In addition to flying cars, there are at least two breakthrough directions for l

After successfully investing in EHang, this seasoned low-altitude economy investor's interest has shifted to a new direction. The low-altitude economy is giving rise to a trillion-dollar industry. According to data from Choice Data of East Money, since February 2024, at least 38 low-altitude economy concept stocks in the A-share market have increased by more than 30%. Drones are one of the hot topics within this sector.

Every groundbreaking new thing faces a lot of controversy and skepticism at the beginning. Conservative people think it's hopeless, but turning points often occur at these seemingly impossible moments.

As an angel investor of EHang Intelligent, Li Jianwei's recommendation to invest in EHang in 2014 was not understood by the industry at that time. Many peers thought flying cars were a fantasy. Looking back ten years later, EHang has made a beautiful comeback. In just five years, it went public on the NASDAQ in the United States, weathered ups and downs but persisted, until the open attitude and policy adjustments of the Civil Aviation Administration of China played a key role in the development of the drone industry. It is now the world's first company to have all three certifications for unmanned eVTOL airworthiness, giving it a first-mover advantage in the industry.

Whether it's sightseeing tourism within the city or public transportation between cities, EHang's "flying cars" have achieved breakthroughs in the passenger transport sector. The concept of the low-altitude economy is broad, new sub-tracks are being opened up, and there are more opportunities to be explored.After EHang's listing, Li Jianwei withdrew from the eVTOL sector and has now shifted his investment interests to new directions: large cargo drones and consumer-level FPV (First Person View) racing drones.

Firstly, cargo drones. According to forecasts by the Shenzhen UAV Industry Association, the drone market size will reach 160 billion yuan by 2024, with the drone market size for express logistics being about 30 billion yuan. At present, when the cargo drone sector in Europe and America is still a blank, China is very likely to become the "only" country at the forefront in this field.

Next, consumer products. Li Jianwei believes that good product logic is always simple: easy for the public to get started, and able to provide flexible configuration capabilities to achieve higher performance, with the right price.

Who will be the next rising EHang? Caijing further dialogues with Li Jianwei, a partner at Zhencheng Investment Management.

Li Jianwei founded Zhencheng Investment in 2016, mainly investing in the fields of information technology and advanced manufacturing. He has led investments in companies such as EHang Intelligent (NASDAQ: EH), Jiuzhou Intelligent (SH: 689009), Huami Technology (NYSE: Zepp), Yuntian Lifie (SH: 688434), and Tiger Brokers (NASDAQ: TIGR).

Here is the dialogue between Caijing and Li Jianwei.

The competition for flying car drivers

Caijing: In 2014, you recommended investing in EHang. How did you first pay attention to the field of flying cars?

Li Jianwei: Initially, I was focused on DJI, and then gradually turned my attention to other categories of drones.I have met the core team of the American Terrafugia flying car (later acquired by Geely), and I have a preliminary impression of flying cars. However, Terrafugia's models require runways, folding fixed wings, and a human driver. But in the context of urban air traffic, there are no runway resources, and a driver would pose a significant safety risk, making this product seem difficult to popularize.

Source | Zhencheng Investment

After several discussions, my understanding of the reasonable product definition for flying cars gradually settled: flying cars should be capable of vertical takeoff and landing, autonomous driving, and fully controlled by a central system without the involvement of a driver. In Guangzhou, after meeting the R&D team of EHang, I was pleasantly surprised to find that our ideas coincided.

"Finance and Economics": Why are you so certain that flying cars should not involve drivers?

Li Jianwei: The key to unmanned systems or flying cars lies in unified dispatch and autonomous driving.

The issue of whether flying cars should be equipped with drivers has been a continuous debate in the industry. One perspective argues that, considering the psychology of passengers, they need a driver to share the risks with them. However, in a high-density urban air traffic environment, having a human operator would pose a significant public safety hazard, which is unacceptable for urban governance.

On the other hand, there is the issue of economic viability. Flying cars typically carry 2-6 people, and adding a pilot increases costs and reduces passenger capacity, which would significantly affect economic efficiency.

In this way, the American Terrafugia and the German Volocopter are more like products of a transitional period. In comparison, EHang, which is fully unmanned, would have a much better economic model.

In terms of passenger flight, I currently believe there are two main application scenarios.

The first is sightseeing and tourism within cities. A tourist attraction can purchase several aircraft to provide sightseeing services. In fact, this operational model is similar to amusement rides at tourist spots, only with an added flying experience.The second is the rapid transportation within and between cities. For instance, flights from the city center to the airport can reduce what was originally a one-hour journey to just a few minutes; direct travel from Zhuhai to Shenzhen via drones can cut what was a two or three-hour drive to just 20 minutes.

