The Zhitong Finance App learned that Open Source Securities released a research report saying that the policy side proposed at the Central Economic Work Conference in December 2023 to build a number of strategic emerging industries, such as the low-altitude economy. A total of 17 provinces included low-altitude economic development in the 2024 government work report, and the low-altitude airspace is expected to be fully liberalized one after another. Industry-side eVTOL experienced the financing boom and capital support from startups in 2021-2022. In 2023, many companies such as Fengfei Airlines and Volant Airlines have released representative eVTOL products, entering the test flight testing and airworthiness certification stage. 2024 is expected to be the first year of the low-altitude economy. The subsequent opening of application scenarios in the manned passenger transport market is expected to accelerate the eVTOL market.

Beneficial targets: 1) eVTOL mainframes: Wanfeng Aowei (002085.SZ), Ehang Intelligence (EH.US), Shangluo Electronics (300975.SZ) (participating in Yiweite); 2) eVTOL core component suppliers: Wolong Electric Drive (600580.SH), Guangyang (002708.SZ), Xingyuan Zhuo Magnesium (301398.SZ), Haite Hi-Tech (002023.SZ).

Open source securities views are as follows:

Policy side: Airspace classification methods have been introduced, and low-altitude airspace in various regions is expected to be fully liberalized one after another

In December 2023, the Central Economic Work Conference proposed building a number of strategic emerging industries, such as the low-altitude economy. A total of 17 provinces included low-altitude economic development in the 2024 government work report. On December 21, 2023, the National Air Traffic Control Commission organized and formulated the “National Airspace Basic Classification Method” to define the legal low-altitude airspace G airspace and W airspace for general aviation such as eVTOL. At the end of 2023, a new batch of airspace was liberalized in Sichuan, Jiangxi and other places. Among them, the area of low-altitude airspace liberalized by Jiangxi increased by 61.5% year-on-year, basically covering major cities, scenic spots and related key areas in the province. The area of low-altitude airspace in Sichuan was liberalized from 6,600 square kilometers to 7,800 square kilometers. The Hunan airspace has been seamlessly connected throughout the region, with a total planned area of 241,000 square kilometers. It is expected that the low-altitude airspace in various regions will be fully liberalized one after another.

Industrial side: The eVTOL industry is progressing smoothly, and the industrial side is catalytic intensive

In 2023, many domestic companies, such as Fengfei Airlines and Volant Airlines, have released representative eVTOL products, entering the test flight testing and airworthiness certification stage. At the same time, Aleph Airlines' eVTOL products were unveiled in February 2024. Currently, the total order value has exceeded 850 million US dollars. The target is to be put into operation in 2025, and industrial-side products at home and abroad will promote intensive catalysis in 2024. Unlike the thrust vector configuration commonly used by overseas manufacturers, domestic manufacturers usually use composite or rotary-wing structures, which have both R&D speed and range. The target market positions the passenger transport market. As research and development of technical difficulties such as obstacle avoidance, intelligent driving, route planning, and battery technology advance, the eVTOL commercialization process is expected to accelerate.

eVTOL manned passenger transport application scenarios have broad prospects

Compared with traditional general aviation aircraft, eVTOL has obvious advantages in terms of convenience, ride comfort, operating costs, and safety. On February 27, 2024, Fengfei Airlines' “Shengshilong” product carried out a test flight between Shenzhen and Zhuhai. At the same time, the cost of a single seat is expected to be reduced to 200-300 yuan after large-scale application of eVTOL, which is 50% lower than the current one-way price of 500-600 yuan. It is expected to become an important mode of transportation and passenger transportation in the future. The opening up of market application scenarios is expected to accelerate the eVTOL market. Third-party consulting agencies forecast that the eVTOL market space to be put into commercial use in 2030 is above the level of 10 billion US dollars.

Risk warning: eVTOL policy support falls short of expectations, airworthiness progress falls short of expectations, and downstream application market expansion falls short of expectations.