Greetings. Welcome to Eve Holding's second quarter 2022 earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. At this time, I'll now turn the conference over to Lucio Aldworth, Head of Investor Relations. Lucio, you may now begin.
Thank you operator. Good afternoon, everyone. This is Lucio Aldworth, the Director of Investor Relations at Eve, and I wanted to welcome everyone to our second quarter of 2022 earnings conference call. I have here with me Co-CEOs Jerry DeMuro and Andre Stein, as well as our CFO, Eduardo Couto. We also have Luiz Valentini, our Chief Technology Officer, who is responsible for the development of our eVTOL. After the initial remarks, we're going to open the call for questions. We have prepared the deck with a few slides and additional information. This is available at our investor relations website at ir.eveairmobility.com. Please download it for your reference. Let me first start by mentioning that this presentation includes forward-looking statements or statements about events or circumstances that have not yet occurred.
We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting our business and our future financial performance. These forward-looking statements are subject to risks, uncertainties, and assumptions, including, among other things, general economic, political, and business conditions, both in Brazil and in our market. The words believe, may, will, estimate, continues, anticipates, intends, expects, and similar words are intended to identify forward-looking statements. We undertake no obligations to update publicly or revise any forward-looking statements because of new information, future events, or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur. Our actual results could differ substantially from those anticipated in our forward-looking statements. With that, I will now turn the presentation over to Jerry DeMuro. Jerry DeMuro?
Thank you Lucio. I'm delighted to be here today on the occasion of our first quarterly release following Eve's listing on the New York Stock Exchange. This is an exciting time for Eve, and I'm proud to be part of the team that has achieved this important milestone. For those not familiar with our recent merger with Zanite Acquisition Corporation, the transaction included a number of strategic and financial investors that raised a combined $377 million, as shown on slide 2. We believe this funding provides an excellent foundation for the development and certification of our eVTOL and other elements of the urban air mobility ecosystem that we expect to launch in 2026. Our most notable and relevant strategic investor is Embraer, the third-largest aircraft manufacturer and a leader in the regional and executive jet markets.
Embraer is a unique partner that brings significant competitive advantages to Eve. We are leveraging its long history and deep expertise in aircraft design and production with royalty-free access to its more than 50 years of intellectual property. We also have access to skilled engineers on a flexible and first priority basis. In simple terms, we have access to a pool of some of the most accomplished and talented aerospace engineers in the world. Our long-term agreement with Embraer yields Eve an unmatched position of development capabilities and cost advantages. It means we do not have to create this workforce from scratch and then shape it into a cohesive team. It already exists, and we can scale up or down as needed. This arrangement means we do not have to carry these engineers on our P&L when not required, which makes for a lean and highly efficient organization.
When coupled with attractive labor costs in Brazil, this arrangement will substantially reduce our development costs. Lastly, our partnership with Embraer also gives us access to its global infrastructure. This is critical not only to our development and certification efforts, but also to service and support of aircraft on a global basis. Embraer has more than 80 service centers around the world that can be an important platform for our maintenance business in the future. There can be no eVTOL operation without a reliable and efficient customer support capability. The combination of Embraer's partnership and our holistic approach to urban air mobility, along with superior aircraft design, have translated into what we believe to be the largest and most diversified order book for eVTOLs globally. We have signed letters of intent for more than 2,000 aircraft from 22 different launch customers.
These are operators from around the globe with different aviation backgrounds, including fixed wing and helicopter operators, rideshare providers, and more recently, a defense player with the potential to expand the applications of our UAM solutions. One last point that is important to note is that no customer represents more than 10% of our order book. This serves to de-risk our business plan and brings confidence to our eVTOL program. Now I would like to invite my colleague and co-CEO, Andre Stein, to give us a bit more color on the development program and the aircraft itself. Stein?
