the application, the civil aviation administrative department shall conduct an operational safety assessment and make a decision on approval or disapproval in accordance with the law based on the assessment results. If approved, an Operator Certificate shall be issued. The operation of agricultural unmanned aircraft with a maximum take-off weight not exceeding 150 kilograms for agricultural, forestry, animal husbandry and fishery operations in the applicable airspace above agricultural, forestry, animal husbandry and fishery areas (hereinafter referred to as “regular agricultural unmanned aircraft operation flight activities”) does not require obtaining an Operator Certificate. Meanwhile, the Interim Regulations on UAV further clarify that engaging in commercial general aviation flight activities after obtaining an Operator Certificate and engaging in regular agricultural unmanned aircraft operation flight activities do not require obtaining a Business Permit For General Purpose Aviation and an Operation Certificate. 84 Table of Contents CCAR-92 specifies that the types of civil unmanned aircraft operations include: (i) Hover Operation; (ii) Line Operation; and (iii) Others. The commercial operation categories include: (i) Passenger Transportation; (ii) Person onboard; (iii) Laden; (iv) Training; and (v) Others. Meanwhile, CCAR-92 further specifies the issuance conditions, application materials, review procedures, etc. for Operator Certificates. In addition, CAAC issued a notice on soliciting opinions on the Application and Issuance of Operational Approval under CCAR-92 on March 15, 2024, providing guidance for operators applying for operational approval under the Rules for Unmanned Aircraft Safety and clarifying the standard formats of civil unmanned aircraft Operator Certificates and operational specifications. Unless otherwise specified by laws, regulations and rules, an Operator Certificate shall be valid for 24 calendar months from the date of issuance or renewal. • Airspace Management and Flight Control Pursuant to the Civil Aviation Law, the specific measures for airspace management shall be formulated by the State Council and the Central Military Commission. Within a designated controlled airspace, one air traffic control unit shall be responsible for the air traffic control of aircraft in that airspace. Civil aircraft conducting flight activities in controlled airspace shall obtain the approval of the air traffic control unit. Pursuant to the General Flight Rules of the People’s Republic of China promulgated by the State Council and the Central Military Commission on October 18, 2007 and effective as of 00:00 on November 22, 2007, the flight control within the territory of China shall be uniformly organized and implemented by the Air Force of the Chinese People’s Liberation Army, and the relevant flight control departments shall provide air traffic control services in accordance with their respective division of responsibilities. The organization and implementation of general aviation flight activities must go through the approval procedures in accordance with relevant provisions and submit a flight application to the local flight control department. The content of the flight application includes: the nature of the task, the type of aircraft, the flight scope, the start and end time, the flight altitude and flight conditions, etc. Prior to conducting any flight activities within the territory of China (including demonstration and test flights of unmanned aircraft, and take-offs related to aerial media solutions and logistics services), an application must be submitted in advance and approved. Pursuant to the relevant provisions of the Interim Regulations on UAV and CCAR-92, China designates Unmanned Aircraft Controlled Airspace (hereinafter referred to as “Controlled Airspace”) as needed. Airspace above 120 meters above ground level, air restricted areas, air prohibited areas and their surrounding airspace, ultra-low-altitude flight airspace for military aviation, and the airspace above the following areas shall be designated as Controlled Airspace: (i) airports and certain surrounding areas; (ii) certain areas on the Chinese side of national borders, actual control lines and border lines; (iii) military restricted areas, military administrative areas, supervision places and other classified units and certain surrounding areas; (iv) important military industrial facility protection areas, nuclear facility control areas, production and storage areas of flammable, explosive and other dangerous goods, and large-scale storage areas of combustible important materials; (v) public infrastructure such as power plants, substations, gas stations (LPG stations), water supply plants, public transportation hubs, aviation and power hubs, major water conservancy facilities, ports, expressways, and electrified railway lines, as well as certain surrounding areas and drinking water source protection areas; (vi) facilities requiring special protection of the electromagnetic environment such as radio observatories, satellite measurement and control (navigation) stations, aeronautical radio navigation stations, and radar stations, as well as certain surrounding areas; (vii) important revolutionary memorial sites, important immovable cultural relics and certain surrounding areas; (viii) other areas specified by the national air traffic management leading body. The airspace outside the scope of Controlled Airspace is the applicable airspace for micro, light and small civil unmanned aircraft. No unmanned aircraft flight activities shall be conducted in Controlled Airspace without the approval of the air traffic management authority. 85 Table of Contents Pursuant to the Interim Regulations on UAV, the competent civil aviation, public security, industrial and information technology, market supervision and administration departments of the State Council shall be responsible for the relevant management of unmanned aircraft nationwide in accordance with their division of responsibilities. Unless otherwise specified by these Regulations, units or individuals organizing unmanned aircraft flight activities shall submit a flight activity application to the air traffic management authority before 12:00 on the day preceding the intended flight. The air traffic management authority shall make a decision on approval or disapproval before 21:00 on the day preceding the flight. On November 16, 2018, the Civil Aviation Administration of China Southern Regional Administration promulgated the Interim Measures for the Administration of Unmanned Aircraft Flights in the Shenzhen Area. Pursuant to these Measures, the Staff Department of the Southern Theater Command Air Force is responsible for organizing and implementing the pilot work of unmanned aircraft flight management in the Shenzhen area. Unmanned aircraft operation units and individuals shall declare the airspace to the flight control department of the Southern Theater Command Air Force five working days before the flight implementation. The flight control department of the Southern Theater Command Air Force shall, after synthesizing the opinions of the civil aviation administrative department and the public security organ, make a decision on approval or disapproval two working days before the flight implementation. For small, medium and large unmanned aircraft to carry out flight activities, they must first obtain airspace use approval. After the airspace application is approved, a flight application shall be submitted through the designated declaration platform before 15:00 on the day preceding the intended flight. The military aviation flight control department shall give a reply before 21:00 on the day preceding the flight and distribute it to the public security department and the civil aviation administrative department. • Geofencing In China, CAAC promulgated the industry standard Unmanned Aircraft Fencing on October 20, 2017, which came into force on December 1, 2017. Pursuant to the relevant provisions of the Interim Regulations on UAV, operators conducting unmanned aircraft flight activities shall make adequate safe flight preparations before the flight, inspect the condition of the unmanned aircraft, and promptly update information such as electronic fencing. CCAR-92 further requires that operators shall enable the civil unmanned aircraft they use to have corresponding airspace maintenance capabilities through technical measures such as electronic fencing. • Trial Operation The Flight Standards Department, Airworthiness Certification Department and Air Traffic Management Industry Management Office of CAAC jointly issued the consultative circular Interim Procedures for the Administration of Trial Operation of Specific Category Unmanned Aircraft (hereinafter referred to as the “Interim Procedures”) on February 1, 2019. The Interim Procedures classify unmanned aircraft into nine categories based on their empty weight and maximum take-off weight: category I includes unmanned aircraft with empty weight and maximum take-off weight between 0 and 1.5 kg (inclusive); category II includes unmanned aircraft with empty weight of 1.5 to 4 kg (inclusive) and maximum take-off weight of 1.5 to 7 kg (inclusive); category III includes unmanned aircraft with empty weight of 4 to 15 kg (inclusive) and maximum take-off weight of 7 to 25 kg (inclusive); category IV includes unmanned aircraft with empty weight of 15 to 116 kg (inclusive) and maximum take-off weight of 25 to 150 kg (inclusive); category V includes agricultural plant protection unmanned aircraft; category V includes unmanned airships; category VII includes category I and II unmanned aircraft operating beyond visual line of sight; category XI includes unmanned aircraft with empty weight of 116 to 5,700 kg (inclusive) and maximum take-off weight of 150 to 5,700 kg (inclusive); category XII includes unmanned aircraft with empty weight and maximum take-off weight both exceeding 5,700 kg. The Interim Procedures apply to: (i) category IV unmanned aircraft; (ii) high-risk operation types of category III unmanned aircraft (for which the competent authority deems trial operation certification necessary); (iii) low-risk category XI and XII unmanned aircraft (for which the competent authority deems trial operation certification feasible). Pursuant to the Interim Procedures, applicants applying for trial operation of the aforementioned applicable categories of unmanned aircraft must first submit a plan to CAAC for preliminary discussion and application; conduct a pre-trial operation safety assessment based on the Specific Operations Risk Assessment (SORA) to initially verify operational risks and ensure risks are controlled within an acceptable range; obtain review and confirmation from the CAAC Trial Operation Certification Team that the trial operation risks are effectively controlled and acceptable. CAAC recognizes the applicant’s trial operation by issuing a trial operation approval letter. The trial operation may be suspended or terminated under specific circumstances, including: the actual operation is inconsistent with the approval letter, there are uncontrollable operational risks, the applicant voluntarily abandons the trial operation, etc. Complete records of the trial operation shall be kept, including the operation manual, list of unmanned aircraft, aircraft maintenance records and personnel qualification information. At the start of the trial operation, the applicant shall have third-party insurance to ensure that all risks during the operation are covered. In addition, the Interim Procedures define “risk” as a combination of the frequency (probability) of an event and its related severity, covering ground risks and air risks. 