You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties about our business and operations. Our actual results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those we describe under “Item 3. Key Information—D. Risk Factors” and elsewhere in this annual report. A. Operating Results Overview We are an advanced air mobility technology platform company. We are pioneering the future of transportation through our proprietarily developed pilotless eVTOL aircraft and other UAVs, related commercial solutions and services. We, the VIE and the VIE’s subsidiaries design, develop, manufacture, sell and operate UAVs and their supporting systems and infrastructure for a broad range of industries and applications, including passenger transportation, logistics, smart city management and aerial media solutions. We aim to make it safe and convenient for both passengers and goods to take to the air. We delivered our first pilotless eVTOL aircraft to a customer in March 2018. Since then, we and the VIE had delivered a total of 622 units of the EH216 series products as of December 31, 2025. As we continue to refine and commercialize our products and air mobility solutions, we believe we will be able to capture addressable markets across multiple industries and develop AAM commercial applications in new industries. 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$3.3 million), representing approximately 94.5% and 5.5% of our total revenues, respectively. Key Components of Results of Operations Revenues We generate revenues from air mobility solutions and others. The following table sets forth a breakdown of our total revenues in absolute amounts and percentages of our total revenues for the periods presented: For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Revenues: Air mobility solutions 104,729 89.2 443,320 97.2 395,154 56,506 94.5 Others 12,697 10.8 12,832 2.8 22,827 3,264 5.5 Total 117,426 100.0 456,152 100.0 417,981 59,770 100.0 105 Table of Contents Air mobility solutions. Revenues from air mobility solutions are primarily product revenues from the sales of passenger-grade UAVs and its software. As the UAVs and software are highly interdependent, the entire bundle of promised goods is considered one performance obligation within the context of the contract. We recognize revenue for this single performance obligation at a point in time when control to the bundle of goods transfers to the customer and other conditions as set out in ASC 606 are met. For domestic sales, control transfers upon delivery to the customer as evidenced by the customer’s acknowledgement of receipt and proof of delivery documentation. For international sales, control transfers at shipping point consistent with the terms of the sales agreements. The transaction price is the amount of consideration we expect to receive under the arrangement. When we contract with a customer and determine that it is not probable to collect substantially all of the consideration for the sales transaction at contract inception and no contract is established, any consideration received is recognized as a liability by us, subsequently recorded as revenue only when we have transferred control of the corresponding goods or services, have no obligation under the contract to transfer additional goods or services, and the consideration received is nonrefundable. We will record an asset in “Prepayments and other current assets” representing the value of the inventories recovered should the sale not happen. Service revenues from air mobility solutions are primarily provision of exhibition income which is satisfied over time. Others. Revenues from others consist of revenues from smart city management solutions, aerial media solutions and others. - Smart city management solutions. We enter into contracts with our customers for designing, building and delivering customized integrated command-and-control centers. The duration of the contracts depends on the contract size and ranges from three months to one year, excluding the duration of warranty accounted for as an assurance-type warranty, which ranges from one year to three years. We provide a significant service of integrating goods and services including the project design, hardware and software promised in the contract into a combined output; therefore, the goods and services in the contracts are not distinct from each other and we determine there is one performance obligation, which is the delivery of the customized integrated command-and-control center. The performance obligation is satisfied, and control is transferred to the customer over time because there is no alternative use for the highly customized and integrated command-control-center and we have an enforceable right to payment for performance completed to date. We have determined the cost-to-cost method best depicts the measure of progress towards fulfilling the performance obligation. Under this method, revenue is recognized based on the estimated extent of progress, which is determined by dividing costs incurred to date by the total amount of costs expected to be incurred for designing, building and delivering a customized integrated command-and-control center. Revisions in the estimated total costs of command-and-control center contracts are made in the period in which the circumstances requiring the revision become known. Provisions, if any, are made in the period when anticipated losses become evident on uncompleted contracts. We review and update the estimated total costs of command-and-control center contracts periodically. We account for revisions to contract revenue and estimated total costs of command-and-control center contracts, in the period in which the facts that cause the revision become known as changes in estimates. Unapproved change orders are considered claims. Claims are recognized only when they have been awarded by customers. We also provide products for smart city management solutions. Product revenues are recognized at a point in time upon customer acceptance of the products. - Aerial media solutions. We generate revenue by providing aerial media performance services and related products. Aerial