Thanks Jerry. I'm also very excited to be here. This is a historic moment for Eve. We have come a long way, and there is a lot more ground to cover, but we are clearly moving in the right direction. We have already kick-started the certification process of our eVTOL with Brazil's aviation authority, ANAC, and initiated conversations with the FAA in U.S., EASA in Europe, and other major certification authorities as well. It is important to highlight that we will receive undivided attention from ANAC while the certification authorities in the U.S. and Europe will be busier dealing with multiple problems at the same time. The Brazilian authorities have a long history of collaboration and bilateral agreements with the FAA, whereby it accepts and validates the work done by ANAC, requiring only a few additional tests.
We believe this puts Eve on a clear path to certification, especially when combined with our simpler design with fixed wings and lift plus cruise configuration. Embraer support is going to be vital in this regard as well. Embraer brings quite a bit to the table by having certified over 30 aircraft just in the last 25 years. They too, for example, received the simultaneous certification approval in Brazil, the U.S., and Europe on schedule within specs and budget. We also took important steps to optimize the plans for our manufacturing facilities and supply chain strategy by partnering with Porsche Consulting. They will bring expertise that will help us plan for future productions, supply chain logistics, and to scale our facilities. Now on to slide 3. In parallel, we are performing several tests in our proof of concepts. Wind tunnel models, rigs, flight simulators, and mock-ups.
All of these, of course, offer important inputs for our aircraft development. We have also run simulations with conventional helicopters to validate and stress test our concept of operations for eVTOLs in a real urban air environment. The most recent experience took place in Rio de Janeiro over 30 days. We collected important information to better address the needs of the passengers, partners, and the community when it comes to the use of eVTOLs for urban mobility. Now on to the next slide 4. We hosted last month our first advisory board in Europe, where we brought several of our customers to discuss the whole spectrum of our portfolio of urban air mobility solutions, including aircraft characteristics such as performance and user experience. In that sense, we unveiled our fifth generation of our eVTOL cabin mock-up.
This cabin was later shown for the first time to the public at the Farnborough Airshow, and it showcased our approach to a human-centric design and reflects market needs, such as accessibility and safety perception, as well as our own emphasis on sustainability. Last but not least, we also disclosed at the Farnborough Airshow the current design of our aircraft that you can see on the left of the slide, featuring a conventional wing and tail. It's important to highlight that as a part of our development process and based on all the background work that has been done so far, we have been evaluating variations of our lift plus cruise configuration. Now we believe that the current configuration is mature enough to disclose to the market.
The aircraft remains simple in design with 8 lifters and pushers, allowing for a reliable and safe platform, designed for vertical takeoff and landing and avoiding moving parts. This simple design is a differentiator in our certification efforts. Next, on Slide 5, Jerry will talk about our partners and how important they are to Eve.
Thanks Stein. We currently enjoy an extensive list of strategic partners that continues to grow. They will all be important in developing the best-in-class products and services we plan to offer to the UAM market. A number of these partners are also investors in our PIPE, so they do have skin in the game, and their participation reflects the fact that they share our belief and vision for the UAM industry. These partners cover the full spectrum of the UAM ecosystem, offering operational support, infrastructure design and build-out, or technical expertise in the design of critical components of our aircraft such as motors, avionics, and propulsion systems. The list of aviation partners includes leading aircraft operators across the globe such as SkyWest and Republic, as well as important leasing companies like Azorra and Falko.
There are also several leading helicopter operators from different parts of the world and ridesharing platforms that connect operators with the riding public. In sum, we have partners involved in every aspect of UAM market. This is a holistic approach that will help define the standards for the entire urban air mobility market. The order book shown on slide 6 demonstrates that the market recognizes our qualities and strengths. As I noted earlier, we have already received more than 2,000 non-binding orders from 22 different customers, which we believe to be the largest and most diversified order book for eVTOLs in the world today. We have orders from 10 countries across 6 continents.
Not only do these customers include helicopter and fixed-wing operators and leasing companies as well as rideshare platforms. More recently, we signed an agreement with BAE Systems and Embraer, which will jointly pursue defense applications as well, while Eve can remain focused on urban air mobility. This new partnership begins to pave the way for different use cases for our aircraft. Our non-binding backlog is valued at almost $6 billion, and we expect progress down payments will add significantly to our cash flow as we begin to convert those letters of intent into firm orders in the years to come. Now, I will turn it over to Edu to talk a bit about our financial position.