86 Table of Contents • Remote Pilot License and Ratings Pursuant to the Interim Regulations on UAV, personnel operating small, medium and large unmanned aircraft shall apply to the competent civil aviation authority of the State Council for the corresponding unmanned aircraft remote pilot license. Personnel operating micro and light unmanned aircraft do not need to obtain a remote pilot license, but shall proficiently master the operation methods of the relevant models and understand risk warning information and relevant management systems. CCAR-92 further clarifies the relevant requirements for remote pilot management: (i) personnel operating micro and light civil unmanned aircraft do not need to obtain an remote pilot license, but shall comply with the relevant safety operation requirements specified therein (e.g., passing the relevant theoretical training and examinations prescribed by CAAC to obtain a safety operation theoretical qualification certificate); (ii) personnel operating small, medium and large civil unmanned aircraft shall obtain and carry a valid remote pilot license when exercising the corresponding rights; (iii) operators implementing distributed operation of civil unmanned aircraft systems shall obtain the corresponding remote pilot license in accordance with CAAC’s provisions. After completing the corresponding training, CAAC shall issue the corresponding type of remote pilot license to the applicant who meets the requirements of the corresponding application category, class and type (if applicable), and endorse the corresponding category, class and type (if applicable) rating on the license. It should be noted that CAAC may allow and authorize relevant personnel to operate civil unmanned aircraft that have obtained Type Certificates and applied for operational certification within the territory of China by issuing a “Type Approval Letter for Large Civil Unmanned Aerial Vehicle Remote Pilot”. In addition, the EH216-S Aircraft Evaluation Report (AER.080E—Initial Version) issued by the Aircraft Evaluation Group (AEG) of CAAC on June 15, 2024, clarifies that the Training Department of EHang may provide training for remote operators of the EH216-S unmanned aircraft system. • Import and Export According to the Measures for the Administration on Import and Export License for Dual-use Items and Technologies, which was issued on December 31, 2025 and became effective on January 1, 2026, a license is required for the exportation of any dual-use goods, products and technologies of the PRC included in a control list issued by the Ministry of Commerce. Notably, certain types of UAVs are subject to the foregoing export license requirements, such as UAVs with (a) a maximum endurance time greater than or equal to 1 hour, (b) maximum endurance time greater than or equal to half an hour but less than 1 hour and the ability to take-off and conduct stable flight against a wind speed of no less than 46.3 kilometer/hour; (c) automatic controlling system and navigation capability containing aerosol preparation for planting with volume of 20 liters or being capable of installing aerosol preparation system for planting with volumes of 20 liters after designing and modification. We may be required to obtain the necessary license for the exportation of certain of our products. Failure to obtain required export licenses could result in penalties, restrictions on our export activities, and reputational harm. 87 Table of Contents • Wireless Communication Our UAVs and command-and-control centers have installed certain radio transmission equipment and telecommunication equipment. For radio transmission equipment, pursuant to the Regulations on the Administration of Radio in the PRC promulgated by the State Council and CMC, with effect from December 1, 2016, radio transmission equipment produced or imported for the purpose of sale and use in the PRC shall comply with laws and regulations in respect of product quality and administration of state radio, as well as other applicable national standards. Except for micro power short-distance radio transmission equipment, for any production or import of other radio transmission equipment for domestic sale and use, an application for model confirmation shall be filed with the radio regulatory authority of the state. According to Telecommunications Regulation of PRC promulgated by State Counsel on September 25, 2000, amended in July 2014 and February 2016, the government stipulates a network connection licensing system for telecommunications equipment. The telecommunications equipment accessing a public telecommunications network shall comply with the national standards, and obtain a network access certificate. We purchase certain equipment and models with Transmission Equipment Type Approval Certificate and Network Access Certificate from our supplier. • Construction On November 1, 1997, the SCNPC promulgated the Construction Law of PRC, which was amended on April 22, 2011 and April 23, 2019. The Construction Law provides that construction enterprises, survey units, design units and project supervision units engaging in construction activities shall be classified under different qualification grades based on certain criteria such as their registered capital, technical professionals team, technical equipment owned and track records of completed construction projects, etc., and may engage in construction activities within the scope permitted for their qualification grade upon passing examination of qualifications and obtaining the qualification certificate for the corresponding grade. Contractor of construction projects shall also possess a qualification certificate. Construction enterprises are prohibited from contracting projects beyond the scope of business permitted for their qualification grade or in any form in the name of another construction enterprise. A construction enterprise must not allow another organization or individual to use their qualification certificate or business license to contract any form of construction projects. According to the Construction Law, Contractors contracting projects without obtaining a qualification certificate shall be clamped down and be subject to a fine; illegal income, if any, shall be confiscated. • Product Liability and Tort Liability Pursuant to the Product Quality Law of the PRC, which was promulgated on February 22, 1993 and subsequently amended on July 8, 2000, August 27, 2009 and December 29, 2018, the production or sale of products that do not meet applicable health and safety standards and requirements is prohibited. Products must not pose unreasonable dangers to human or property. Where a defective product causes physical injury to a person or damage to property, the aggrieved party may make a claim for compensation from the producer or the seller of the product. Producers and sellers of non-compliant products may be ordered to cease production and sale of such products, subject to fines and/or revocation of business license. Non-compliant products, as well as earnings attributable to the sales of such products may also be confiscated. 88 Table of Contents In addition, pursuant to the Tort Law of the PRC, promulgated by the SCNPC on December 26, 2009 and taking effect since July 1, 2010, the manufacturer of defective products that cause damage shall bear tort liability. On May 28, 2020, the Third Session of the 13th National People’s Congress passed the Civil Code of the People’s Republic of China, which took effect on January 1, 2021 and replaced the Tort Law of the PRC. Where defects are discovered after the relevant products are put in circulation, the manufacturer and the seller shall promptly adopt remedial measures such as warnings and product recalls, failing which, the manufacturer and the seller will be liable for tort claims. • Consumer Rights Protection Our business is subject to a variety of consumer protection laws, including the PRC Consumer Rights and Interests Protection Law, as amended on October 25, 2013, which imposes stringent obligations on business operators. Failure to comply with these consumer protection laws could subject us to administrative sanctions, such as the issuance of warning, confiscation of income, imposition of fines, order to cease business operations, revocation of business licenses, as well as potential civil and criminal liabilities. • Internet Information Security and Privacy Protection In November 2016, the SCNPC promulgated the Cyber Security Law of the PRC, or the Cyber Security Law, which became effective on June 1, 2017. The Cyber Security Law requires that a network operator, which includes, among others, internet information services providers, to take technical measures and/or other necessary measures in accordance with applicable laws, regulations and national and industrial standards, to ensure the safe and stable operation of its networks. We are considered an “internet information service provider” as we operate website and mobile application and providing certain internet services mainly through our mobile application. The Cyber Security Law further requires internet information service providers to formulate contingency plans for network security incidents, report to competent departments immediately upon the occurrence of any incident endangering cyber security and take corresponding remedial measures. Internet information service providers are also required to maintain the integrity, confidentiality and availability of network data. The Cyber Security Law reaffirms the basic principles and requirements specified in other existing laws and regulations on personal data protection, such as the requirements on the collection, use, processing, storage and disclosure of personal data, and internet information service providers being required to take technical and other necessary measures to ensure the security of the personal information they have collected and prevent the personal information from being divulged, damaged or lost. Any violation of the Cyber Security Law may subject the internet information service provider like us to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, shutdown of websites or criminal liabilities. The recommended national standard, Information Security Technology Personal Information Security Specification, which became effective in October 2020, puts forward specific refinement requirements on the collection, preservation, use, sharing, transfer, and public disclosure of personal information. Although it is not mandatory, in the absence of clear implementation rules and standards for the law on cyber security and other personal information protection, it will be used as the basis for judging and making determinations. On November 28, 2019, The Notice of Identification Method of Application Illegal Collection and Use of Personal Information was issued, which provides a reference for the identification of illegal collection and use of personal information by mobile apps, and provides guidance for app operators’ self-inspection and self-correction and netizens’ social supervision. On June 10, 2021, the Standing Committee of the National People’s Congress of China promulgated the Data Security Law of PRC, or Data Security Law, which took effect in September 2021. The Data Security Law sets forth data security and privacy related compliance obligations on entities and individuals carrying out data related activities. The Data Security Law also introduces a data classification and layered protection system based on the importance of data and the degree of impact on national security, public interests or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked or illegally acquired or used. In addition, the Data Security Law provides a national security review procedure for those data activities that may affect national security, and imposes export restrictions on certain data and information. According to the PRC National Security Law, the State shall establish institutions and mechanisms for national security review and regulation, and conduct national security review on certain matters that affect or may affect PRC national security, such as key technologies and IT products and services. In early July 2021, regulatory authorities in China launched cybersecurity investigations with regard to several China-based companies that are listed in the United States. 