media performance services allow multiple smart control-based drones to demonstrate and transform their formation to display diversified messages and images in specific airspace, that is tailor made based on different branding or advertising requirements. We use self-produced and purchased drones and customize the fleet formation performances based on customer’s needs and availability of airspace approval in the area. The performance is usually completed within a day and revenue is recognized when the service is delivered. While the aerial media performance services are delivered to customers over a period of time, the customer simultaneously receives and consumes the benefits of our performance as and when each service is delivered and revenue is recognized over time. We also sell hardware and software components of the aerial media performance drones. As the hardware and software components are highly interdependent, the entire bundle of promised goods is considered one performance obligation within the context of the contract. The single performance obligation is satisfied at a point in time, which is upon customer acceptance of the products. - Others. We generate other revenues mainly from stand-alone sales of consumer drones and their components and spare parts. Revenues are recognized for consumer drones upon shipment which is when control of the drones is transferred to the customers. Contract modifications, defined as changes in the scope or price (or both) of a contract that are approved by the parties to the contract, such as a contract amendment, exist when the parties to a contract approve a modification that either creates new or changes existing enforceable rights and obligations of the parties to the contract. Contract modifications, if any, will be accounting for as one of the following: (i) a separate contract; (ii) a termination of the existing contract and a creation of a new contract; or (iii) a combination of the preceding treatments. A contract modification is accounted for as a separate contract if the scope of the contract increases because of the addition of promised goods or services that are distinct and the price of the contract increases by an amount of consideration that reflects our standalone selling prices of the additional promised goods or services. When a contract modification is not considered a separate contract and the remaining goods or services are distinct from the goods or services transferred on or before the date of the contract modification, we account for the contract modification as a termination of the existing contract and a creation of a new contract. When a contract modification is not considered a separate contract and the remaining goods or services are not distinct, we account for the contract modification as an add-on to the existing contract and as an adjustment to revenue on a cumulative catch-up basis. 106 Table of Contents As we have obtained the TC, Standard AC and PC for EH216-S from the CAAC, and as the OC was granted to EH216-S operators in March 2025, we expect that our revenues will increase in China and we will continue to fulfill existing orders and pre-orders for the EH216 series products, secure new orders for our air mobility solutions, provide air mobility operational services, offer smart city management and aerial media solutions and expand our commercial solutions and sales network. We expect that the increase in revenues generated from air mobility solutions will be the main increase in both domestic and international markets. Revenues to be recognized will be subject to assessment of the collectability of considerations at inception date. Cost of revenues Cost of revenues consists primarily of aerial vehicles material and manufacturing costs, construction costs of smart city management solutions, depreciation, rental fees, payroll and related costs of operations. We expect that our cost of revenues will increase in the foreseeable future as we increase our product sales volume and expand our commercial solutions business. Operating expenses Our total operating expenses consist of sales and marketing expenses, general and administrative expenses and research and development expenses. The following table sets forth the components of our total operating expenses by amounts and percentages of operating expenses for the periods presented: For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Sales and marketing expenses 60,389 16.0 131,027 23.2 122,020 17,449 20.8 General and administrative expenses 150,092 39.7 233,398 41.4 269,648 38,559 46.0 Research and development expenses 167,315 44.3 199,465 35.4 194,581 27,825 33.2 Total operating expenses 377,796 100.0 563,890 100.0 586,249 83,833 100.0 Sales and marketing expenses. Our sales and marketing expenses primarily consist of advertising and promotion expenses, payroll and related expenses for personnel in sales and marketing. General and administrative expenses. Our general and administrative expenses mainly consist of payroll and related costs for employees in general corporate functions, professional fees, allowance for doubtful account expenses or expected credit losses provision, and other general corporate expenses, as well as expenses associated with the use by these functions of facilities and equipment, such as depreciation and rental expenses. Research and development expenses. Our research and development expenses mainly consist of payroll and benefits for our research and development personnel, as well as expenses associated with our research and development activities. Other operating income Other operating income mainly consists of financial subsidies that we received from provincial and local governments for operating our business in their jurisdictions in compliance with certain promoted policies. Taxation Cayman Islands We are an exempted company incorporated in the Cayman Islands. The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution, brought within the jurisdiction of the Cayman Islands. In addition, the Cayman Islands does not impose withholding tax on dividend payments. 