Thanks Jerry. I'm glad to be here today to present Eve's second quarter results after the recent conclusion of our capital raise and public listing on the New York Stock Exchange in May. This is a very exciting moment for us as we were able to secure significant funding for our program while bringing strong partners to join our project. Turning to our financials on slide 7, I would like to start with the income statement highlights. We spent $9.8 million during the second quarter 2022, and almost $20 million in the first half of this year on research and development. The bulk was invested in our eVTOL development, and a portion was used for the development of our service and support solutions and the development of our urban air traffic management system.
We are the only eVTOL company with a complete solution, including the vehicle, service and support, and air traffic control. In addition to the R&D expenses, we also had $6.5 million in SG&A expenses during the second quarter 2022, and $7.3 million in the first six months this year. Given those expenses and considering we are still a non-operational company, we reported a net loss of $11.8 million in the second quarter 2022, and $21.3 million in the first half of the year. I would like to call your attention to some of our competitive cost advantages, especially first, our full access to Embraer's engineers on a first priority basis and only as needed. That means we don't need to bring hundreds of engineers to our P&L, which makes our development much more cost-efficient.
Second, our ability to use Embraer's 50-year intellectual property on a royalty-free basis. That's another important source of cost savings. Third, access to Embraer's facilities with minor investments and only the sharing of facility fees. That also saves us significant infrastructure CapEx at this stage. That said, moving to cash flow, I would like to highlight our cash burn of $13.2 million in the first six months of 2022. The cash consumption was positively impacted by accounts payable of approximately $10 million related to Embraer's development services. Eve has 45 days to pay Embraer for engineering services for any given period. With that, we ended the second quarter with approximately $330 million in cash, following our net capital raise of $329 million in May.
Given the cost advantages I just mentioned, we feel extremely comfortable with our current cash position as it gives Eve plenty of resources to maintain our eVTOL development for multiple years. At this point in time, Eve has no debt on its balance sheet, which provides another avenue for financing operations, as well as cash from customer progress payments once LOIs are definitized as firm orders. Now on the balance sheet, I want to emphasize again total accounts payable of $12.6 million at the end of the second quarter that reduced our cash burn. At the same time, we have no debt on our balance sheet and a cash or net cash position of more than $330 million. That concludes our financial highlights, and now we would like to open for questions. Operator, please go ahead.
Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions. Thank you. Once again, to ask a question, you may press star one. Our first question comes from the line of Sheila Kahyaoglu with Jefferies. Please proceed with your question.
Hi good afternoon guys and thank you and congratulations on going public. Maybe I wanted to just ask first steps in terms of you announced the formalization of your eVTOL certificate with ANAC during Q2. What's sort of the next step in the process? And if you could, you know, sort of talk about what testing is involved from here, maybe for Andre or Jerry.
Sure. Thanks Sheila. It's an excellent question. You know, the quick answer is that there are multiple steps, and as we have done in the past, we expect to move to a common structure with the FAA later this year. Stein, you want to talk to that a little bit further?
Sure. Our strategy overall as Jerry mentioned, something that we've done in other programs, which is use ANAC as our primary certification organization. We have their undivided attention, but at the same time, engage with all the other major regulatory authorities, including in particular the FAA, where ANAC has bilateral agreements. We've used that in previous programs to assure that there is not a new certification process in the FAA, but rather a validation of what ANAC has done. We are quite confident of moving towards that. I'm not sure if Valentini you wanna comment more on that, but that covers it.
No no. That's it.
Sure Stein, so okay.
Okay.
Very good. Thank you.
I just have one more question, actually. This one's for Eduardo, if that's possible. Eduardo, you guys raised a little bit of debt, I believe, on August first, with a loan agreement with Embraer for $81 million at about a 5% rate. I guess, what drove you to take on that debt, and how do you think about the use of funds there? Would you like to pursue any leverage, and your thoughts on any debt raises?