89 Table of Contents On July 10, 2021, the CAC released the revised draft of Cybersecurity Review Measures (for public comments). On December 28, 2021, the CAC, NDRC, MIIT, the MPS, the Ministry of National Security, the MOF, the MOFCOM, the People’s Bank of China, the SAMR, the National Radio and Television Administration, the CSRC, the National Administration of State Secrets Protection and the State Cryptography Administration jointly released the Cybersecurity Review Measures, which took effect on February 15, 2022. Pursuant to the Cybersecurity Review Measures, network platform operators with information of over one million users shall be subject to cybersecurity review before listing abroad. The cybersecurity review will evaluate, among others, the risk of critical information infrastructure, core data, important data, or the risk of a large amount of personal information being influenced, controlled or maliciously used by foreign governments after going public, and Cyber information security risk. On August 17, 2021, the State Council promulgated the Regulations on the Protection of the Security of Critical Information Infrastructure, or the CIIO Regulations, which took effect in September 2021. The CIIO Regulations supplement and specify the provisions on the security of critical information infrastructure as stated in the Cyber Security Law. The CIIO Regulations provide, among others, that protection department of certain industry or sector shall notify the operator of the critical information infrastructure in time after the identification of certain critical information infrastructure. According to the CIIO Regulations, operators of certain industries or sectors that may endanger national security, people’s livelihood and public interest in case of damage, function loss or data leakage may be identified as critical information infrastructure operators by the CAC or the respective industrial regulatory authorities once they meet the identification standards promulgated by the governmental authorities. On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the Personal Information Protection Law of the PRC, or the Personal Information Protection Law, which took effect in November 2021. As the first systematic and comprehensive law specifically for the protection of personal information in the PRC, the Personal Information Protection Law provides, among others, that (i) an individual’s separate consent shall be obtained before operation of such individual’s sensitive personal information, e.g., biometric characteristics and individual location tracking, (ii) personal information operators operating sensitive personal information shall notify individuals of the necessity of such operations and the influence on the individuals’ rights, (iii) if personal information operators reject individuals’ requests to exercise their rights, individuals may file a lawsuit with a People’s Court. Furthermore, on May 28, 2020, the National People’s Congress of the PRC approved the PRC Civil Code, which came into effect on January 1, 2021. Pursuant to the PRC Civil Code, the collection, storage, use, process, transmission, provision and disclosure of personal information should follow the principles of legitimacy, properness and necessity. On July 7, 2022, the CAC issued the Measures for the Security Assessment of Outbound Data Transfer, pursuant to which, the data processor shall apply to the CAC for the security assessment via the local provincial-level cyberspace administration authority for an outbound data transfer under following circumstances: (i) outbound transfer of important data by a data processor; (ii) outbound transfer of personal information by a critical information infrastructure operator or a personal information processor who has processed the personal information of more than 1,000,000 people; (iii) outbound transfer of personal information by a personal information processor who has made outbound transfers of the personal information of 100,000 people cumulatively or the sensitive personal information of 10,000 people cumulatively since 1 January of the previous year; and (v) other circumstances as specified by the CAC. The assessment results of the data exit are valid for two years. In addition, on November 14, 2021, the Administration Regulations on Cyber Data Security (Draft for Comments) was proposed by the CAC for public comments until December 13, 2021. On September 24, 2024, PRC State Council promulgated the Administration Regulations on Cyber Data Security, or the Cyber Data Security Regulation, which became effective on January 1, 2025. It sets out general guidelines, protection of personal information, security of important data, security management of cross-border data transfer, obligations of internet platform operators, supervision and management, and legal liabilities. Network data processors should in accordance with the provisions of laws and administrative regulations and the mandatory requirements of national standards, and on the basis of multi-level protection of cyber security, strengthen the protection of network data security, establish and perfect the system of network data security management, and take technical measures such as encryption, backup, access control and security authentication as well as other necessary measures to protect network data from being falsified, destroyed, divulged or illegally acquired or used, dispose of network data security incidents, prevent illegal and criminal activities aiming at and using network data, and assume primary responsibility for the security of the network data handled by them. Moreover, network products and services provided by a network data processor shall comply with the compulsory requirements of the relevant national standards; in the case of any risk such as security defect or bug discovered to be associated with a network product or service, the network data processor shall take remedial measures forthwith, notify users in a timely manner and report the same to the relevant competent authority in accordance with the provisions; in the case of any harm to the national security or public interest, the network data processor shall also report the same to the relevant competent authority within 24 hours. The Cyber Data Security Regulation requires the data processors that carry out network data processing activities that affect or may affect national security, shall undergo a national security review in accordance with relevant national laws and regulations. In addition, where it is impossible to avoid the collection of unnecessary personal information by using automatic collection technology or an individual’s personal information without obtaining his/her consent according to the law, or an individual deregisters his/her account, the cyber data processor shall delete or anonymize the personal information. 90 Table of Contents On September 24, 2024, the State Council promulgated the Regulation on Network Data Security Management (the “Cyber Data Security Regulation”), which became effective on January 1, 2025. It sets out general guidelines, protection of personal information, security of important data, security management of cross-border data transfer, obligations of internet platform operators, supervision and management, and legal liabilities. Network data processors should in accordance with the provisions of laws and administrative regulations and the mandatory requirements of national standards, and on the basis of multi-level protection of cyber security, strengthen the protection of network data security, establish and perfect the system of network data security management, and take technical measures such as encryption, backup, access control and security authentication as well as other necessary measures to protect network data from being falsified, destroyed, divulged or illegally acquired or used, dispose of network data security incidents, prevent illegal and criminal activities aiming at and using network data, and assume primary responsibility for the security of the network data handled by them. Moreover, network products and services provided by a network data processor shall comply with the compulsory requirements of the relevant national standards; in the case of any risk such as security defect or bug discovered to be associated with a network product or service, the network data processor shall take remedial measures forthwith, notify users in a timely manner and report the same to the relevant competent authority in accordance with the provisions; in the case of any harm to the national security or public interest, the network data processor shall also report the same to the relevant competent authority within 24 hours. The Cyber Data Security Regulation requires the data processors that carry out network data processing activities that affect or may affect national security, shall undergo a national security review in accordance with relevant national laws and regulations. In addition, where it is impossible to avoid the collection of unnecessary personal information by using automatic collection technology or an individual’s personal information without obtaining his/her consent according to the law, or an individual deregisters his/her account, the cyber data processor shall delete or anonymize the personal information. On March 22, 2024, the CAC enacted the Provisions on Promoting and Regulating Cross-Border Data Flows, or the Cross-Border Data Flows Provisions, further regulating that a data processor’s responsibility to conduct cybersecurity review such as applying for the data export security assessment, submitting the standard contract filing, or obtaining the compliance certification can be exempted under certain circumstances, including, among others: (1) an individual’s information must be provided abroad for entering into or performing a contract which the individual is a contracting party, such as for cross-border shopping, cross-border delivery, cross-border remittance, cross-border payment, cross-border account opening, air ticket and hotel reservation, visa processing and examination services; (2) an employee’s information must be provided abroad for human resource management under the labor-relating rules and regulations and a collective contract signed in accordance with the law; (3) an individual’s information that must be provided abroad to protect the safety of his/her life and property under emergency circumstances; and (4) the cumulative number of the individuals’ information that a data processor (other than CIIO) transferred abroad in a year since January 1 is smaller than 100,000 individuals and no sensitive personal information is included. 