107 Table of Contents Hong Kong Our wholly-owned subsidiary, Ehfly Technology Limited, or Ehfly Technology, incorporated in Hong Kong, is subject to Hong Kong profit tax on its profits arising from its business operations carried on in Hong Kong. Hong Kong profits tax for a corporation from the year of assessment 2018/2019 onwards is generally 8.25% on assessable profits up to HK$2.0 million; and 16.5% on any part of assessable profits over HK$2.0 million. Under the Hong Kong Inland Revenue Ordinance, profits that we derive from sources outside of Hong Kong are not generally chargeable to Hong Kong profits tax. As such, Ehfly Technology is exempted from the Hong Kong income tax on its foreign-derived income. In addition, payments of dividends from Ehfly Technology to our company are not subject to any withholding tax in Hong Kong. PRC Under the Enterprise Income Tax Law, or the EIT Law, our PRC subsidiaries, the VIE and the VIE’s subsidiaries are subject to a statutory income tax rate of 25%. The WFOE and the VIE have each been qualified as a high and new technology enterprise, or HNTE, and are eligible for a 15% preferential tax rate, from 2023 to 2025, and from 2025 to 2027, respectively. The EIT law also imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise, or FIE, to its immediate holding company outside China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. According to the Arrangement Between Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006, dividends paid by an FIE in China to its immediate holding company in Hong Kong will be subject to withholding tax at a rate of no more than 5%, if the immediate holding company owns at least 25% of the equity interest of the FIE and satisfies all other requirements under the tax arrangement and receives approval from the relevant tax authority. We did not record any dividend withholding tax, as our PRC entities have no retained earnings in the periods presented. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—We may not be able to obtain certain benefits under the relevant tax treaty on dividends paid by our PRC subsidiaries to us through our Hong Kong subsidiary.” Under the EIT Law, research and development expenses that have not formed intangible assets are included in the profit and loss account for the current year. Besides deducting the actual amount of research and development expenses incurred, according to Announcement of the Ministry of Finance and the State Taxation Administration [2021] No.13 (“Circular 13”), manufacturing enterprise with qualified research and development expenses could enjoy research and development Super Deduction, i.e. to claim additional 100% research and development expenses on top of those actually incurred. Subsequently, pursuant to Announcement of the Ministry of Finance and the State Taxation Administration 2023 No. 7, effective from January 1, 2023, all eligible enterprises are entitled to claim an additional 100% deduction for qualified research and development expenses. Dividends, interests, rent or royalties payable by our PRC subsidiaries, to non-PRC resident enterprises, and proceeds from any such non-resident enterprise investor’s disposition of assets (after deducting the net value of such assets) shall be subject to 10% withholding tax, unless the respective non-PRC resident enterprise’s jurisdiction of incorporation has a tax treaty or arrangements with PRC that provides for a reduced withholding tax rate or an exemption from withholding tax. 108 Table of Contents Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amounts and as percentages of our total revenues, for the periods presented. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The results of operations in any particular period are not necessarily indicative of our future trends. For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Total revenues 117,426 100.0 456,152 100.0 417,981 59,770 100.0 Cost of revenues(1) (42,115 ) (35.9 ) (176,206 ) (38.6 ) (160,827 ) (22,998 ) (38.5 ) Gross profit 75,311 64.1 279,946 61.4 257,154 36,772 61.5 Operating expenses: Sales and marketing expenses(1) (60,389 ) (51.4 ) (131,027 ) (28.7 ) (122,020 ) (17,449 ) (29.2 ) General and administrative expenses(1) (150,092 ) (127.8 ) (233,398 ) (51.2 ) (269,648 ) (38,559 ) (64.5 ) Research and development expenses(1) (167,315 ) (142.5 ) (199,465 ) (43.7 ) (194,581 ) (27,825 ) (46.6 ) Total operating expenses (377,796 ) (321.7 ) (563,890 ) (123.6 ) (586,249 ) (83,833 ) (140.3 ) Other operating income 6,233 5.3 29,869 6.5 12,383 1,771 3.0 Operating loss (296,252 ) (252.3 ) (254,075 ) (55.7 ) (316,712 ) (45,290 ) (75.8 ) Other (expenses) income: Interest and investment income 8,484 7.2 30,599 6.7 58,588 8,378 14.0 Interest expenses (2,930 ) (2.5 ) (3,375 ) (0.7 ) (5,976 ) (855 ) (1.4 ) Amortization of debt discounts (12,023 ) (10.2 ) — — — — — Foreign currency exchange (losses) gains, net 394 0.3 (1,188 ) (0.3 ) 1,174 168 0.3 Other non-operating income 1,966 1.7 4,670 1.0 2,810 402 0.7 Other non-operating expenses (214 ) (0.2 ) (1,924 ) (0.4 ) (15,456 ) (2,210 ) (3.7 ) Total other (expenses) income (4,323 ) (3.7 ) 28,782 6.3 41,140 5,883 9.9 Loss before income tax and (loss) from equity method investment (300,575 ) (256.0 ) (225,293 ) (49.4 ) (275,572 ) (39,407 ) (65.9 ) Income tax (expenses) benefit (206 ) (0.2 ) (386 ) (0.1 ) 4,409 630 1.1 Loss before (loss) from equity method investment (300,781 ) (256.1 ) (225,679 ) (49.5 ) (271,163 ) (38,777 ) (64.8 ) Income (loss) from equity method investment (1,560 ) (1.3 ) (4,353 ) (1.0 ) (5,248 ) (750 ) (1.3 ) Net loss (302,341 ) (257.5 ) (230,032 ) (50.4 ) (276,411 ) (39,527 ) (66.1 ) Note: (1) Share-based compensation expense was allocated in operating expenses as follows: For the Year Ended December 31, 2023 2024 2025 RMB RMB RMB US$ (in thousands, except share and share related data) Cost of revenues — — 416 59 Sales and marketing expenses 18,958 65,597 45,537 6,512 General and administrative expenses 79,327 134,984 154,838 22,142 Research and development expenses 53,200 72,543 45,367 6,487 Total 151,485 273,124 246,158 35,200 109 Table of Contents Year ended December 31, 2025 compared with year ended December 31, 