Yeah. Hi Sheila. No, just to clarify, it's really the other way around. We didn't raise any debt with Embraer. We invested part of our cash with Embraer at arm's length rate, right, of almost 5% a year. That's $80 million will give us almost $5 million in interest rates per year. A very good investment for Eve. It's a one-year. We can prepay that loan and get the money back anytime we want. We get an independent assessment from an auditor regarding the interest rate of 5%. We also get our independent board approval, so it's really the other way around. We don't have any debt.
We are always looking for ways to leverage the company and maybe bring additional cash and maybe raise some debt in the future. We are approached by a lot of potential lenders, but at this time, we have no leverage in our balance sheet, which gives us flexibility to raise future debt to bring even more cash for Eve. Okay?
Yes. Thank you so much for clarifying. Congratulations, guys. Thank you.
Thank you.
The next question is from the line of Savanthi Syth with Raymond James. Please proceed with your question.
Hey good afternoon and congrats. If I might ask, like the design changes that you announced at Farnborough, could you talk about, you know, some of the rationale behind the changes and kinda what kind of benefits they provide versus the prior design, just to understanding a little bit more of what was finalized here at Farnborough?
Sure Savi. That's an excellent question. There are a number of benefits and Valentini, you're probably in the best position to talk about some of the specific trade-offs and what they resulted in.
Sure Jerry. Good afternoon to all. I think there are two important points to highlight with respect to the changing configuration. One is that the displacement of the rotors, the placement of the rotors that we made allows us for sizing of the motors with less power, the motors of the lifters with less power, thinking of the controllability in case of the failure of one of them in flight. We maintain controllability of the vehicle, but we can do that, and we did maintain also in the previous configuration, but we can maintain it in this updated configuration with less power in each of the motors. This is helpful with respect to the sizing and the weight of the vehicle.
It allows us to reduce the weight, which of course brings benefit in terms of energy efficiency and noise and other aspects. In addition to this, we find that this configuration with the conventional placement of wing and tail gives us a little bit more flexibility to adjust the stability and controllability of the vehicle in the future and make minor adjustments if we have to. It gives us a little bit more leeway to refine the flying qualities as we refine the project and go along. Those are the two main reasons for updating the configuration in this way.
I really appreciate that Valentini.
Savi does that?
Yes it does. Thank you.
Thank you.
Go ahead Jerry.
Go ahead.
Sorry. I guess the kind of follow-up on that would be, you know, just the kind of the parts and the aircraft design and suppliers. Like, when do you expect that to be firmed up, and when can we kinda expect a, you know, a full demonstrator vehicle here?
Yeah Savi, you know, that happens as the design matures. As you saw here or as Valentini talked about, these modifications give us an enhanced controllability with reduced power and weight. They also provide a little bit of design margin as we further refine this design. The best answer I can give to your question is, you know, we're flying a variety of vehicles now, doing extensive simulation and modeling to test variations of key elements so that we can understand and verify the effects those variations have. With respect to suppliers, you'll probably see us start on three of the key areas, really on the motors, propellers, and batteries. Starting at the end of this year through the first half of next year, we will probably lock down each of those three categories.
Valentini anything you want to add to that?
Jerry, just that timeline supports the development of the vehicle, as we had planned originally. That timeline of bringing the locking in with the suppliers, as you mentioned, is part and again is as we had originally planned for the project. I just want to remind that we are talking about the signing the contracts of supply of these parts and these systems that you mentioned. Before that, we have some pretty significant engagement with several potential suppliers for them to participate and us even to learn about their products, from you know from the beginning of this year on. We mature the participation with them and then sign with that schedule, as you mentioned.
Yeah Savi I would just add one more point. We believe we will continue to mature this design as we get closer to what we call a production representative model. It depends how one defines prototype and commercial or production representative models. We expect to refine details on this all the way until we head towards that production representative model roughly two years in advance of certification.
That's super helpful. I appreciate all that background. Final question, just, I thought the BAE announcement was interesting. It kind of gives you a new, maybe a vertical, a new defense kind of vertical to go into. I was curious as you know, this is still very early days, but any thoughts on you know what type of missions these will probably launch on first as you kind of start to produce and how big that defense angle can get? Could it be as meaningful as it is for Embraer?
