Western: A flurry of industry support policies are coming into effect, propelling the development of low-altitude economy.

Western released a research report stating that low-altitude economy has been listed as a strategic emerging industry by the country and represents a new quality of productivity. With the continuous introduction of support policies by the national and local governments, the low-altitude airspace is gradually being released, and the industry is expected to accelerate its development and application. Among them, eVTOL is a new core carrier of the low-altitude economy. The prospects for development in the transportation, tourism, and freight sectors are promising, with a focus on investment opportunities in original equipment manufacturers, core components, and supporting facilities. Western's main points are as follows: Policy side: The low-altitude economy has become a strategic emerging industry and represents a new quality of productivity. In December 2023, the State Council listed the low-altitude economy as a strategic emerging industry during the Central Economic Work Conference. That same month, the Civil Aviation Administration of China issued the "National Airspace Basic Classification Method," standardizing the G and W airspace as uncontrolled airspace, and low-altitude airspace in various regions will gradually be opened up. In March 2024, the low-altitude economy was mentioned for the first time in the government work report. The government work report "2024 Government Work Tasks" emphasized promoting the development of new quality productivity, including actively creating new growth engines such as biological manufacturing, commercial spaceflight, and low-altitude economy. In March 2024, four ministries issued the "General Aviation Equipment Innovation Application Implementation Plan (2024-2030)," proposing to achieve commercial applications in areas such as urban air transport, logistics distribution, and emergency rescue by 2027, and to form a trillion-level market size in the low-altitude economy by 2030. Technology side: eVTOL is the new core carrier of the low-altitude economy, with players mainly from China, the United States, and Europe. Domestic eVTOL companies such as EHang Holdings Ltd. and FLYINGCAM represent the industry, with EHang 216-S being the first eVTOL company in the world to obtain TC/PC certification. Other domestic eVTOL companies like Xpeng Huitian, Vpower Aerosky, Times Technology, and Yufeng Future have their TC applications already in progress, and commercial operations of eVTOL are expected to be implemented soon. According to calculations, with a long-term market space of 100,000 eVTOL units, the cumulative sales of eVTOL complete aircraft alone could reach 500 billion RMB. Taking into account the supporting industrial chain and backend operations, the market space is even larger. Market side: There is a large space for transportation, tourism, and promising prospects for freight. eVTOL is suitable for distances of 50-400 km and can meet the privacy needs of high-end business travel. In February 2024, FLYINGCAM successfully conducted a trial flight from Shenzhen to Zhuhai, reducing the former 2.5-3 hour journey by car to only 20 minutes. EHang 216-S has already signed agreements with various tourism companies, including Tianjian Hangyuan, to develop low-altitude tourism resources. In terms of freight, according to calculations by EHang Holdings Ltd., compared to traditional logistics transportation, eVTOL can save 40-60% in delivery time and is expected to reduce scale distribution costs by 50%, indicating broad prospects for industry development. Investment recommendations: The low-altitude economy industry is experiencing a development boost, focusing on three main lines. The first main line is the main manufacturers benefiting from increased demand, recommending Gresgying Digital Energy Technology, and keeping an eye on EHang Holdings Ltd., Zhejiang Wanfeng Auto Wheel, and Nanjing Sunlord Electronics Corporation. The second main line focuses on core components such as batteries and electric drive control, recommending Contemporary Amperex Technology, Eve Energy Co., Farasis Energy, and paying attention to Wolong Electric Group, Zhuhai Enpower Electric, Shenzhen V&T Technologies, Gotion High-tech, CALB, and Jiangsu Azure Corporation. The third mainline is on infrastructure supporting elements such as air traffic control systems, focusing on companies such as Nanjing Les Information Technology, Sichuan Jiuzhou Electric, Citic Offshore Helicopter, Shenzhen Urban Transport Planning Center, China Design Group, and Guoanda Co. Risk factors: Certification progress falls short of expectations, low-altitude airspace management construction is not as expected, and eVTOL industrialization cost reduction falls short of expectations.