2024 Revenues Our total revenues decreased by 8.4% from RMB456.2 million in 2024 to RMB418.0 million (US$59.8 million) in 2025, primarily due to the decrease in the sales volume of eVTOL aircraft. Revenues from air mobility solutions decreased from RMB443.3 million in 2024 to RMB395.2 million (US$56.5 million) in 2025. We sold 169 units of the EH216 series products and six units of VT35 in 2025, compared with 216 units in 2024. Revenues from others increased from RMB12.9 million in 2024 to RMB22.8 million (US$3.3 million) in 2025, primarily driven by growth in smart city management solutions and aerial media solutions. Cost of revenues Our cost of revenues decreased by 8.7% from RMB176.2 million in 2024 to RMB160.8 million (US$23.0 million) in 2025, which was broadly in line with the decrease in the sales volume of EH216 series products. Gross profit and gross profit margin As a result of the foregoing, our gross profit decreased from RMB279.9 million in 2024 to RMB257.2 million (US$36.8 million) in 2025. Our gross profit margin remained relatively stable at 61.4% in 2024 and 61.5% in 2025. Operating expenses Our operating expenses increased by 4.0% from RMB563.9 million in 2024 to RMB586.2 million (US$83.8 million) in 2025. Sales and marketing expenses decreased from RMB131.0 million in 2024 to RMB122.0 million (US$17.4 million) in 2025, mainly attributed to lower share-based compensation expenses due to modification and accelerated vesting of outstanding share-based awards in 2024, partially offset by increased sales-related compensation driven by workforce expansion for sales and service network. General and administrative expenses. General and administrative expenses increased from RMB233.4 million in 2024 to RMB269.6 million (US$38.6 million) in 2025, primarily due to increased employee compensation driven by workforce expansion and higher share-based compensation expenses due to new grant of share-based awards in 2025, and increased lease expenses due to the expansion of our office space. Research and development expenses decreased slightly from RMB199.5 million in 2024 to RMB194.6 million (US$27.8 million) in 2025, mainly attributed to lower share-based compensation expenses due to accelerated vesting of outstanding share-based awards in 2024, partially offset by increased employee compensation driven by workforce expansion to further accelerate the research and development progress of different models of eVTOL aircraft in support of the Company’s future growth. Other operating income Other operating income decreased from RMB29.9 million in 2024 to RMB12.4 million (US$1.8 million) in 2025, primarily due to a decrease in government subsidies recognized in the period. For the year ended December 31, 2025, government grants recognized upon receipt immediately in profit or loss amounted to RMB10.4 million (US$1.5 million), and other operating income of RMB2.0 million (US$0.3 million) was recognized from deferred government subsidies when the conditions were met. 110 Table of Contents Interest and investment income We recorded interest and investment income of RMB58.6 million (US$8.4 million) in 2025 and RMB30.6 million in 2024, both of which consisted primarily of interest earned from our cash and cash equivalents, short-term investments and fair value gains on short-term investments and other investments. The significant increase in 2025 was primarily driven by higher average balances of short-term investments and fair value gains on equity investments. Interest expenses We recorded interest expenses of RMB6.0 million (US$0.9 million) in 2025 and RMB3.4 million in 2024, both of which were primarily related to bank loans. The increase in 2025 reflects higher average bank loan balances during the year. Other non-operating income Other non-operating income was RMB2.8 million (US$0.4 million) in 2025 and RMB4.7 million in 2024. Other non-operating expenses Other non-operating expenses were RMB15.5 million (US$2.2 million) in 2025 and RMB1.9 million in 2024. The significant increase in 2025 was primarily attributable to the settlement of the securities class action lawsuit (Pujo v. EHang Holdings Limited) for US$1,985 thousand (equivalent to RMB14,254 thousand), which was recorded as a loss from shareholder securities litigation. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings.” Income tax (expenses) benefits Our income tax expenses were RMB0.4 million in 2024 and income tax benefits were RMB4.4 million (US$0.6 million) in 2025. We did not have significant income tax expenses because most of our subsidiaries and consolidated affiliated entities were loss making in 2024 and 2025. Our income tax benefits were due to one of our subsidiaries recognized deferred tax assets in 2025. Net loss As a result of the foregoing, our net loss increased by 20.2% from RMB230.0 million in 2024 to RMB276.4 million (US$39.5 million) in 2025. Net loss attributable to EHang Holdings Limited’s ordinary shareholders was RMB276.0 million (US$39.5 million) in 2025, compared with RMB229.8 million in 2024. Year ended December 31, 2024 compared with year ended December 31, 2023 Revenues Our total revenues increased significantly from RMB117.4 million in 2023 to RMB456.2 million in 2024, primarily due to the increase in the sales volume of EH216 series products. Revenues from air mobility solutions increased significantly from RMB104.7 million in 2023 to RMB443.3 million in 2024. We sold 216 units of the EH216 series products in 2024, compared with 52 units in 2023. Revenues from others remained stable at RMB12.9 million in 2024, as compared to RMB12.7 million in 2023. Cost of revenues Our cost of revenues increased significantly from RMB42.1 million in 2023 to RMB176.2 million in 2024, which was in line with the increase in the sales volume of EH216 series products. 