Caijing: Is passenger travel a replacement for the existing helicopter market or an expansion of the incremental market?

Li Jianwei: In the past, the vast majority of scenic spots could not use helicopters due to various restrictions. Helicopters themselves, along with their operation and maintenance costs, are very expensive.

In contrast, EHang's aircraft have a lower cost, and the operation expenses are also quite affordable. They only require ground operation, integration with air traffic control, and application for flight routes, which can provide operators with new revenue sources without a significant investment.

Source | Zhencheng Investment

Such changes are not a simple replacement of helicopter sightseeing but an expansion of the market by at least several times. The use of helicopters was previously limited by noise and cost, while EHang's aircraft can operate in more places where helicopters found it difficult to take off and land. It is reported that EHang's orders are already booked until 2025.

Regarding future development, I believe that urban transportation will be relatively cautious. Passenger-carrying aircraft need to undergo sufficient test flights in places with low population density, such as scenic spots, to ensure safety. After the flight records are verified and the public becomes accustomed to them, they can gradually expand to regular operations in the city center. Large-scale operations may not be possible until around 2028. However, in the next two or three years, we may see some small pilot projects.

Large cargo drones may be the next star product.

Caijing: The market is currently very interested in flying cars, but your interest has shifted to cargo drones, investing in Beluga Airline, why?Li Jianwei: Compared to flying cars that focus on urban air traffic, the market for unmanned cargo aircraft is much larger. After all, there are limited flight routes in cities, and it is hard to imagine the air becoming as busy as ground traffic. However, cargo aircraft are different; they are an indispensable part of daily transportation. Replacing manned with unmanned operation can reduce the cost per ton-kilometer by 60%, leading to a better economic model and significant development potential.

We believe that cargo drones have the potential to become the next hotspot in the low-altitude economy. In this field, we have invested in Beluga Air, who are developing the world's largest cargo drone. Beluga's main model, the W5000, has a takeoff weight of 10.8 tons, a payload of 5 tons, and a maximum range of 2600 kilometers.

This type of aircraft will be launched by the end of this year and will have its first flight in the first half of next year. In terms of financing, the company has also made rapid progress, having raised over 100 million in multiple rounds of financing over the past year. If things go smoothly, Beluga has the opportunity to become the main model for future air cargo transportation.

"Finance and Economics": What level do you think the market size of drone cargo aircraft can reach in the future?

Li Jianwei: In my view, it is possible to have a global fleet of several thousand. As an important part of the logistics system, cargo aircraft are in high demand, both for civilian and military use.

In some special regions, such as Xinjiang and the South China Sea islands, unmanned cargo aircraft can play a huge role. Originally, supplies to Xinjiang might have relied on trains, which are relatively slow. With unmanned cargo aircraft capable of carrying 5 tons of cargo, front-line deployment becomes very fast.

Let's also compare unmanned cargo aircraft with manned cargo aircraft. The cost of a single mission for a manned cargo aircraft is quite high, including fuel consumption and maintenance, with more than 20 subsystems required to maintain crew survival. In contrast, unmanned cargo aircraft do not need to consider crew survival, so the number of subsystems is reduced to 13. As long as the air link and communication are not issues, it can continue to fly, significantly increasing its mission attendance rate and operational efficiency.

Source | Zhencheng Investment

This large cargo drone market may not seem as "sexy," but it actually has a very high level of certainty and potential.

Currently, the cargo aviation market mainly relies on cargo aircraft modified from passenger planes, but this model has limitations in terms of efficiency and cost. On the technical front, the application of multi-rotor aircraft in the cargo sector may face certain restrictions due to relatively low technical barriers and intense market competition.In the future, the unmanned, automated, and intelligent development of large fixed-wing cargo aircraft will be a trend. By closely integrating with general aviation airports, these cargo planes will achieve efficient and safe point-to-point flights, bringing revolutionary changes to the logistics industry. At the same time, this will also effectively avoid the shortage of takeoff and landing resources at large city airports.

Great products have simple logic.

"Finance and Economics": The emergence of flying cars has already subverted the imagination of ordinary people. Will there be more products or companies in the future that were unimaginable before?

Li Jianwei: With the continuous advancement of technology, we will see more unprecedented product forms. For example, flying cars have begun to take off, although they are still in the early stages, but they may evolve into more aesthetically pleasing and efficient forms in the future. In addition, I am also very much looking forward to seeing more companies like DJI continue to promote the innovation and application of drone technology.

