(Yicai Global) Feb. 18 -- Shares in Ehang yesterday clawed back most of the sharp losses made on Feb. 16 after the Chinese unmanned aerial vehicle manufacturer strongly refuted a short selling report released that day accusing it of being an “elaborate stock promotion” built on lies and fake clients.

Ehang’s stock price [NASDAQ:EH] advanced 67.88 percent yesterday to close at USD77.73, erasing much of the 63 percent drop the day before. This brought an end to an astonishing nine-fold gain in its share price to an all-time high of USD126.70 on Feb. 12 from Dec. 1 last year, and a ten-fold gain from its issue price of USD12.50 in December 2019.

Ehang has been “fabricating revenues based on sham sales contracts,” Wolfpack Research said in its report, which cited recorded phone calls, videos of on-site visits and other evidence. It went on to accuse the Guangzhou-based firm of having an “exaggerated physical presence,” when much of its office space lies empty, and of using “hobby-grade motors” in its EH216 model.

The ‘Ehang: A Stock Promotion Destined to Crash and Burn’ report “contains numerous errors, unsubstantiated statements and misinterpretation of information,” Ehang said. “The firm is committed to maintaining the highest standards of corporate governance and is in full compliance with the regulations of the US Securities and Exchange Commission and Nasdaq bourse,” it added.

Ehang, which develops autonomous flying vehicles for urban air mobility solutions such as passenger transport and logistics, has spent approximately USD37 million on research and development since 2017, much less than its peers, said founder Hu Huazhi. “We do not have a tradition of burning cash for white elephant money-pit projects. Every penny counts,” he added.

It is also “absolutely wrong” to allege that Ehang uses inferior motors in its machines, Hu said. Ehang uses proprietary equipment designed by our chosen supplier, he added.

Since 2017, Ehang has made over 10,000 trial flights with its autonomous aerial vehicles in 41 cities and eight countries.

Editor: Kim Taylor