111 Table of Contents Gross profit and gross profit margin As a result of the foregoing, our gross profit increased significantly from RMB75.3 million in 2023 to RMB279.9 million in 2024. However, our gross profit margin decreased from 64.1% in 2023 to 61.4% in 2024 primarily due to changes in revenue mix and increased cost per unit of the airworthiness certified EH216-S product. Operating expenses Our operating expenses increased by 49.3% from RMB377.8 million in 2023 to RMB563.9 million in 2024. Sales and marketing expenses. Sales and marketing expenses increased significantly from RMB60.4 million in 2023 to RMB131.0 million in 2024, primarily due to increased sales-related compensation and associated share-based compensation expenses due to new grant and modification of share-based awards, as well as increased expansion of sales channels. General and administrative expenses. General and administrative expenses increased from RMB150.1 million in 2023 to RMB233.4 million in 2024, primarily due to headcount expansion, increased employee compensation and related share-based compensation expenses resulting from new grants of share-based awards, and increased professional fees due to more professional services acquired from third parties for operational needs. Research and development expenses. Research and development expenses increased from RMB167.3 million in 2023 to RMB199.5 million in 2024, primarily due to incremental expenditures on different models of eVTOL aircraft, headcount expansion, increased employee compensation and related share-based compensation expenses due to new grants of share-based awards. Other operating income Other operating income increased significantly from RMB6.2 million in 2023 to RMB29.9 million in 2024, primarily due to the increase of government subsidies. Interest and investment income We recorded interest and investment income of RMB30.6 million in 2024 and RMB8.5 million in 2023, both of which consisted primarily of interest earned from our cash and cash equivalents, short-term deposits, restricted short-term deposits and short-term investments. Interest expenses We recorded interest expenses of RMB3.4 million in 2024 and RMB2.9 million in 2023, both of which were primarily related to bank loans and loans from third parties. Amortization of debt discounts We recognized amortization of debt discounts of RMB12.0 million in 2023, which were related to the private placement transaction completed in 2023. There were no such debt discounts in 2024. Other non-operating income Other non-operating income was RMB4.7 million in 2024 and RMB2.0 million in 2023. Other non-operating expenses Other non-operating expenses were RMB1.9 million in 2024 and RMB0.2 million in 2023. 112 Table of Contents Income tax expenses Our income tax expenses increased from RMB0.2 million in 2023 to RMB0.4 million in 2024. We did not have significant income tax expenses because most of our subsidiaries and consolidated affiliated entities were loss making in 2023 and 2024. Net loss As a result of the foregoing, our net loss decreased by 23.9% from RMB302.3 million in 2023 to RMB230.0 million in 2024. B. Liquidity and Capital Resources The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities during the normal course of operations. We have experienced recurring losses from operations since inception. As of December 31, 2024 and 2025, we had an accumulated deficit of RMB1,984.9 million and RMB2,262.4 million (US$323.5 million) respectively. For the years ended December 31, 2023, 2024 and 2025, we incurred net loss of RMB302.3 million, RMB230.0 million and RMB276.4 million (US$39.5 million) respectively. We had net cash used in operating activities of RMB88.4 million and RMB179.5 million (US$25.7 million) for the years ended December 31, 2023 and 2025, respectively, and net cash generated from operating activities of RMB158.0 million for the year ended December 31, 2024. As of December 31, 2025, our cash and cash equivalents, short-term investments and restricted short-term deposits were RMB256.4 million (US$36.7 million), RMB843.2 million (US$120.6 million) and RMB29.7 million (US$4.2 million), respectively. Our ability to continue as a going concern is largely dependent on successful execution of our business plan to scale up commercial sales of EH216-S and our ability to raise additional funds when needed. Our primary sources of liquidity have been proceeds from issuance of equity securities offerings, including private placements, as well as customer advances, short-term and long-term bank loans. For example, we had raised a total of US$95.6 million from the sale and issuance of our Class A ordinary shares in private placements as of the date of this annual report, including US$40 million in 2021, US$33 million in 2023, and US$22.6 million in 2024. In addition, we raised a total of US$76.2 million and US$23.8 million through our ATM Program in 2024 and 2025, respectively. As of December 31, 2025, we had RMB1,129.3 million (US$161.5 million) in cash and cash equivalents, short-term investments and restricted short-term deposits, of which 9.6% were held in Renminbi and the remainder was held in U.S. dollars and other currencies, and of which 24.2% were held in the PRC. Our cash and cash equivalents consist primarily of cash on hand and highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less. Following the milestone achievement in obtaining the world’s first human-carrying unmanned aerial vehicle system certification for EH216-S, and the granting of OC to EH216-S operators in March 2025, the Company’s management is implementing business plans to scale up the commercial sales and operations of EH216-S through building a replicable and promotable business model to further expand the Company’s partnership network and enrich the commercial scenarios of EH216-S. We believe that our balances of cash and cash equivalents, short-term investments and restricted short-term deposits as of December 31, 2025 will be sufficient to meet our sustainable operations and material cash requirements for at least the next 12 months after the date of this annual report. However, we may need additional cash resources in the future if we experience changes in business conditions or other developments, or if we pursue opportunities for investment, acquisition, capital expenditure or similar actions. If we determine that our cash requirements exceed the amount of cash we have on hand, we may seek to issue equity or equity linked securities or obtain debt financing. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. In utilizing the proceeds, we received from our securities offerings including our initial public offering and private placements, we may make additional capital contributions to our PRC subsidiaries, establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, make loans to our PRC subsidiaries, or acquire offshore entities with operations in China in offshore transactions. However, most of these uses are subject to PRC regulations. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our offshore offerings to make loans to or make additional capital contributions to our PRC subsidiaries, the VIE and the VIE’s subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business,” and “Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds—Use of Proceeds.” 113 Table of Contents A majority of our revenues have been, and we expect they are likely to continue to be, in the form of Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore, our PRC subsidiaries are allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain routine procedural requirements. However, current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Our PRC subsidiaries are required to set aside at least 10% of their after-tax profits after making up previous years’ accumulated losses each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. These reserves are not distributable as cash dividends. Historically, our PRC subsidiaries have not paid dividends to us, and it will not be able to pay dividends until it generates accumulated profits. Furthermore, capital account transactions, which include foreign direct investment and loans, must be approved by and/or registered with SAFE, its local branches and certain local banks. As a Cayman Islands exempted company and offshore holding company, we are permitted under PRC laws and regulations to provide funding to our PRC subsidiaries only through loans or capital contributions, subject to the approval of government authorities and limits on the amount of capital contributions and loans. This may delay us from using the proceeds from our securities offerings to make loans or capital contributions to our PRC subsidiaries. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our offshore offerings to make loans to or make additional capital contributions to our PRC subsidiaries, the VIE and the VIE’s subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” The following table sets forth a summary of our cash flows for the periods presented: For the Year Ended December 31, 2023 2024 2025 RMB RMB RMB US$ (in thousands) Net cash (used in) generated from operating activities (88,410 ) 157,959 (179,506 ) (25,668 ) Net cash used in investing activities (128,692 ) (482,508 ) (507,145 ) (72,521 ) Net cash provided by financing activities 195,480 701,357 337,431 48,252 Effect of exchange rate changes on cash, cash equivalents 562 5,819 (5,257 ) (752 ) Net (decrease) increase in cash, cash equivalents and restricted cash (21,060 ) 382,627 (354,477 ) (50,689 ) Cash, cash equivalents and restricted cash at the beginning of the year 249,310 228,250 610,877 87,354 Cash and cash equivalents at the end of the year 228,250 610,877 256,400 36,665 114 Table of Contents Operating Activities Net cash used in operating activities in 2025 was RMB179.5 million (US$25.7 million). This amount was primarily attributable to net loss of RMB276.4 million (US$39.5 million), adjusted to add back certain non-cash expenses, principally share-based compensation of RMB246.2 million (US$35.2 million), current expected credit losses of RMB7.9 million (US$1.1 million), depreciation of property and equipment of RMB19.0 million (US$2.7 million) and amortization of right-of-use assets of RMB10.1 million (US$1.4 million), and further adjusted downwards due to changes in operating assets and liabilities. The changes in operating assets and liabilities primarily included an increase of RMB61.4 million (US$8.8 million) in accounts receivable as a result of deliberate business strategy to grant longer credit terms to certain customers in an effort to strengthen long-term strategic partnerships, an increase of RMB101.6 million (US$14.5 million) in prepayments and other assets, and an increase of RMB35.7 million (US$5.1 million) in inventories, partially offset by an increase of RMB61.6 million (US$8.8 million) in accrued expenses and other liabilities. Net cash generated from operating activities in 2024 was RMB158.0 million. This amount was primarily attributable to net loss of RMB230.0 million, adjusted to add back certain non-cash expenses, principally share-based compensation of RMB273.1 million, current expected credit losses of RMB12.8 million, depreciation of property and equipment of RMB12.8 million and amortization of right-of-use assets of RMB6.1 million, and further adjusted upwards due to changes in operating assets and liabilities. The changes in operating assets and liabilities primarily included an increase of RMB92.3 million in accounts payable in relation to procurement of materials for production, an increase of RMB57.6 million in accrued expenses and other liabilities in relation to payrolls and tax payables, an increase of RMB30.1 million in accounts receivable in relation to receivables that we are entitled to receive primarily due to the increase in the sales volume, and an increase of RMB29.5 million in prepayments and other assets in relation to deductible value-added tax input and acquisition of inventories. Net cash used in operating activities in 2023 was RMB88.4 million. This amount was primarily attributable to net loss of RMB302.3 million, adjusted to add back certain non-cash expenses, principally share-based compensation of RMB151.5 million, current expected credit losses of RMB13.7 million, depreciation of property and equipment of RMB12.4 million and amortization of right-of-use assets of RMB8.1 million, and further adjusted upwards due to changes in operating assets and liabilities. The changes in operating assets and liabilities primarily included an increase of RMB20.5 million