91 Table of Contents However, the relationship between the Data Security Law of the PRC and the implemented National Security Law of the PRC, the Cyber Security Law of the PRC, the Confidentiality Law of the PRC and the Personal Information Protection Law of the PRC needs to be carefully clarified. Intellectual Property Rights • Patent Law According to the Patent Law of the PRC (as amended in 1992, 2000, 2008 and 2020), or the Patent Law, the State Intellectual Property Office is responsible for administering patent laws in the PRC. The provincial, autonomous region and municipal level patent administration departments are responsible for the administration of patent laws within their respective jurisdictions. The Chinese patent system adopts a first-to-file principle, which means that when more than one person files patent applications with respect to the same invention, the person who files the application first will obtain the patent of the invention. To be patentable, an invention or a utility model must meet three criteria: novelty, inventiveness and practicability. A patent is valid for twenty years in the case of an invention, ten years in the case of utility models and fifteen years in the case of designs. • Regulations on Copyright The Copyright Law of the PRC, or the Copyright Law, which took effect on June 1, 1991 and was amended in 2001, 2010 and 2020, provides that Chinese citizens, legal persons, or other organizations shall, whether published or not, own copyright in their copyrightable works, which include, among others, works of literature, art, natural science, social science, engineering technology and computer software. Copyright owners enjoy certain legal rights, including right of publication, right of authorship and right of reproduction. The Copyright Law also extends copyright protection to internet activities, products disseminated over the internet and software products. In addition, the Copyright Law provides for a voluntary registration system administered by the China Copyright Protection Center, or the CPCC. According to the Copyright Law, an infringer of the copyrights shall be subject to various civil liabilities, which include ceasing infringement activities, making apology to the copyright owners and compensating the copyright owners for his/her loss. Infringers of copyright may also be subject to fines and/or administrative or criminal liabilities in severe situations. In order to further implement the Regulations on Computer Software Protection, the National Copyright Administration issued the Measures for the Registration of Computer Software Copyright on February 20, 2002, which specify detailed procedures and requirements with respect to the registration of software copyrights. Pursuant to the Computer Software Copyright Protection Regulations promulgated by the State Council on December 20, 2001 and amended on January 30, 2013, software copyright owner may complete registration formalities with a software registration authority recognized by the State Council’s copyright administrative department. The software copyright owner may authorize others to exercise that copyright, and is entitled to receive remuneration. • Trademark Law Trademarks are protected by the Trademark Law of the PRC which was adopted on August 23, 1982 and subsequently amended in 1993, 2001, 2013 and 2019 (to take effect on November 1, 2019) as well as by the Implementation Regulations of the PRC Trademark Law adopted by the State Council in 2002 and as most recently amended on April 29, 2014. The Trademark Office under the State Administration for Industry and Commerce takes charge of trademark registrations. The Trademark Office grants a ten-year term to registered trademarks which term may be renewed for another ten-year period upon request by the trademark owner. A trademark registrant may license its registered trademarks to another party by entering into trademark license agreements, which must be filed with the Trademark Office for its record. As with trademark registrations, the Trademark Law has adopted a first-to-file principle. If a trademark applied for is identical or similar to another trademark which has already been registered or subject to a preliminary examination and approval for use on the same or similar kinds of products or services, such trademark application may be rejected. Any person applying for the registration of a trademark may not injure existing trademark rights first obtained by others, nor may any person register in advance a trademark that has already been used by another party and has already gained a “sufficient degree of reputation” through such party’s use. 92 Table of Contents • Regulations on Domain Names The MIIT promulgated the Measures on Administration of Internet Domain Names, or the Domain Name Measures, on August 24, 2017, which took effect on November 1, 2017 and replaced the Administrative Measures on China Internet Domain Names promulgated by the MIIT on November 5, 2004. According to the Domain Name Measures, the MIIT is in charge of the administration of PRC internet domain names. The domain name registrations follow a first-to-file principle. Applicants for registration of domain names must provide the true, accurate and complete information of their identities to domain name registration service institutions. The applicants will become the holders of such domain names upon the completion of the registration procedures. Foreign Investment • The Foreign Investment Law On March 15, 2019, the SCNPC approved the Foreign Investment Law of the PRC, which took effect on January 1, 2020 and replace three existing laws on foreign investments in China, namely, the PRC Equity Joint Venture Law, the PRC Cooperative Joint Venture Law and the Wholly Foreign-owned Enterprise Law, together with their implementation rules and ancillary regulations. The Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic invested enterprises in China. The Foreign Investment Law establishes the basic framework for the access to, and the promotion, protection and administration of foreign investments in view of investment protection and fair competition. According to the Foreign Investment Law, “foreign investment” refers to investment activities directly or indirectly conducted by one or more natural persons, business entities, or otherwise organizations of a foreign country (collectively referred to as “foreign investor”) within China, and the investment activities include the following situations: (i) a foreign investor, individually or collectively with other investors, establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares in assets, or other like rights and interests of an enterprise within China; (iii) a foreign investor, individually or collectively with other investors, invests in a new project within China; and (iv) investments in other means as provided by laws, administrative regulations, or the State Council. According to the Foreign Investment Law, the State Council will publish or approve to publish a catalogue for special administrative measures, or the “negative list.” The Foreign Investment Law grants national treatment to foreign invested entities, except for those foreign invested entities that operate in industries deemed to be either “restricted” or “prohibited” in the “negative list”. The Foreign Investment Law provides that foreign invested entities operating in foreign restricted or prohibited industries will require market entry clearance and other approvals from relevant PRC governmental authorities. Furthermore, the Foreign Investment Law provides that foreign invested enterprises established according to the existing laws regulating foreign investment may maintain their structure and corporate governance within five years after the implementing of the Foreign Investment Law. In addition, the Foreign Investment Law also provides several protective rules and principles for foreign investors and their investments in the PRC, including, among others, that local governments shall abide by their commitments to the foreign investors; foreign-invested enterprises are allowed to issue stocks and corporate bonds; except for special circumstances, in which case statutory procedures shall be followed and fair and reasonable compensation shall be made in a timely manner, expropriation or requisition of the investment of foreign investors is prohibited; mandatory technology transfer is prohibited; and the capital contributions, profits, capital gains, proceeds out of asset disposal, licensing fees of intellectual property rights, indemnity or compensation legally obtained, or proceeds received upon settlement by foreign investors within China, may be freely remitted inward and outward in RMB or a foreign currency. Also, foreign investors or the foreign investment enterprise should be imposed legal liabilities for failing to report investment information in accordance with the requirements. 93 Table of Contents On December 26, 2019, the State Council promulgated the Implementation Regulations on the Foreign Investment Law, which came into effect on January 1, 2020. It further requires that foreign-invested enterprises and domestic enterprises shall be treated equally with respect to policy making and implementation. Pursuant to the Implementation Regulations on the Foreign Investment Law, if the existing foreign-invested enterprises fail to change their original forms as of January 1, 2025, the relevant market regulation departments will not process other registration matters for these enterprises, and may disclose their relevant information to the public. On December 30, 2019, the MOFCOM and the State Administration for Market Regulation jointly issued the Measures for Reporting of Foreign Investment Information, or the Foreign Investment Information Measures, which came into effect on January 1, 2020 and replaced the Interim Administrative Measures for the Record-filing of the Establishment and Modification of Foreign-invested Enterprises. Since January 1, 2020, for foreign investors carrying out investment activities directly or indirectly in the PRC, foreign investors or foreign-invested enterprises shall submit investment information through the Enterprise Registration System and the National Enterprise Credit Information Publicity System operated by the State Administration for Market Regulation. Foreign investors or foreign-invested enterprises shall disclose their investment information by submitting reports for their establishments, modifications and cancellations and their annual reports in accordance with the Foreign Investment Information Measures. If a foreign-invested enterprise investing in the PRC has finished submitting its reports for its establishment, modifications and cancellation and its annual reports, the relevant information will be shared by the competent market regulation department to the competent commercial department, and does not require such foreign-invested enterprise to submit the reports separately. The establishment, operation and management of corporate entities in the PRC are governed by the PRC Company Law, which was initially promulgated by the SCNPC on December 29, 1993 and was most recently amended on December 29, 2023. The current PRC Company Law will come into effect on July 1, 2024. The PRC Company Law generally governs two types of companies, limited liability companies and joint stock limited companies. The PRC Company Law also applies to foreign-invested companies that are also subject to the operation of other laws and regulations applicable to foreign investment. • Foreign Investment Negative List The Special Administrative Measures for Access of Foreign Investment (Negative List), the “Negative List”) was firstly issued by the NDRC and the MOFCOM on June 28, 2018, and latest amended and promulgated on September 6, 2024. The Negative List sets forth the prohibited or restricted industries or economic activities for foreign investment in China, including that the legal representative of a general aviation company shall be a Chinese citizen, general aviation companies for agriculture, forestry, or fishing shall be restricted to equity joint ventures, and the Chinese party shall have a controlling stake in a general aviation company for any other field. Foreign Exchange • General Administration of Foreign Exchange Under the Regulation of the People’s Republic of China on Foreign Exchange Administration promulgated on January 29, 1996 and most recently amended on August 5, 2008 and various regulations issued by the State Administration of Foreign Exchange, or the SAFE, and other relevant PRC government authorities, Renminbi is convertible into other currencies for current account items, such as trade-related receipts and payments and payment of interest and dividends. The conversion of Renminbi into other currencies and remittance of the converted foreign currency outside the PRC for capital account items, such as direct equity investments, loans and repatriation of investment, require the prior approval from the SAFE or its local office. Payments for transactions that take place within the PRC must be made in Renminbi. Unless otherwise approved, PRC companies may not repatriate foreign currency payments received from abroad or retain the same abroad. Foreign-invested enterprises may retain foreign exchange in accounts with designated foreign exchange banks under the current account items subject to a cap set by the SAFE or its local office. Foreign exchange proceeds under the current accounts may be either retained or sold to a financial institution engaged in settlement and sale of foreign exchange pursuant to relevant SAFE rules and regulations. For foreign exchange proceeds under the capital accounts, approval from the SAFE is generally required for the retention or sale of such proceeds to a financial institution engaged in settlement and sale of foreign exchange. 