Executive Summary / Key Takeaways

• Eve Holding (NYSE:EVEX) is pursuing a holistic strategy to accelerate the urban air mobility (UAM) ecosystem, developing not just an eVTOL aircraft but also comprehensive service/support solutions (TechCare) and air traffic management software (Vector), leveraging its strategic relationship with Embraer S.A. for de-risking and efficiency.
• The company is making tangible progress on its eVTOL development, with the full-scale engineering prototype undergoing ground testing and assembly of the first certification-conforming prototypes expected to begin in the second half of 2025, targeting initial flight tests for these in 2026.
• Certification with ANAC and FAA is now anticipated in 2027, reflecting a realistic timeline for a complex, innovative program, prioritizing a mature and reliable product over being first to market.
• Eve maintains a solid liquidity position, with approximately $410.3 million as of March 31, 2025, expected to fund operations through 2026, supported by recent capital raises and available debt facilities, with 2025 cash consumption guided between $200 million and $250 million.
• While pre-revenue and incurring significant R&D expenses ($44.7 million in Q1 2025), Eve has built a substantial non-binding pre-order backlog of ~2,800 aircraft and secured contracts for its TechCare services potentially worth up to $1.6 billion, demonstrating customer interest in its integrated solution despite facing intense competition from other eVTOL developers and established aerospace players.

Setting the Scene: A Holistic Vision for Urban Air Mobility

Eve Holding, Inc. is not merely building an electric vertical take-off and landing (eVTOL) aircraft; it is architecting a comprehensive solution for the nascent urban air mobility (UAM) market. Born from the business combination with a blank check company in May 2022, Eve inherited a strategic relationship with Brazilian aerospace giant Embraer S.A. (ERJ). This partnership is foundational to Eve's strategy, providing access to Embraer's extensive engineering expertise, manufacturing capabilities (including existing facilities for prototyping and future production), and deep experience in aircraft certification and global customer support. This collaboration is intended to de-risk and accelerate Eve's development while controlling costs.

Eve's vision extends beyond the aircraft itself, encompassing three core pillars: the eVTOL aircraft (eVTOL Production and Design), a global services and support network (TechCare), and an urban air traffic management system (Vector). This holistic approach is a key differentiator in a competitive landscape populated by focused eVTOL developers like Joby Aviation (JOBY), Archer Aviation (ACHR), Lilium N.V. (LILM), and Vertical Aerospace (EVVT), as well as larger aerospace and automotive conglomerates. While competitors like Joby and Archer have shown faster progress towards initial certification or prototyping, Eve believes its integrated ecosystem approach, backed by Embraer's legacy, offers a more complete and sustainable solution for future UAM operators.

Technological Foundation and the Path to Certification

At the heart of Eve's offering is its eVTOL design. The company has opted for a lift + cruise configuration, featuring eight dedicated lift rotors for vertical flight and a single pusher propeller for horizontal cruise. This design choice, while potentially incurring an "eventual loss of range" compared to configurations like tilt rotors, is seen as optimizing the vehicle for urban missions by prioritizing simpler systems and a clearer path to certification. This simplicity is also expected to translate into benefits for aftermarket support and operational availability, a critical factor for operators aiming for high aircraft utilization.

Key technological enablers include a sophisticated fly-by-wire flight control system, leveraging Embraer's experience from projects like the Praetor and E2 jets. This system is crucial for managing the complex transition phases between hover and cruise flight, addressing the lack of inherent stability in such configurations. The company is also developing its battery system, building on similar technology and cells used in the engineering prototype for the commercial vehicle, working closely with suppliers to ensure manufacturability and maturity.

Development is progressing through distinct phases. The full-scale engineering prototype, assembled in July 2024, is currently undergoing ground testing. This remotely piloted, simplified vehicle lacks a full cabin or cockpit but is vital for validating aerodynamic and performance models, setting up test rigs (like the "Iron Bird" which integrates systems physically for troubleshooting and understanding component fatigue), and refining technical aspects. Management is confident the engineering prototype will begin initial flights "till this year" (2025).