in accounts receivable in relation to the receivables that we are entitled to receive and a decrease of RMB3.7 million in lease liabilities in relation to lease payments for office and production facilities and offset mainly by an increase of RMB17.8 million in contract liabilities in relation to more payments received before the sale of products or services to customers, a decrease of RMB10.7 million in prepayments and other current assets in relation to consideration received for vested share-based awards under share incentive plan, and a decrease of RMB7.8 million in inventories in relation to procurement of materials for production and finished goods. Investing Activities Net cash used in investing activities in 2025 was RMB507.1 million (US$72.5 million), mainly consisting of purchase of short-term investments of RMB729.2 million (US$104.3 million), purchase of property and equipment of RMB147.9 million (US$21.2 million) and purchases of land use rights of RMB11.4 million (US$1.6 million), partially offset by redemption of short-term investments of RMB418.7 million (US$59.9 million). Net cash used in investing activities in 2024 was RMB482.5 million, mainly consisting of purchase of short-term investments of RMB885.7 million and payments for short-term deposits of RMB130.1 million, partially offset by redemption of short-term investments of RMB444.8 million and proceeds received from maturity of short-term deposits of RMB143.8 million. Net cash used in investing activities in 2023 was RMB128.7 million, mainly consisting of purchase of short-term investments of RMB56.7 million, purchase of restricted short-term deposits of RMB33.4 million and purchase of short-term deposits of RMB14.2 million. 115 Table of Contents Financing Activities Net cash provided by financing activities in 2025 was RMB337.4 million (US$48.3 million), primarily attributable to RMB249.1 million (US$35.6 million) from proceeds from short-term bank loans, RMB75.0 million (US$10.7 million) from proceeds from long-term bank loans, and RMB166.8 million (US$23.9 million) from issuance of Class A ordinary shares under the ATM Program, partially offset by repayment of mandatorily redeemable non-controlling interests of RMB40.0 million (US$5.7 million) and repayment of short-term bank loans of RMB83.8 million (US$12.0 million). Net cash provided by financing activities in 2024 was RMB701.4 million, primarily attributable to RMB698.1 million from issuance of Class A ordinary shares under the ATM Program and certain private placement transactions. Net cash provided by financing activities in 2023 was RMB195.5 million, primarily attributable to RMB250.2 million from issuance of Class A ordinary shares, including to several strategic investors in connection with a US$23.0 million private placement which had closed in the third quarter of 2023, and net proceeds of RMB19.3 million from short-term bank loans. Capital Expenditures Our capital expenditures were RMB9.1 million, RMB40.1 million and RMB160.4 million (US$22.9 million) in 2023, 2024 and 2025, respectively, which were mainly used for the purchase of property and equipment for the establishment and installation of equipment at our manufacturing facility in Yunfu, construction of our new office building in Guangzhou, improvements for other office buildings and obtaining a land use right. We plan to fund our future capital expenditures with our existing cash balance. Material Cash Requirements Our material cash requirements as of December 31, 2025 and any subsequent interim period primarily include operating lease commitments, short-term bank loans, long-term bank loans, capital commitment for property, plant and equipment, and investment obligations. Our operating lease commitments primarily represent our non-cancelable lease of offices and facilities for business operation. We lease offices under non-cancelable operating lease arrangements with initial terms in excess of one year. We intend to fund our existing and future material cash requirements primarily with our existing cash balance and other financing alternatives. We will continue to make cash commitments, including capital expenditures, to support the growth of our business. The following table sets forth our contractual obligations as of December 31, 2025: Payment Due by Period Total Less than 1 year 1-3 years 3-5 years More than 5 years (in RMB thousands) Operating lease commitments 172,977 16,576 28,712 24,626 103,063 Short-term bank loans(1) 232,667 232,667 — — — Long-term bank loans(1) 100,226 12,303 66,421 7,692 13,810 Capital commitment for property, plant and equipment 30,064 30,064 — — — Investment obligations 29,880 20,880 — 9,000 — Total 565,814 312,490 95,133 41,318 116,873 Note: (1) The short-term bank loans and long-term bank loans are presented with the principle and estimated interest calculated based on the contractual interest rate. 116 Table of Contents As disclosed in our consolidated financial statements included elsewhere in this annual report, we had unrecognized tax benefits. The final outcome of the tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax laws or expiration of statutes of limitation. However, due to the uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities, there is a high degree of uncertainty regarding the future cash outflows associated with these tax uncertainties. Other than as shown above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2025. Off-Balance Sheet Arrangements We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. Holding Company Structure We are a holding company with no material operations on our own. We conduct our operations primarily through the WFOE, the VIE and their respective subsidiaries in China. As a result, our ability to pay dividends depends upon dividends paid by the WFOE. If the WFOE or any newly formed PRC subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our wholly foreign-owned subsidiary in China is permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of the WFOE, the VIE and their respective subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to contribute to certain statutory reserve