94 Table of Contents Pursuant to the Circular of the SAFE on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investments, or the SAFE Circular No. 59 promulgated by the SAFE on November 19, 2012, which became effective on December 17, 2012 and was further amended on May 4, 2015, and again October 10, 2018, and December 30, 2019, approval of the SAFE is not required for opening a foreign exchange account and depositing foreign exchange into the accounts relating to the direct investments. The SAFE Circular No. 59 also simplified foreign exchange-related registration required for foreign investors to acquire equity interests in PRC companies and further improved the administration on foreign exchange settlement for foreign-invested enterprises. The Circular on Further Simplifying and Improving the Foreign Currency Management Policy on Direct Investments, or the SAFE Circular No. 13, effective from June 1, 2015, and was amended on December 30, 2019, removes the requirement of administrative approvals for foreign exchange registration of direct domestic investments and direct overseas investments and simplifies the procedure of foreign exchange-related registration. Pursuant to the SAFE Circular No. 13, the investors shall register with banks for direct domestic investment and direct overseas investments. The Circular on Reforming the Management Approach regarding the Settlement of Foreign Exchange of Foreign-invested Enterprises, or the SAFE Circular No. 19, which was promulgated by the SAFE on March 30, 2015 and became effective on June 1, 2015, provides that a foreign-invested enterprise may, according to its actual business needs, settle with a bank the portion of the foreign exchange capital in its capital account for which the relevant foreign exchange administration has confirmed monetary capital contribution rights and interests (or for which the bank has registered the injection of the monetary capital contribution into the account). Pursuant to the SAFE Circular No. 19, for the time being, foreign-invested enterprises are allowed to settle 100% of their foreign exchange capital on a discretionary basis; a foreign-invested enterprise shall truthfully use its capital for its own operational purposes within the scope of business; where an ordinary foreign-invested enterprise makes domestic equity investment with the amount of foreign exchanges settled, the invested enterprise must first go through domestic re-investment registration and open a corresponding account for foreign exchange settlement pending payment with the foreign exchange administration or the bank at the place where it is registered. According to the Circular of the State Administration of Foreign Exchange on Abolishing and Nullifying Five Regulatory Documents on Foreign Exchange Administration and Seven Regulatory Documents on Foreign Exchange Administration promulgated on December 30, 2019, there are no longer restrictions on the use of foreign exchange settlement in the special overseas inflow deposit account and the special domestic inflow deposit account. The Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or the SAFE Circular No. 16, which was promulgated by the SAFE and became effective on June 9, 2016, provides that enterprises registered in the PRC may also convert their foreign debts from foreign currency into Renminbi on a self-discretionary basis. The SAFE Circular No. 16 also provides an integrated standard for conversion of foreign exchange under capital account items (including but not limited to foreign currency capital and foreign debts) on a self-discretionary basis, which applies to all enterprises registered in the PRC. According to the SAFE Circular No. 13, the Administrative Rules on the Company Registration that was promulgated by the State Council on June 24, 1994 and most recently amended on February 6, 2016, and other laws and regulations governing foreign invested enterprises and company registrations, the establishment of a foreign invested enterprise and any capital increases and other major changes in a foreign invested enterprise shall be registered with a designated bank at the place of its registration and the State Administration for Market Regulation, or the SAMR, or its local counterparts, and be filed via the foreign investment comprehensive administrative system, or the FICMIS, if such foreign invested enterprise does not involve special access administrative measures prescribed by the PRC government. On December 4, 2023, the SAFE promulgated the Notice of the State Administration of Foreign Exchange on Further Promoting the Convenience of Cross-border Trade and Investment, or the SAFE Circular 28. The SAFE Circular 28 stipulates that non-investment FIEs may use capital to carry out domestic equity investment in accordance with the law provided that such investment does not violate the Negative List and the projects invested are genuine and in compliance with laws and regulations. 95 Table of Contents • Loans by the Foreign Companies to their PRC Subsidiaries A loan made by foreign investors to a foreign invested enterprise in which it has an equity interest is considered to be foreign debt in China and is regulated by various laws and regulations, including the Regulation of the People’s Republic of China on Foreign Exchange Administration, the Interim Provisions on the Management of Foreign Debts, the Statistical Monitoring of Foreign Debts Tentative Provisions, the Detailed Rules for the Implementation of Provisional Regulations on Statistics and Supervision of External Debt, and the Administrative Measures for Registration of Foreign Debts. Under these rules and regulations, a shareholder loan in the form of foreign debt made to a PRC entity does not require the prior approval of the SAFE. However, such foreign debt must be registered with and recorded by the SAFE or its local branches within fifteen business days after execution of the relevant agreement. Pursuant to these rules and regulations, the balance of the foreign debts of a foreign invested enterprise shall not exceed the difference between the total investment and the registered capital of the foreign invested enterprise, or Total Investment and Registered Capital Balance. Pursuant to the Interim Provisions of the State Administration for Industry and Commerce on the Ratio of the Registered Capital to the Total Investment of a Sino-Foreign Equity Joint Venture Enterprise, promulgated by SAMR on February 17, 1987 and taking effect on March 1, 1987, with respect to a Sino-foreign equity join venture, the registered capital shall be (i) no less than 7/10 of its total investment, if the total investment is US$3 million or under US$3 million; (ii) no less than 1/2 of its total investment, if the total investment is ranging from US$3 million to US$10 million (including US$10 million), provided that the registered capital shall not be less than US$2.1 million if the total investment is less than US$4.2 million; (iii) no less than 2/5 of its total investment, if the total investment is ranging from US$10 million to US$30 million (including US$30 million), provided that the registered capital shall not be less than US$5 million if the total investment is less than US$12.5 million; and (iv) no less than 1/3 of its total investment, if the total investment exceeds US$30 million, provided that the registered capital shall not be less than US$12 million if the total investment is less than US$36 million. On January 11, 2017, the People’s Bank of China, or the PBOC promulgated the Notice of the People’s Bank of China on Matters concerning the Macro-Prudential Management of Full-Covered Cross-Border Financing, or the PBOC Notice No. 9. Pursuant to the PBOC Notice No. 9, within a transition period of one year from January 11, 2017, the foreign invested enterprises may adopt the currently valid foreign debt management mechanism, or Current Foreign Debt Mechanism, or the mechanism as provided in the PBOC Notice No. 9, or Notice No. 9 Foreign Debt Mechanism, at their own discretions. The PBOC Notice No. 9 provides that enterprises may conduct independent cross-border financing in Renminbi or foreign currencies as required. Pursuant to the PBOC Notice No. 9, the outstanding cross-border financing of an enterprise (the outstanding balance drawn, here and below) shall be calculated using a risk-weighted approach, or Risk-Weighted Approach, and shall not exceed the specified upper limit, namely: risk-weighted outstanding cross-border financing ≤ the upper limit of risk-weighted outstanding cross-border financing. Risk-weighted outstanding cross-border financing = Σoutstanding amount of Renminbi and foreign currency denominated cross-border financing * maturity risk conversion factor * type risk conversion factor + Σoutstanding foreign currency denominated cross-border financing * exchange rate risk conversion factor. Maturity risk conversion factor shall be one (1) for medium and long-term cross-border financing with a term of more than one year and 1.5 for short-term cross-border financing with a term of no less than one (1) year. Type risk conversion factor shall be one (1) for on-balance-sheet financing and one (1) for off-balance-sheet financing (contingent liabilities) for the time being. Exchange rate risk conversion factor shall be 0.5. The PBOC Notice No. 9 further provides that the upper limit of risk-weighted outstanding cross-border financing for enterprises shall calculated and adjustable based on the equation of upper limit of risk-weighted outstanding cross-border financing = the capital or the net assets × the leverage rate of cross-border financing × the macro-prudential adjustment parameter. For enterprises, the leverage rate of cross-border financing shall be 2 and the macro-prudential adjustment parameter shall be 1, which means that the upper limit of risk-weighted outstanding cross-border financing for an enterprise shall be 200% of its net assets. Enterprises shall file with the SAFE in its capital item information system after entering into the relevant cross-border financing contracts and prior to three (3) business days before drawing any money from the foreign debts. On March 11, 2020, the PBOC and the SAFE issued PBOC and SAFE Notice Concerning Adjustment to the Full Caliber Cross-border Finance Adjustment Parameter, pursuant to which the macro-prudential adjustment parameter has been increased from 1 to 1.25, which means that the upper limit of risk-weighted outstanding cross-border financing for an enterprise is increased to 250% of its net assets. 