Source | Star Qi World

In the field of FPV toy drone, I think there is an opportunity to redefine the basic products, and there will be products similar to the level of remote control cars at that time. We have invested in Star Qi World, which focuses on making FPV toy planes. They hope to make high-quality toy FPV drones, and have made rapid progress in products in the past two years.

"Finance and Economics": What is the difference between this toy drone and DJI's consumer-grade drone?

Li Jianwei: DJI's drones are mainly used for aerial photography, with relatively high prices, equipped with GPS, mainly used outdoors, you can understand that this is a flying camera. And the FPV drones of Star Qi World, without GPS, are mainly used indoors, and mainly allow users to control the drone through the first-person perspective. You can regard this kind of plane as a flying remote control car.

Star Qi World's current high-end models are selling well, and it is expected to launch models with prices below 900 yuan this year to enrich the product line. In addition, they also assisted in organizing the Ministry of Education's National Youth Drone Competition and monthly commercial competitions, which have been strongly responded to.

Stargazer toy drone source | Star Qi WorldWhen we invested in Star Qi World in 2021, we encountered many difficulties. At that time, the toy drone industry was not productized, very fragmented and primitive, mainly participated by some geeks.

Star Qi World spent 2 years redefining the toy drone product, adopting autonomous controllable chips, redefining battery standards, and completely rewriting the flight control algorithm. The new product was very popular after its launch, often in a state of shortage.

Good product logic is simple: it is easy for the public to get started, and it can provide flexible configuration capabilities to achieve higher performance, with the right price.

Stock prices fluctuate, but the underlying driving force is moving forward.

Caijing: Zhencheng Investment has already laid out several companies in the low-altitude economy field. What are the criteria for investing in related enterprises?

Li Jianwei: The criteria for judging are different at different stages of the enterprise. It is easy to make a judgment when the enterprise has income and profit, but for projects with income but no profit, or even very meager income, it is necessary to add analysis of the technical route and prediction of the future market trend.

In the emerging frontier field, the most important criterion is still the product. We pay more attention to the definition of the product and the clarity of the business model. A successful product must not only have a unique selling point but also a sustainable business model that can bring stable income to the company.

Of course, the excellent entrepreneurial team behind is also very important. Team members should have a deep accumulation of technology, passion for the industry, and a reasonable team composition. It is not only a sufficient technical strength but also a requirement for keen market insight and rapid response ability.

Caijing: The concept of "low-altitude economy" extends from point to surface, from plane to three-dimensional. What do you think are the connotations of the low-altitude economy that have not been mentioned?Li Jianwei: Different altitudes in airspace correspond to different product forms. High altitudes are primarily for fixed-wing cargo aircraft, while low altitudes encompass a variety of small aircraft and drones. For instance, in airspace below two kilometers, small passenger aircraft (including eVTOLs) and sports aircraft are more common. Although fields like sports aircraft may not seem to be riding the current wave of technological enthusiasm, companies such as Sunward Intelligence have still made significant progress in the field of small sports aircraft.

In the low-altitude economy, trunk logistics is undoubtedly an important component. It involves the transportation of a large amount of goods, and the demand for unmanned cargo aircraft is the most urgent; passenger-carrying eVTOLs are currently at the forefront of the trend, expected to develop rapidly within a few years; intercity logistics and intra-city logistics are also important segments within the low-altitude economy. Below that are consumer-grade aerial photography drones, and finally, indoor FPV toy drones. Each has its unique demands and market prospects, together forming a diversified development pattern of the low-altitude economy.

Caijing: Looking back to the present, is there anything we can be relatively certain about, such as whether there will be another wave of financing this year?

Li Jianwei: In my view, the drone industry this year is indeed full of opportunities and challenges. While fluctuations in secondary stock prices are of concern, as investors in the primary market, we pay more attention to the underlying drivers of industry development. This driving force is pushing the entire industry forward, which is a very clear trend.

In the consumer-grade aerial photography drone sector, DJI continues to lead the pack, capturing more than 80% of the global market share; the indoor toy FPV drone market has the potential to develop rapidly in the coming years. Industrial-grade drones will penetrate deeper into various industries.

With technological advancements and market maturation, more passenger and logistics drone routes will be opened, covering more cities. Additionally, intra-city drone logistics are also developing rapidly.

At the same time, the number of companies applying for Type Certificates (TC) this year is continuously increasing, and the approval times are gradually shortening. This means that by 2025/2026, more and more companies are expected to obtain TC certification to enter this market, which is good news for the development of the entire industry.

As for the ultimate form of passenger products, I believe this needs to be determined based on market demand and technological development. But in any case, safety, comfort, and cost-effectiveness are key factors we must consider. Only when all three aspects meet the requirements can the product succeed in the market.