The recent developments in the nascent eVTOL (electric Vertical Take-Off and Landing) industry highlight the growing collaboration between traditional automotive companies and cutting-edge aerospace technology firmsOne notable example is the partnership announcement between Yingboer (300681.SZ), a company primarily engaged in the development and manufacturing of power systems for new energy vehicles (NEVs), and Ehang Intelligent, an established player in the eVTOL market.

On January 13, the industry was abuzz with news as Yingboer disclosed its engagement with Ehang Intelligent (Nanjing) Aircraft Technology Co., Ltdto jointly develop high-performance integrated motor and motor control products for Ehang's ET9 eVTOL aircraft seriesThis collaboration marks a significant step for Yingboer as it transitions its focus from automotive components to the emerging low-altitude economy.

The partnership's specifics, including model development, supply timelines, pricing, and quantities, will be formalized through supply agreements and sales orders, demonstrating the meticulous nature of the aerospace industry where precision is paramount

Yingboer also stated that Ehang will compensate them for technology services, which will include both R&D and the procurement of twelve lift unit productsFurthermore, the projected sales volume and revenue from this project will depend on a final signed purchase contract and its execution status, signifying a cautious but optimistic approach.

As Yingboer pivots towards the low-altitude economy, its integrated motor and control systems could provide a new growth trajectory amid the intense competition within the NEV sector, where profit margins have been squeezed to around 14%. Despite achieving revenues of 1.607 billion yuan in the first three quarters of 2024, the company's net profits were just 51.136 million yuan—a reminder of the strenuous environment in which they currently operate.

Transitioning from automotive to aerospace components presents unique challenges and opportunities

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Typically, eVTOLs use redundant backup systems that require complex electric propulsion configurations, possessing significant potential once mass production beginsThis shift, however, is not seamless; adapting automotive technologies to meet the stringent requirements of aviation involves overcoming technical hurdles and rethinking established methodologies.

Insights from industry experts like Shi Hong, co-founder of Zero Gravity Aircraft, indicate that only about 20% of automotive components can be directly adapted to eVTOL applicationsHowever, when technologies evolve from automotive design into aviation-specific applications, such as propulsion systems and flight controls, this overlap can increase to around 70%. This nuanced understanding illustrates that while there are foundations to build on, the aerospace arena requires a fundamental reengineering of these systems to ensure safety and reliability.

Moreover, eVTOL flight controls represent a significant departure from conventional systems employed in manned aircraft

As Zhou Hualin, an investment director, pointed out, eVTOL control systems demand lightweight and highly stabilized functions that cannot simply replicate systems designed for larger aircraft like the Boeing 737 or Airbus A320. Instead, eVTOLs must rely on simplified control mechanisms, diverging from traditional mechanical systems used in helicopters.

Yingboer's commitment to the low-altitude aircraft market is evidenced by its consistent statements regarding the development of products tailored to this new frontierThe company aims to leverage its experience in producing small, lightweight, and smart drive products to support the evolution of eVTOLsThere's an evident excitement within Yingboer surrounding the potential of its power systems to enhance low-altitude flight capabilities.

The partnership with Ehang Intelligent goes deeper than mere collaboration; on January 8, they announced the formation of a joint venture

This entity will oversee various operations related to the assembly and manufacturing of Ehang's eVTOLs, including optimizing processes at Ehang’s factoriesWith Yingboer holding a 60% stake, this arrangement solidifies their role in the rapidly developing eVTOL landscape.

Ehang Intelligent has demonstrated remarkable leadership in the domestic eVTOL market, being the only company to secure the three essential certifications for eVTOL manufacturingIn 2024’s first three quarters alone, they delivered 138 aircraft, and with the establishment of this joint venture, their production capacity is expected to increase significantly, particularly as they prepare for mass production in 2025 and 2026. This step is anticipated to stimulate the entire industry supply chain, affirming the collaborative efforts at play.

On the industry cooperation front, announcements have been made regarding upcoming projects aimed at the development and industrialization of eVTOL power systems, showcasing Yingboer's role as a key supplier of electric motors, with Ehang responsible for installation and sales

In a notable move, Yingboer also invested $12.6 million to subscribe for shares in Ehang Holdings Limited, marking a significant financial commitment in a burgeoning sector.

In a recent interview, Ehang’s chairman Hu Huazhi emphasized the importance of collaborative growth within the eVTOL ecosystem, stating that the success of the low-altitude economy hinges on the collective progress of multiple enterprises rather than the efforts of any single corporationEhang is committed to driving innovation in eVTOL technology and solutions, enhancing flight performance, and ensuring supply chain stability.

However, despite the promising announcements and strategic partnerships, Yingboer's stock price has remained relatively stable, oscillating between 20 to 30 yuan since their strategic cooperation announcement with Ehang in November 2024. As of January 14, the stock closed at 27.02 yuan, reflecting a notable increase of 12.96% in a single day, yet the overall market response suggests cautious optimism rather than overwhelming excitement.

The journey into the eVTOL sector presents both a challenge and an opportunity for Yingboer, given its automotive roots