96 Table of Contents Based on the foregoing, if we provide funding to our wholly foreign owned subsidiaries through shareholder loans, the balance of such loans shall not exceed the Total Investment and Registered Capital Balance and we will need to register such loans with the SAFE or its local branches in the event that the Current Foreign Debt Mechanism applies, or the balance of such loans shall be subject to the Risk-Weighted Approach and the net asset limits and we will need to file the loans with the SAFE in its information system in the event that the Notice No. 9 Foreign Debt Mechanism applies. According to the PBOC Notice No. 9, after a transition period of one year from January 11, 2017, the PBOC and the SAFE will determine the cross-border financing administration mechanism for the foreign-invested enterprises after evaluating the overall implementation of the PBOC Notice No. 9. It is uncertain which mechanism will be adopted by the PBOC and the SAFE in the future and what statutory limits will be imposed on us when providing loans to our PRC subsidiaries. • Offshore Investment by PRC Residents Pursuant to the SAFE’s Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Financing and Round-Trip Investment via Overseas Special Purpose Vehicles and its subsequent amendments, supplements or implementation rules, or SAFE Circular 75, issued on October 21, 2005, a PRC resident (whether a natural person or a legal person) shall register with the local branch of the SAFE before it establishes or controls an overseas special purpose vehicle, or an SPV, with assets or equity interests in a PRC company, for the purpose of overseas equity financing. On July 4, 2014, SAFE issued the SAFE’s Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Outbound Investment and Financing and Round-trip Investments via Special Purpose Vehicles, or the SAFE Circular 37, which superseded SAFE Circular 75. According to SAFE Circular 37, the PRC domestic resident shall apply for SAFE registration for overseas investment before paying capital to SPV by using his, her or its legal assets whether overseas or domestic. The SPV is defined as “offshore enterprise directly established or indirectly controlled by the domestic residents (including domestic institutions and individuals) with their legally owned assets and equity of the domestic enterprise, or legally owned offshore assets or equity, for the purpose of offshore investment and financing”. In addition, in the event that the SPV undergoes changes of its basic information such as the individual shareholder, name, operation term, etc., or material events including increase or decrease in investment amount by domestic individual shareholder, equity transfer or swap, mergers, spin-off, etc., the domestic resident shall timely complete the change of foreign exchange registration formality for offshore investment. According to the SAFE Circular 37, failure to make such registration or truthfully disclose actual controllers of the round-trip enterprises may subject PRC residents to fines of up to RMB300,000 in case of domestic institutions or RMB50,000 in case of domestic individuals. If the registered or beneficial shareholders of the offshore holding company who are PRC residents do not complete their registration with the local SAFE branches, the relevant PRC subsidiary may be prohibited from distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to the offshore company, and the offshore company may be restricted in its ability to contribute additional capital to its PRC subsidiary. Moreover, failure to comply with the SAFE registration and amendment requirements described above could result in liability under PRC laws for violating applicable foreign exchange restrictions. Mr. Huazhi Hu, our founder, has completed initial registration under the SAFE Circular 37 with respect to his shareholding in our company through his wholly-owned company incorporated in the British Virgin Islands. An amendment to the registration is required if there are material changes to the registrant, such as any changes to the identity of the registrant, increases or decreases in investment amount, transfers or exchanges of shares and mergers. We cannot provide any assurance that all of our shareholders who are PRC residents will file all applicable registrations or amend previously filed registrations as required by these SAFE regulations. The failure or inability of our PRC resident shareholders to comply with the registration procedures may subject the PRC resident shareholders to fines and legal sanctions, restrict our cross-border investment activities, or limit our PRC subsidiaries’ ability to distribute dividends to or obtain foreign exchange-dominated loans from our company. • Dividend Distribution The principal laws and regulations regulating the distribution of dividends by foreign-invested enterprises in the PRC include the PRC Company Law, as amended in 2004, 2005, 2013, 2018 and 2023, the Foreign Investment Law of PRC promulgated in 2020 and the Implementation Rules to the Foreign Investment Law promulgated in 2020. Under the current regulatory regime in the PRC, foreign-invested enterprises may pay dividends only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. A PRC company is required to set aside as statutory reserve funds of at least 10% of its after-tax profit, until the cumulative amount of such reserve funds reaches 50% of its registered capital unless laws regarding foreign investment provide otherwise. A PRC company shall not distribute any profits until any losses from prior fiscal years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year. 97 Table of Contents Taxation • Enterprise Income Tax On March 16, 2007, the SCNPC promulgated the Enterprise Income Tax Law of the PRC which was amended on February 24, 2017 and December 29, 2018. On December 6, 2007, the State Council enacted the Regulations for the Implementation of the Enterprise Income Tax Law, or collectively, the EIT Law. The EIT Law came into effect on January 1, 2008 and was amended on April 23, 2019 and December 6, 2024. Under the EIT Law, both resident enterprises and non-resident enterprises are subject to tax in the PRC. Resident enterprises are defined as enterprises that are established in China in accordance with PRC laws, or that are established in accordance with the laws of foreign countries but are actually or in effect controlled from within the PRC. Non-resident enterprises are defined as enterprises that are organized under the laws of foreign countries and whose actual management is conducted outside the PRC, but have established institutions or premises in the PRC, or have no such established institutions or premises but have income generated from inside the PRC. Under the EIT Law and relevant implementing regulations, a uniform corporate income tax rate of 25% is applied. However, if non-resident enterprises have not formed permanent establishments or premises in the PRC, or if they have formed permanent establishment or premises in the PRC but there is no actual relationship between the relevant income derived in the PRC and the established institutions or premises set up by them, enterprise income tax is set at the rate of 10% with respect to their income sourced from inside the PRC. According to the EIT Law and relevant regulations, subject to the approval of competent tax authorities, the income tax of an enterprise that has been determined to be a high and new technology enterprise shall be reduced to a preferential rate of 15%. • Value-added Tax Pursuant to the Value-added Tax Law of the People’s Republic of China promulgated by the SCNPC on December 25, 2024 and became effective on January 1, 2026, all enterprises and individuals that engage in the sale of goods, services, intangible assets or immovable properties and the importation of goods within the territory of the PRC must pay value-added tax (the “VAT”). The VAT tax implemented is 13%, 9%, 6%, and shall be adjusted by the State Council. • Tax on Indirect Transfer On February 3, 2015, the SAT issued the Circular on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or the SAT Circular 7. Pursuant to the SAT Circular 7, an “indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises, may be recharacterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax. When determining whether there is a “reasonable commercial purpose” of the transaction arrangement, features to be taken into consideration include, inter alia, whether the main value of the equity interest of the relevant offshore enterprise derives directly or indirectly from PRC taxable assets; whether the assets of the relevant offshore enterprise mainly consists of direct or indirect investment in China or if its income is mainly derived from China; and whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have real commercial nature which is evidenced by their actual function and risk exposure. The SAT Circular 7 does not apply to transactions of sale of shares by investors through a public stock exchange where such shares were acquired on a public stock exchange. On October 17, 2017, the SAT issued the Circular on Issues of Tax Withholding regarding Source of Non-PRC Resident Enterprise Income Tax, or the SAT Circular 37, which further elaborates on the relevant implemental rules regarding the calculation, reporting and payment obligations of the withholding tax by the non-resident enterprises. 98 Table of Contents Employment and Social Welfare • Labor Contract Law The Labor Contract Law of the PRC, or the Labor Contract Law, which was promulgated on June 29, 2007 and amended on December 28, 2012, is primarily aimed at regulating rights and obligations of employer and employee relationships, including the establishment, performance and termination of labor contracts. Pursuant to the Labor Contract Law, labor contracts shall be concluded in writing if labor relationships are to be or have been established between employers and employees. Employers are prohibited from forcing employees to work in excess of certain time limit and employers shall pay employees for overtime work in accordance with national regulations. In addition, employee wages shall be no lower than the local minimum wages and must be paid to employees in a timely manner. • Interim Provisions on Labor Dispatch Pursuant to the Interim Provisions on Labor Dispatch promulgated by the Ministry of Human Resources and Social Security on January 24, 2014, which became effective on March 1, 2014, dispatched workers are entitled to the same pay as the fulltime employees for the same nature of work. Employers are allowed to use dispatched workers for temporary, auxiliary or substitutive positions, and the number of dispatched workers must not exceed 10% of the total number of employees. • Social Insurance and Housing Fund As required under the Regulation of Insurance for Labor Injury implemented on January 1, 2004 and amended in 2010, the Provisional Measures for Maternity Insurance of Employees of Corporations implemented on January 1, 1995, the Decisions on the Establishment of a Unified Pension Insurance Program for Enterprise Employees of the State Council issued on July 16, 1997, the Decisions on the Establishment of the Medical Insurance Program for Urban Workers of the State Council promulgated on December 14, 1998, the Unemployment