The next critical step is the assembly of five certification-conforming prototypes. Parts for these are already being produced by suppliers, and the assembly line at an Embraer facility in Sao Jose dos Campos is being prepared. Assembly is expected to begin in the second half of 2025 and conclude in 2025. These conforming prototypes will be close to the final commercial version, including all necessary systems and redundancies, and will be manned for flight testing. The formal certification flight test campaign with these prototypes is planned to commence in 2026, expected to take 12 to 18 months, leading to an anticipated Type Certificate issuance in 2027. This timeline, updated from earlier projections, is viewed by management as realistic given the program's maturity and the complexities of certifying a novel aircraft type. Regulatory engagement is ongoing, with close collaboration with ANAC (Brazil's civil aviation agency, which published the Basis of Certification in October 2024) and the FAA (which issued a supportive SFAR), focusing on defining the "means of compliance" – the specific tests and analyses required for certification.

Beyond the aircraft, Eve's TechCare services portfolio is being developed to provide comprehensive aftermarket support, including maintenance, logistics, training, and technical support. This is seen as crucial for ensuring aircraft reliability and optimized operating costs for customers. The company has partnered with Embraer-CAE Training Services (ECTS) (CAE) for pilot and mechanic training, providing initial data packages for simulator development. The Vector UATM software aims to enable safe and efficient operations in dense urban airspace, having undergone real-world simulations to validate its algorithms for fleet management and airspace control, even shadowing helicopter operations to demonstrate its applicability.

Financial Performance and Liquidity

As a pre-revenue company in a heavy development phase, Eve's financials primarily reflect its significant investment in R&D and operational scaling. For the three months ended March 31, 2025, total operating expenses were $52.6 million, a substantial increase from $33.9 million in the same period of 2024. This rise was predominantly driven by Research and development expenses, which climbed to $44.7 million from $27.5 million year-over-year. This acceleration reflects the intensified development efforts under the Master Service Agreement with Embraer and increased engagement with suppliers as the eVTOL program matures and ground testing progresses. Selling, general and administrative expenses also increased to $7.9 million from $6.5 million, attributed to growth in Eve's direct workforce, higher outsourced services, and initial costs related to the planned manufacturing facility site in Taubaté.

The company reported a net loss of $48.8 million for Q1 2025, compared to $25.3 million in Q1 2024. While operating losses widened, changes in non-operating items also played a role. A gain from derivative liabilities decreased to $3.3 million from $6.3 million due to a smaller change in the Public Warrant trading price. Financial investment income increased significantly to $3.9 million from $2.3 million, benefiting from a higher average investment balance. Conversely, related party loan interest income disappeared after the loan matured in August 2024, and interest expense rose to $2.2 million from $0.4 million due to a larger outstanding debt balance. Other loss, net increased primarily due to higher foreign currency losses.

Cash flow from operations remains negative, as expected for a company at this stage. Net cash used by operating activities was $24.9 million in Q1 2025, an improvement from $35.8 million in Q1 2024, primarily influenced by favorable changes in operating assets and liabilities and the change in fair value of derivative instruments, partially offsetting the increased net loss. Investing activities provided $18.5 million in cash, a significant increase from a usage of $2.1 million in Q1 2024, mainly due to higher redemptions of financial investments ($117 million vs. $10 million), partially offset by increased purchases ($98 million vs. $12 million) and higher capital expenditures ($0.5 million vs. $0.1 million). Financing activities provided $9.3 million, down from $14.7 million, reflecting lower debt borrowings.

Eve maintains a solid liquidity position. As of March 31, 2025, the company held $59.5 million in cash and cash equivalents and $228.1 million in financial investments. Combined with approximately $122.7 million available to be drawn under existing debt arrangements (including BNDES loans and a Citibank (C) credit agreement), total liquidity stood at approximately $410.3 million. Management stated this liquidity is sufficient to fund the operating plan for at least the next twelve months, extending through 2026. The company successfully raised approximately $270 million in 2024 through a mix of debt and equity, contributing significantly to this position. Future funding needs are expected to be met through a combination of equity and debt, potentially including customer advances or pre-delivery payments.