Well Savi, I'll turn that over to Stein, but you know, in terms of the specific applications, that'll be up to the, you know, the joint venture between Embraer and BAE to determine. We at Eve will remain focused on the core urban air market. Stein, you want to talk a little bit about where maybe some of the early adoption might be on the defense segment?
Sure. Actually the beauty of the deal because of BAE and Embraer is exactly that Eve will remain focused on the urban air mobility market, and we'll provide them with our baseline aircraft. We can optimize our aircraft for urban air mobility and at the same time access the defense market, in particular applications where we could deploy technology for autonomous, for example, that are the regulatory environment is easier in the defense applications than it is for the civilian applications. I think, as Jerry said, the final use will depend on that market development from both BAE and Embraer Defense.
Some of the applications we've heard during the discussions are things like search and rescue, disaster relief, ship-to-shore, things that will take advantage of both the different qualities we have on our vehicle, meaning the fact that it's electric and ship-to-shore, for example, there is an excess of electricity in the ship, so we don't need to carry fuel. That's a clear benefit of electric vehicle for that type of application. There are apparently quite a few potential customers that have been excited about it.
All very helpful. Thank you.
Our next question is from the line of Marvin Fong with BTIG. Please proceed with your question.
Good afternoon. Thank you for taking my questions. Let me also say congratulations on your first quarter as a public company. I appreciate the color you provided on the redesign. That was one of my questions. I'll move on to a couple of finance questions perhaps. Your press release referenced, you know, that you'll be able to kind of leverage additional capital from down payments, you know, as orders firm up. I know that pre-delivery payments is very common in the aircraft industry.
Since potentially a lot of investors on the call are actually not familiar, you know, being tech investors, maybe it'd be helpful if you guys just kind of dug a little deeper into how much capital you think, you know, or working capital you can raise from pre-delivery payments and the timing relative to final delivery those payments will come in. Then I have a couple of additional questions.
Sure. I'll turn that over to Edu in a moment. As Edu said, we've got substantial cash on the balance sheet. We've got quite a bit of runway in front of us, that allows us to determine what's the most advantageous way to strengthen the balance sheet if and when we decide to do that. Certainly, you know, the pre-delivery payments are a vehicle to do that. In terms of timing, we expect to start definitizing those LOIs, over the next 24-month period. Edu, you wanna talk a little bit about the timing of and the magnitude of what that cash flow could be?
Yeah sure Jerry. Thanks Marvin for the question. Yeah, it depends on product to product, but you know, down payments or advances could be as big as 50% of the value of the vehicle. So if you look our non-binding backlog, right, it's over 2,000 vehicles over $6 billion. If you assume that some of the advances could be as high as 50%, you can figure out that, you know, a lot of cash flow may come to the company as we, you know, transition those non-binding orders into firm orders. In general, that happens as Jerry mentioned 24-18 months prior to the delivery. So there is a schedule, but it depends a lot and varies from customer to customer.
Okay great. Thanks for that color. One other question on finances. You know, Edu, maybe you could help share your thoughts on how we should be thinking about, you know, OpEx and CapEx for the back half of the year. You know, is the second quarter run rate a good run rate, or do you expect that to step up?
We expect that to step up as we advance in the program, right? Probably, the cash burn or the expenses investments will be higher on the second half. We have a lot of advantages, right? As you mentioned, we only pay the engineers as they work for us. We don't bring them to the balance sheet. We have all the, you know, the engineers or the labor force most of that available in Brazil, where there are competitive rates. You know, we have a lot of advantages. I would say we may spend around $100 million. It depends on the year, but throughout the development, around $100 million, maybe some years a little less, some years a little more.
I believe the cash we have today, the $330 million, it's a robust cash considering the pace of cash burn that we expect, and we have a lot of room and a lot of cash to speed up our development. We're feeling very good.
Great thank you. Maybe just one last question for me. Just on business development, you guys have built the largest unit backlog in the industry as far as I'm aware. Could you just help investors understand like the process? I mean, how are potential customers, you know, are they reaching out to you or are you reaching out to them? And what's sort of the evaluation process? Are they considering you against some of the other eVTOL players, or is it generally like an exclusive sort of negotiation?