Insurance Measures promulgated on January 22, 1999 and the Social Insurance Law of the PRC implemented on July 1, 2011 and amended on December 29, 2018, employers are required to provide their employees in the PRC with welfare benefits covering pension insurance, unemployment insurance, maternity insurance, labor injury insurance and medical insurance. These payments are made to local administrative authorities. Any employer that fails to make social insurance contributions may be ordered to rectify the non-compliance and pay the required contributions within a prescribed time limit and be subject to a late fee. If the employer still fails to rectify the failure to make the relevant contributions within the grace period, it may be subject to a fine ranging from one (1) to three (3) times the amount overdue. In accordance with the Regulations on the Management of Housing Fund which was promulgated by the State Council in 1999 and amended in 2002 and 2019, employers must register at the designated administrative centers and open bank accounts for depositing employees’ housing funds. An employee and his/her employer are also required to pay and deposit certain percentage of the monthly average salary of such employee as housing funds in the preceding year in full and on time. • Employee Stock Incentive Plan Pursuant to the Notice of Issues Related to the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Listed Company, or the SAFE Circular 7, which was issued by the SAFE on February 15, 2012, if PRC “domestic individuals” (both PRC residents and non-PRC residents who reside in China for a continuous period of not less than one year, excluding foreign diplomatic personnel and representatives of international organizations) participate in any stock incentive plan of an overseas listed company, a PRC domestic qualified agent, which could be the PRC subsidiary of such overseas listed company, shall, among others things, file, on behalf of such individual, an application with the SAFE to conduct the SAFE registration with respect to such stock incentive plan, and obtain approval for an annual allowance with respect to the purchase of foreign exchange in connection with stock holding or stock option exercises. In addition, the SAFE Circular 37 also provides certain requirements and procedures of foreign exchange registration in relation to equity incentive plan of SPV before listing. In this regard, if a non-listed SPV grants equity incentives to its directors, supervisors, senior officers or other employees in its domestic subsidiaries, the relevant domestic individual residents may register with the SAFE before exercising their rights. 99 Table of Contents In addition, the SAT has issued certain circulars concerning employee stock options and restricted shares. Under these circulars, employees working in the PRC who exercise stock options or are granted restricted shares will be subject to PRC individual income tax. The PRC subsidiaries of an overseas listed company are required to file documents related to employee stock options and restricted shares with relevant tax authorities and to withhold individual income taxes of employees who exercise their stock option or purchase restricted shares. If the employees fail to pay or the PRC subsidiaries fail to withhold income tax in accordance with relevant laws and regulations, the PRC subsidiaries may face sanctions imposed by the tax authorities or other PRC governmental authorities. • M&A Rules and Overseas Listing On August 8, 2006, six (6) PRC governmental and regulatory agencies, including the MOFCOM and the China Securities Regulatory Commission, or the CSRC, promulgated the Rules on Acquisition of Domestic Enterprises by Foreign Investors, or the M&A Rules that became effective on September 8, 2006 and was revised on June 22, 2009, governing the mergers and acquisitions of domestic enterprises by foreign investors. The M&A Rules, among other things, require that if an overseas company established or controlled by PRC companies or individuals, or PRC Citizens, intends to acquire equity interests or assets of any other PRC domestic company affiliated with the PRC Citizens, such acquisition must be submitted to the MOFCOM for approval. The M&A Rules also require that an offshore SPV, or an SPV formed for overseas listing purposes and controlled directly or indirectly by PRC companies or individuals, shall obtain the approval of the CSRC prior to overseas listing and trading of such SPV’s securities on an overseas stock exchange. On February 17, 2023, the CSRC issued rules and regulations concerning the filing management of overseas listing, which came into effect on March 31, 2023. The rules and regulations issued include the Provisional Measures for the Administration of Overseas Issuance and Listing of Securities by Domestic Enterprises, or the New Filing Rules, and five supporting guidelines. The New Filing Rules dictate that enterprises that have been listed overseas prior to March 31, 2023 constitute “Existing Issuers.” Existing Issuers are required to complete filing procedure with the CSRC before they conduct refinancing activities or issue securities such as convertible bonds, exchangeable bonds and preference shares, unless such securities are issued as equity incentive awards or in connection with conversion of public reserve funds into increased company capital, share dividends or share split. Given that the New Filing Rules were recently promulgated, there remains substantial uncertainties as to their interpretation, application, and enforcement and how they will affect an Existing Issuer’s operations and future financing. Environmental Protection and Work Safety • Environmental Protection Pursuant to the Environmental Protection Law of the PRC promulgated by the SCNPC, on December 26, 1989, amended on April 24, 2014 and effective on January 1, 2015, any entity which discharges or will discharge pollutants during course of operations or other activities must implement effective environmental protection safeguards and procedures to control and properly treat waste gas, waste water, waste residue, dust, malodorous gases, radioactive substances, noise vibrations, electromagnetic radiation and other hazards produced during such activities. On March 12, 2026, the National People’s Congress adopted the Ecological and Environmental Code of the People’s Republic of China, which will take effect on August 15, 2026, to replace the above Environment Protection Law of the PRC. The code establishes a dedicated chapter on “Pollutant Discharge Permit Management,” requiring all pollutant-discharging entities to be included in permit management; it also includes specific provisions on legal liabilities for violations of pollutant discharge permit regulations, imposing stricter penalties for acts such as falsifying monitoring data. Environmental protection authorities impose various administrative penalties on persons or enterprises in violation of applicable environmental laws. Such penalties include warnings, fines, orders to rectify within the prescribed period, orders to cease construction, orders to restrict or suspend production, orders to make recovery, orders to disclose relevant information or make an announcement, imposition of administrative action against relevant responsible persons, and orders to shut down enterprises. Any person or entity that pollutes the environment resulting in damage could also be held liable under the Civil Code of the PRC. In addition, environmental organizations may also bring lawsuits against any entity that discharges pollutants detrimental to the public welfare. 100 Table of Contents Environmental protection authorities impose various administrative penalties on persons or enterprises in violation of the Environmental Protection Law. Such penalties include warnings, fines, orders to rectify within the prescribed period, orders to cease construction, orders to restrict or suspend production, orders to make recovery, orders to disclose relevant information or make an announcement, imposition of administrative action against relevant responsible persons, and orders to shut down enterprises. Any person or entity that pollutes the environment resulting in damage could also be held liable under the Civil Code of the PRC. In addition, environmental organizations may also bring lawsuits against any entity that discharges pollutants detrimental to the public welfare. • Work Safety Under relevant construction safety laws and regulations, including the Work Safety Law of the PRC which was promulgated by the SCNPC on June 29, 2002, amended on August 27, 2009, August 31, 2014, and June 10, 2021 and effective as of September 1, 2021, production and operating business entities must establish objectives and measures for work safety and improve the working environment and conditions for workers in a planned and systematic way. A work safety protection scheme must also be set up to implement the work safety job responsibility system. In addition, production and operating business entities must arrange work safety training and provide the employees with protective equipment that meets the national standards or industrial standards. Automobile and components manufacturers are subject to the aforementioned environment protection and work safety requirements. • Fire Control Pursuant to the Fire Safety Law of the PRC promulgated by the SCNPC on April 29, 1998, amended on October 28, 2008, April 23, 2019, and April 29, 2021 and which became effective on April 29, 2021 and the Interim Provisions for Management of Examination and Acceptance of Fire Protection Design of Construction Projects promulgated by the Ministry of Housing and Urban-Rural Development of the PRC on April 1, 2020, amended on August 21, 2023, and became effective on October 30, 2023, the construction entity of a large-scale crowded venue (including the construction of a manufacturing factory that is over 2,500 square meters) and other special construction projects must apply for fire prevention design review with fire control authorities, and complete fire assessment inspection and acceptance procedures after the construction project is completed. The construction entity of other construction projects must provide fire protection design and technical materials meeting the construction needs when it applies for construction work permits, and complete the filing for fire safety completion inspection and acceptance procedures within five business days after passing the construction completion inspection and acceptance. If the construction entity fails to pass the fire safety inspection before such venue is put into use, or fails to conform to the fire safety requirements after such inspection, it shall be subject to (i) orders to suspend the construction of projects, use of such projects or operation of relevant business; and (ii) a fine ranging between RMB30,000 and RMB300,000. C. Organizational Structure The following diagram illustrates our corporate structure as of the date of this annual report. 