Pilotless planes are taking flight in China. Bank of America says it's time to buy
While startups around the world have tried to build vehicles that can fly without a pilot, only one is certified to carry people — in China. U.S.-listed Ehang received this certification from China's aviation regulator in late March, and the company plans to begin operating flights for tourists along a few designated routes by the end of June . The vehicle, known as an eVTOL aircraft, carries two passengers and uses electric power for vertical take-off and landing, similar to a helicopter. "Ehang should maintain 100% market share in China over 2025-27, as the strict [the Civil Aviation Administration of China] airworthiness process poses a high entry barrier to new entrants," Bank of America Greater China industrials stock analysts said in a May 14 report. They initiated coverage of the stock with a "buy" rating, and predict the stock can reach $26 — 36% above Friday's close. The stock is up more than 20% for the year so far. The analysts expect Ehang to benefit from national policy support and faster-than-expected delivery to tourism customers. Ehang also ranked first among global players as the most likely to reach the thousand-unit-a-year milestone through widespread certification and adoption, according to a recent report from U.S.-based SMG Consulting. U.S.-based rival Joby Aviation , whose shares have dropped 9% year to date, ranked fourth. Fifth in the rankings was Archer Aviation . Its shares are up 36% for the year. The company on Thursday announced it will be the official air taxi provider for the Olympic Games in Los Angeles in 2028 . Bank of America does not currently cover either stock. The U.S. Federal Aviation Administration has been working on certification rules for allowing the companies to fly their vehicles with passengers in the U.S., although initial focus is on piloted flights. In contrast, China has accelerated its efforts in the last two years to develop what it calls the "low-altitude economy." About 300 local Chinese governments have announced related plans as of April 2025, which include investment in infrastructure for eVTOL operation and business subsidies, the Bank of America analysts said in a separate May 14 report about the overall industry. Ehang's certified model, the 216-S, sells for about 2.39 million yuan ($330,000) in China, and $410,000 outside China, the report said. It noted that the larger, 4-seat Joby S4 sells for $1.3 million. "We conclude that the central gov't sees the development of low-altitude economy as the crucial strategic industry to China's economy in the coming few years," the analysts said. The policy also covers support for using drones to deliver food and supplies to tourist sites in the mountains. Such tests gained popularity over the May 1 Labor Day holiday in China. Several Chinese companies from Xpeng to Volant are also working on flying devices that carry people. Short-haul aerial vehicles can also help with firefighting and emergency services. For Ehang, the Bank of America analysts predict each tourist attraction will want to buy five to 10 eVTOLs, supporting a total potential China market of 80,000 units. In the near term, they estimate Ehang's delivery volume will reach 442 units this year, and 813 next year. "This will translate into 103%/82% revenue growth in 2025/26E," the report said. Another, more distant, area of potential growth is the urban air taxi market. While the analysts expect tourism to be the main driver of demand in the near term, they expect air taxis to grow their share starting from the year 2035. Based on the current taxi and ride-hailing car market, Bank of America estimates total demand for eVTOL air taxis could reach 200,000 units in the future. "If the annual revenue per air taxi could reach RMB1.5mn by 2035, the air taxi operation will be profitable and … should bring incremental revenue and earnings to Ehang in the long term," the analysts said. But the Bank of America analysts cautioned that any accident or passenger injuries could result in reputational damage for Ehang, on top of potential legal claims. Significant incidents could also slow the pace of eVTOL adoption, the analysts pointed out. — CNBC's Michael Bloom contributed to this report.
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