funds until the cumulative amount of such reserve funds reaches 50% of its registered capital. As of December 31, 2025, the total registered capital of the WFOE, the VIE and their respective subsidiaries in China amounted to RMB1,858.9 million (US$265.8 million), implying a maximum total amount of RMB929.4 million (US$132.9 million) in statutory reserve funds to be set aside from their after-tax profits, if any. Our WFOE, the VIE and their respective subsidiaries in China had set aside a cumulative amount of RMB3.3 million (US$0.5 million) for such statutory reserve funds as of December 31, 2025. We believe that setting aside such additional amount will not have a material adverse impact on our business or liquidity because (i) a company is not required to set aside any amount for its statutory reserve fund until it has positive after-tax profits; (ii) the amount to be set aside annually is only 10% of a company’s after-tax profits, if any, and (iii) pursuant to the PRC Company Law, the statutory reserve funds can be used for offsetting a company’s losses, expanding its business operations and increasing its capital. In addition, our wholly foreign-owned subsidiary in China may allocate a portion of its after-tax profits based on PRC accounting standards to enterprise expansion funds and staff bonus and welfare funds at its discretion, and the VIE may allocate a portion of its after-tax profits based on PRC accounting standards to a surplus fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE. Our WFOE has not paid dividends and will not be able to pay dividends until it generates accumulated profits and meets the requirements for statutory reserve funds. Inflation Since our inception, inflation in China has not materially affected our results of operations. According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index were a decrease of 0.3% for December 2023 and an increase of 0.1% for December 2024 and remained stable for December 2025. Although we have not been materially affected by inflation in the past, we can provide no assurance that we will not be affected in the future by higher rates of inflation in mainland China. For example, certain operating costs and expenses, such as employee compensation and office operating expenses may increase as a result of higher inflation. We are not able to hedge our exposure to higher inflation in mainland China. 117 Table of Contents C. Research and Development, Patents and Licenses, etc. See “Item 4. Information on the Company—B. Business Overview—Research and Development Capabilities” and “—Intellectual Property.” D. Trend Information Other than as described elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenue, income from continuing operations, profitability, liquidity or capital resources, or that would cause our reported financial information not necessarily to be indicative of future operating results or financial condition. E. Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting estimates are described below. The critical accounting estimates should be read in conjunction with our risk factors as disclosed in “Item 3. Key Information—D. Risk Factors.” See Note 2 to our consolidated financial statements for the year ended December 31, 2025 for more information on our critical accounting policies. Current expected credit loss Our cash and cash equivalents, restricted short-term deposits, accounts receivable, loans receivable, other receivables and other non-current assets are within the scope of ASC Topic 326. We have identified the relevant risk characteristics of our customers and the related receivables which include the products we provide, the type of business, the scale of transactions on credit terms, the nature of counterparties and the level of credit risk of the customers, or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, we consider the historical credit loss experience, current economic conditions, supportable forecasts of future economic conditions, and any recoveries in assessing the lifetime expected credit losses. Other key factors that influence the expected credit loss analysis include payment terms offered in the normal course of business to customers and industry-specific factors that could impact our receivables. Additionally, external data and macroeconomic factors are also considered. When facts and circumstances indicate that the receivable no longer shares similar risk characteristics, the Group evaluates the receivables for expected credit losses on an individual basis with expected future cash flow. This is assessed at each quarter based on our specific facts and circumstances. For the year ended December 31, 2025, we recorded RMB7,938 thousand (US$1,135 thousand) of expected credit loss in general and administrative expenses. We apply management’s judgments and estimates when determining the expected credit loss to be recognized. We reassess the allowance at each balance sheet date. Where the basis of judgments and estimates is different from the initial assessment, such differences will impact the expected credit loss and the carrying values of the accounts receivable in the year. As of December 31, 2024 and 2025, we assessed the ending balance of expected credit losses provision to be RMB110,422 thousand and RMB118,508 thousand (US$16,946 thousand), respectively. Changes in these estimates and assumptions could materially affect the allowance losses. Valuation allowance for deferred tax assets We record a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. Significant judgment is required in determining the valuation allowance. In assessing the need for a valuation allowance, we consider all sources of taxable income, including projected future taxable income, reversing taxable temporary differences and ongoing tax planning strategies. If it is determined that we are able to realize deferred tax assets in excess of the net carrying value or to the extent we are unable to realize a deferred tax asset, we would adjust the valuation allowance in the period in which such a determination is made, with a corresponding increase or decrease to earnings. 118 Table of Contents