101 Table of Contents Notes: (1) Mr. Huazhi Hu and Mr. Weixian Xia hold 95.0% and 5.0% equity interests in the VIE, respectively. In September 2025, Mr. Shuai Feng transferred all of his equity interests in the VIE to Mr. Huazhi Hu. (2) As of December 31, 2025, the mandatorily redeemable non-controlling interests in Yunfu EHang Intelligent Technology Limited were fully repaid in June 2025 and the investor was deregistered in August 2025. Accordingly, the WFOE holds 96.2% of the equity interests in Yunfu EHang Intelligent Technology Limited as of December 31, 2025. Contractual Arrangements with the VIE and its Shareholders The following is a summary of the currently effective contractual arrangements by and among the WFOE, the VIE and the VIE’s shareholders. Contractual Agreements that Provide Us with Power to Direct the Activities of the VIE Shareholders Voting Proxy Agreement. Pursuant to the shareholders voting proxy agreement dated October 21, 2020 and as amended on August 18, 2025 and November 21, 2025, respectively, and the power of attorney granted thereunder, each of the VIE’s shareholders irrevocably authorizes the WFOE to act as his attorney-in-fact to exercise all of his rights as a shareholder of the VIE, including, but not limited to, the right to (i) propose, convene and preside over the shareholders’ meetings; (ii) attend shareholders’ meetings; (iii) vote on any resolution that requires a shareholder vote pursuant to applicable laws and the articles of association of the VIE, such as the sale and transfer of all or part of the equity interests owned by such shareholder; and (iv) designate and appoint legal representative, directors, supervisors, general manager and other senior management. Pursuant to the shareholders voting proxy agreement, a breach by any party of its obligations thereunder which is not remedied within a reasonable period or within ten days after written notice may give rise to liability for breach. Where the Registered Shareholders or the VIE is in breach, the WFOE is entitled to terminate the agreement and claim compensation. Where the breach is by the WFOE, the non-defaulting party may claim damages but, unless otherwise required by law, does not have the right to terminate the agreement. The shareholders voting proxy agreement will remain effective for 20 years and can be extended at the WFOE’s sole discretion. The power of attorney granted under the shareholders voting proxy agreement will remain effective continuously from the date of execution, and the WFOE is entitled to assign its rights relating to the equity interests to any other person or entity at its own discretion. 102 Table of Contents The Special Agreement on the Capital Increase of the VIE. Pursuant to the special agreement on the capital increase of the VIE dated February 22, 2019 and as amended on November 21, 2025, among the WFOE, the VIE and the shareholders of the VIE, being Mr. Hu and Mr. Yifang Xiong which was amended on September 7, 2020, October 21, 2020 and August 18, 2025, respectively, the WFOE has granted interest-free loans with an aggregate amount of RMB60 million to the shareholders of the VIE for the sole purpose of providing funds necessary for the capital increase to the VIE. The loans shall be repaid by the shareholders of the VIE through a transfer of their equity interests in the VIE to the WFOE, in proportion to the amount of the loans to be repaid. As of the date of this annual report, the full amount of these loans remains outstanding. Share Pledge Agreements. Pursuant to the share pledge agreements dated October 21, 2020 and September 4, 2025 and as amended on November 21, 2025, between the WFOE and each of the shareholders of the VIE, the shareholders of the VIE have pledged their entire equity interests in the VIE to the WFOE, to guarantee the performance of their obligations under the exclusive technical consulting and services agreement, the exclusive services agreement, the shareholders voting proxy agreement and the exclusive option agreement described elsewhere in this annual report. In the event of a breach by any of the VIE’s shareholders of his contractual obligations under the relevant agreements, the WFOE, as pledgee, will have the right to acquire all or part of the pledged equity interests in the VIE. The shareholders of the VIE also undertake that, without the prior written consent of the WFOE, they will not create any encumbrance on or otherwise transfer or dispose of their respective equity interests in the VIE. The share pledge agreements will remain effective until all the contractual obligations under the relevant agreement have been satisfied in full, the WFOE exercises its unilateral and unconditional right to terminate the share pledge agreements, or it is terminated as required by applicable PRC laws and regulations. As of the date of this annual report, we have registered all such share pledges with the relevant authorities in accordance with PRC regulations. Agreement that Allows Us to Receive Economic Benefits from the VIE Exclusive Technical Consulting and Services Agreements. Pursuant to the exclusive technical consulting and services agreement, dated January 29, 2016 and subsequently amended on November 30, 2018 and November 21, 2025, respectively, and the exclusive services agreement dated January 29, 2016 and as amended on November 21, 2025, between the WFOE and the VIE, the WFOE has the exclusive right to provide the VIE and the VIE’s subsidiaries with technical consulting and services, including but not limited to those relating to the development, manufacturing and sales of intelligent aerial vehicles. Without the WFOE’s prior written consent, the VIE cannot, directly or indirectly, accept any technical consulting services subject to this agreement from any third party. the VIE agrees to pay the WFOE a service fee equal to 100% of the consolidated net profits of the VIE after the VIE turns profitable on a cumulative basis and after netting off certain expenses. Our WFOE has the sole discretion in determining the service fee charged to the VIE under this agreement. Our WFOE has the exclusive ownership of all the intellectual property rights created as a result of the performance of the exclusive technical consulting and services agreement. The exclusive technical consulting and services agreement and the exclusive agreement, unless terminated earlier in accordance with their terms, have an initial term of ten years and shall be automatically renewed for successive ten-year periods without limitation on the number of renewals. Notwithstanding the foregoing, the WFOE has the exclusive and unconditional right, at its sole discretion, to terminate the agreements at any time by giving notice to VIE,while VIE does not have the right to terminate the agreements. Agreement that Provides Us with the Option to Purchase the Equity Interests in the VIE Exclusive Option Agreement. Pursuant to the exclusive option agreement dated October 21, 2020 and as amended on August 18, 2025 and November 21, 2025, respectively, among the WFOE, the VIE and the shareholders of the VIE, each of the shareholders of the VIE has irrevocably granted the WFOE an exclusive option to purchase all or part of his equity interests in the VIE. Our WFOE or its designated person may exercise such options at the lowest price permitted under applicable PRC laws. Any proceeds received by the shareholders of the VIE from the exercise of the options shall be remitted to the WFOE or its designated party, to the extent permitted under applicable PRC laws. The shareholders of the VIE undertake that, without the WFOE’s prior written consent, they will not, among other things, (i) create any pledge or encumbrance on their equity interests in the VIE, (ii) transfer or otherwise dispose of their equity interests in the VIE, or (iii) request any distribution of profits, income or any form of profit sharing, and any such assets that have been transferred to the shareholders of the VIE (including any legal or beneficial interests in assets, business or income that have been sold, transferred, pledged or otherwise disposed of without the prior consent of the WFOE) shall be returned to the WFOE or any entity designated by the WFOE. In addition, the Registered Shareholders undertake that, upon the winding up of the VIE, all assets obtained by them shall be transferred to the WFOE or any entity designated by the WFOE at nil consideration or at the lowest price permissible under applicable PRC laws. The exclusive option agreements will remain effective until all equity interests in the VIE have been transferred to the WFOE or our designated person. The WFOE may terminate the agreement at its sole discretion. 103 Table of Contents In the opinion of Zhong Lun Law Firm, our PRC legal counsel: • the ownership structures of the WFOE and the VIE are in compliance with applicable PRC laws and regulations currently in effect; and • each of the contractual arrangement is valid, legal and binding on the parties thereto under applicable PRC Laws currently in effect, and each party to the contractual arrangement is entitled to assert its respective rights and is obligated to perform its respective duties in accordance with the terms and conditions of each contractual arrangement, subject to applicable PRC Laws currently in effect, except that: a) the exercise of the option by the WFOE of its rights under the Exclusive Option Agreement to acquire all or part of the equity interests in the VIE is subject to the approval and consent of, and the filing and/or registration with the competent PRC governmental authorities; b) any equity pledge contemplated under the Equity Pledge Agreement is subject to the registration with competent PRC governmental authorities; and c) pursuant to the dispute resolution provisions of the contractual arrangement, (x) in the event of any dispute arising from the performance of or relating to the contractual arrangements, each party thereto has the right to submit the relevant dispute to the Guangzhou Arbitration Commission for arbitration, and (y) the arbitral tribunal may award any remedies in accordance with applicable PRC laws and regulations, including temporary and permanent injunctive relief (e.g. injunctions against carrying out business activities, or mandating the transfer of assets) or order the winding up of the Domestic Company according to applicable laws, and each party thereto may apply to the courts of Hong Kong, the Cayman Islands (being the place of incorporation of the Company), the PRC and the jurisdictions where the principal assets of the Domestic Company are located for interim remedies or injunctive relief. However, the above dispute resolution provisions may not be enforceable under the PRC Laws, including without limitation that the arbitral tribunal in the PRC has no power to grant such injunctive relief, nor will it be able to order the winding up of the Domestic Company pursuant to the current PRC Laws. In addition, interim remedies or enforcement orders granted by non-PRC courts such as Hong Kong and the Cayman Islands may not be recognizable or enforceable in the PRC. However, our PRC legal counsel has also advised us that there are certain uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules; accordingly, the PRC regulatory authorities may take a view that is contrary to the opinion of our PRC legal counsel. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or the VIE is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—If the PRC government finds that the contractual arrangements between the WFOE, the VIE and the VIE’s shareholders do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations”. D. Property, plants and equipment Our headquarters is located in Guangzhou, China, where we lease and occupy our office space with an aggregate floor area of approximately 33,195 square meters from unrelated third parties under operating lease agreements. Our production facility in Yunfu city, China has a total planned gross floor area of 48,000 square meters. A substantial majority of our employees are based at our headquarters in Guangzhou. As of the date of this annual report, we also own an office building in Guangzhou of approximately 8,551 square meters, which is used for our research and development activities. 104 Table of Contents We believe that our existing facilities are generally adequate to meet our current needs, but we expect to seek additional space as needed to accommodate our future growth.