You know, that's an excellent question. I think Stein is in the best position to answer that. But as you look at the backlog, it really covers the first three or four years of our business plan. At this point, we're not focused as much on numbers as, you know, the strategic positioning, etc. Stein, you wanna add anything to that?
Sure. To your question about if we are being, if they're looking for us or you're looking for the customers, the answer is always the both of them, right? We have been approached first by several customers around the globe. We, as Jerry put, are very selective on the partners we accept to join us in a way. It's not just a question of getting the largest backlog for the sake of it, but really finding the right partners. The beauty of it, the way we're doing, is that we don't have to date no customer that has more than 10% of our backlog, for example. That minimizes the risk. It's quite spread around. We have customers in all parts of the globe, in all continents.
That also helps to minimize the risk, as well as business models with leasing companies, helicopter operators, airlines coming on board. We are being strategic and going on that direction. To your point about competition, yes, competition is definitely always there.
Perfect thanks so much for the commentary. Congratulations again.
Thank you.
The next question is coming from the line of Marcelo Motta with JP Morgan. Please proceed with your question.
Hi. Thank you very much. It's a question to Eduardo Couto, regarding, you know, cash needs and capital structure. I mean, you guys comment about, you know, this like $100 million cash burn per year, you know, over the next, I don't know, two to three years. Just to understand what you guys see as the capital structure. You know, of course, it all depends on the speed of development and so on. Just to understand, you know, how much leverage you guys think that you can add, you know, and how do you see the capital structure evolving over the years?
Thanks Marcelo Motta. Thanks for the question. We raised, you know, a very good money, right, in our capital raise, almost $400 million. We have this, almost $350 million in our balance sheet. Our cash burn is really, in our view, you know, it's under control. We definitely, you know, are always analyzing and looking possibilities to bring more cash to the company. There are ways to do that. Leverage the company is one of them, right? We could always, raise debt, but we need to make sure that this debt comes at the, you know, right, maturity. It needs to be long term. It needs, maybe some grace period, and, also it needs to come at the, at the right cost.
We are approached by different players offering different opportunities, but you know, we still don't have anything secured, but it's one way to go. Another possibility as we are discussing here, right? Advances from customers as we secure the orders, we expect to start to get bigger down payments, advances, and that could be a meaningful cash flow. There are different levers that we can pull to bring more cash to the company. Considering you know, our cash burn rate, we already feel comfortable with our cash, but you know, there are ways to bring more cash. We're feeling super good.
Perfect thank you. The second question is regarding the start of deliveries. You know, there were those changes on design and, you know, everything is very fluid at this point in time as you guys are, you know, perfecting the model and get to, you know, the most efficient solution. So just wanted to double-check if, you know, 2026 continues to be kind of the base case or if, you know, change in design, supply chain or, you know, certification process, any of those things over, you know, the past six months has changed and could lead to, you know, an anticipation or delay on this base case for 2026.
You know, excellent question. I'll turn this over to Valentini and Stein. The short answer is, you know, we're still looking at 2026, but as you know, things can happen, like, for instance, you mentioned the certification process and major agencies, whether it's ANAC, FAA or EASA, are still working their way through that. I think that's not so much an Eve specific issue, but that affects the industry as a whole. That's one of the macro things that could affect entry into service as well as the other, you know, community acceptance and the other regulatory factors associated with operation, not just certification. I think they could be as much or more of an impact on 2026 for the industry than the internal factors.
Stein, Valentini, you want to add anything to that?
Sure. Just on the configuration, it's important to highlight that it is part of the development process. Selecting the configuration was a planned part of it. We have been focusing on lift plus cruise solution, perceiving that as the best direction to go with the eight rotors to take off. That's what we have been evaluating, and we've selected the direction to go now. It wasn't a change in course, was part of the development, the natural development and evolution of the product. That was the way it was planned, and that there is no change on our target for entry in service or the first deliveries.
Perfect. Thank you very much.