Outlook and the Road Ahead

Management's outlook centers on executing the development and certification plan while managing cash burn. For 2025, the company guides for cash consumption between $200 million and $250 million, likely closer to the lower end. This spend is heavily weighted towards R&D ($150 million to $160 million) to advance the eVTOL program, including flight testing the engineering prototype and beginning assembly of the conforming prototypes. Approximately $30 million is allocated for initial capital expenditures at the Taubaté manufacturing facility site, which is being prepared with tooling and equipment, leveraging an existing Embraer site for efficiency. The total CapEx for this facility is estimated at around $100 million, with the peak spend expected in 2026.

The updated certification target of 2027 is a key element of the outlook. This timeline is based on the expected duration of the flight test campaign with the five conforming prototypes (12-18 months starting in 2026) and ongoing regulatory processes. Management views this as a realistic and achievable target, emphasizing the importance of delivering a mature and reliable product.

Despite being pre-revenue, Eve has built a substantial non-binding pre-order backlog of approximately 2,800 aircraft, valued at close to $14 billion based on list price. This backlog, spread across 28 customers in nine countries, demonstrates significant customer interest in Eve's solution. Furthermore, the company has secured contracts for its TechCare services with 14 customers, covering services for around 1,100 aircraft (40% of the preorder book) and potentially generating up to $1.6 billion in revenue over the first few years of operation. This highlights the potential for the services segment to contribute meaningfully as operations commence. The Vector UATM software also has 21 customers, indicating demand for airspace management solutions.

Risks and Competitive Dynamics

The path to commercialization is fraught with risks inherent in pioneering a new industry. Regulatory uncertainty remains a significant challenge; while ANAC and FAA have provided initial frameworks, defining the specific "means of compliance" and operational requirements is ongoing and could impact timelines or require design adjustments. The UAM market itself is undeveloped, with no guarantee of future demand or the pace of adoption, which depends on factors ranging from public perception of safety and cost to the development of necessary infrastructure like vertiports.

Competition is intense and expected to increase. Focused eVTOL developers and established aerospace players are vying for market position. While Eve highlights its holistic approach and Embraer relationship as competitive advantages, rivals like Joby and Archer are perceived by some as being further along in the certification process or having advantages in specific technical areas (e.g., Joby's battery tech, Archer's payload efficiency). Eve's higher upfront costs compared to some competitors could also pose a challenge in price-sensitive segments. The company's financial performance, characterized by significant losses and cash burn, is a vulnerability, requiring continuous access to capital in potentially volatile markets. The BNDES debt facilities, while providing liquidity, are subject to conditions that could affect availability. Furthermore, the company is facing a putative shareholder derivative action related to its 2024 private placement, the outcome of which is currently unpredictable. The impending loss of emerging growth company status by the end of 2025 will also increase compliance costs and requirements.

Eve's strategy to offer an agnostic service platform (TechCare) and UATM software (Vector) that can support third-party eVTOLs is a strategic response to the competitive landscape, aiming to capture value across the ecosystem regardless of which aircraft ultimately dominate. However, the success of this strategy depends on widespread adoption of UAM and the willingness of operators to rely on a competitor's affiliate for critical services and software.

Conclusion

Eve Holding is pursuing an ambitious, vertically integrated strategy to become a leading player in the urban air mobility market. By leveraging the formidable resources and experience of Embraer, developing a comprehensive suite of solutions spanning aircraft, services, and air traffic management, and making tangible progress on its prototype development and supplier network, Eve is building a foundation for future commercialization.

While the certification timeline has been adjusted to 2027, reflecting the inherent complexities of this pioneering endeavor, it underscores a commitment to delivering a mature and reliable product. The company's solid liquidity position provides runway through 2026, supporting the critical development and initial manufacturing preparation phases. The significant pre-order backlog and service contracts signal strong customer interest in Eve's holistic vision. However, investors must weigh this potential against the substantial cash burn, intense competition, and regulatory and market adoption risks that remain. The successful execution of the flight test campaign, securing firm orders, and navigating the evolving regulatory and competitive landscape will be critical determinants of Eve's long-term success and the realization of its UAM ecosystem vision.