The next question comes from the line of Kristine Liwag with Morgan Stanley. Please proceed with your question.
Hi this is Jeff Lennon for Kristine Liwag. Good afternoon, congrats. I wanted to ask about plans for autonomy, appreciating that it's still a ways out, but maybe you could speak to the roadmap here, and any maybe near-term milestones to watch for with regard to autonomy. Thanks.
Sure. I think that's an excellent question. Stein, you already alluded to that with the defense application, maybe giving us an early adopter there. Some things that we were already doing in ConOps in Rio and to advance the autonomous capabilities. Stein?
Yeah. Absolutely. Earlier this year we've announced our tests in Rio, where we have been carrying a pack of sensors in a helicopter in a real urban environment. The idea for that was exactly to start the machine learning in a very literal sense. Starting acquiring the data in a real urban environment, so we can apply that for a future that is autonomous. We are on track for that. We believe that we start operations with an eVTOL operator on board, and from there, gather even more data in real operations to move towards autonomous future. We have been investing on that and invest on the development of the technology, but not counting on that as part of the critical path for entry in service. Valentini, if you want to add anything else to it?
Sure. In addition to what Stein described, we have in the near term advances or directions really that we are establishing for the vehicle still while piloted that we believe will set the base for introducing the autonomous flight. One, for example, is having a modular architecture for the avionics in a way that we can evolve it to an autonomous flight, take advantage of what we will have already built in terms of fly-by-wire flight controls in terms of sensors and integration. That also is connected to our vision of developing a simplified human machine interface for the pilot while the pilot is on board the vehicle.
That also creates automation in the system, in the flight control system, for example, that will be already a step ahead when receiving the autonomous functions of the vehicle. At the same time that we are executing these works that Stein alluded to with Embraer, for example, we are also taking measures on the vehicle architecture and definitions that will pave the way for receiving the autonomous functions in the future.
Thanks. Very helpful. I'll stick to one.
Okay. Welcome.
The next question comes from the line of Josh Milberg with Morgan Stanley. Please proceed with your question.
Good afternoon everyone, and thanks for the event. Let me also congratulate you on your now being a public company. You guys covered a number of our doubts, but I wanted to ask if you could elaborate a little further on the topic of proof of concept flight testing, just on the latest developments there, what you have planned for the remainder of the year.
Thanks Josh. Good question. As I said, we're flying a number of different kinds of aircraft. You know, you can define them as proof of concepts, prototypes, et cetera. But more importantly, we think is evolving the final design through the simulation modeling and testing. Valentini, you wanna talk about that?
Sure. We talked about for example, the update in the configuration recently. We believe that this, at this stage, we need to make sure that we understand all of these variations that are possible for the vehicle and make sure that whatever, the improvements or changes we want to make to the vehicle, we do it now when we still have flexibility to do it, right? The later you apply any modifications, then the harder it is, the more expensive it is, the more rework that you have, right, for changing the vehicle as you go along the project.
With this in mind, these tests that we are performing, which include flying vehicles, but also include, for example, wind tunnel tests or rigs and things like that, they help us understand these characteristics, the different effects of different system architectures and things like that. With that then, with the modeling that we do, which then receives data from these tests, we are able to make sure that the choices that we are making for the vehicle are the right choices for us to move on. That's how the tests, being, you know, proof of concept again or not, that's how they contribute to the stage of the development that we are in right now.
Josh.
Okay.
The short answer is we generally don't publish a schedule. We let the engineering team move through this entire process and model, as Embraer has proven as very effective in the past. We expect to be flying more and more mature aircraft all the way up to the time that I said, you know, about two years out from entry into service, where we think we have a production-ready or production representative specimen. It's ongoing.
Okay. That's very helpful color. Thank you for that.
Yeah.
Thank you. At this time, we've reached the end of our question and answer session. I'll turn the call over to Lucio Aldworth for closing remarks.
Thanks Rob. Thank you everyone for joining us today. We do look forward to updating you on our continued progress throughout the year. Please don't hesitate to reach out to us in case you have any additional questions. Thanks and have a good day.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.