- 31 Jan 2022
- Fabrizio Poli
- Aircraft Development
With over 700 electric Vertical Take-Off and Landing aircraft concepts, who is most likely to overcome the significant challenges to certification and reap the even bigger rewards that are up for grabs? René Armas Maes provides some market analysis...Back to Articles
According to the Vertical Flight Society (VFS), the number of electric Vertical Take-Off and Landing (eVTOL) aircraft concepts exceeded 700 as of August 2022.
Those concepts come from 347 entities spread across 48 countries. The most prolific nations for eVTOL entities are the United States (124), the United Kingdom (24), China (21), Germany (19), and Canada (17), which together account for nearly 60% of all eVTOL design entities.
There are manned and unmanned vehicles designed for a wide range of roles, including cargo, surveillance and special missions, as well as for short to medium range, and regional passenger transportation. In 2021 the VFS estimated that, compared to the 2010-2020 timeframe, the total funding invested into eVTOL aircraft developers had doubled, reaching $10bn.
The increased funding was channelled through public offerings attracting private investment, primarily through Special Purpose Acquisition Companies (SPACs) listed on the US stock market. Many preferred to bypass the traditional Initial Public Offering (IPO) process to gain public listing.
eVTOL companies such as Archer Aviation, Joby Aviation, Lilium and Vertical Aerospace have all benefited from private financing (though they are not the only ones to do so). A look at the current stock price and valuation for these four start-up companies reveals their shares have fallen, on average, 73% as of February 2, 2023 (see graphic below, representing selected Historical NYSE Nasdaq eVTOL Stock Information).
At the time of writing, only a small percentage of selected start-ups – one being EVE, a subsidiary of Embraer – have appreciated since their first day of trading. In the case of EVE, shares have risen 5% to US$10.34 each.
Is the hype about eVTOLs starting to wear thin? What are the implications of falling share prices for future rounds of financing as these eVTOL companies try to progress their concept aircraft towards flight testing, certification, and ultimately production?
The answer may not be straightforward. While our selected eVTOL companies’ stock performances have hit some turbulence lately, many should expect a valuation lift as their program and certification timelines become clearer.
It’s also worth noting that in 2022, Boeing – through a joint venture – committed an additional US$450m to Wisk Aero while other traditional and established aircraft OEMs, including Airbus and Embraer, have also invested heavily in the race to develop and certify eVTOLs.
When considering the hurdles and challenges faced in this sector as well as the opportunities for the forerunners, it’s important to take a wider view.
While a number of the leading eVTOL companies plan to have completed flight testing, and some even hope to achieve certification towards the end of 2024 and beyond, several challenges line their horizons.
These include securing the necessary funding, meeting aggressive timelines for certification, the need for technological enhancements (longer-life, faster-charging batteries), current supply chain constraints, the need for infrastructural deployment, air space management coordination, pilot training/shortages (at least for crewed vehicles), initial public buy-in, and more.
For any eVTOL company that overcomes, the opportunity for Urban Air Mobility (UAM) could potentially be enormous, especially considering the limited or broken ground infrastructure of many of the world’s most crowded cities. The opportunity to transcend the traffic jams and fly from one point in a city to another unimpeded holds great appeal.
This is especially compelling when you factor in the number of man-hours lost while stuck in traffic. eVTOLs would offer a solution for moving people more efficiently around cities, or to neighboring areas. At least, that’s the short-distance travel focus of the initial phase of eVTOLs.
And then, of course, there’s the demand for sustainability. With the leading authorities in Business Aviation targeting net zero carbon emissions by 2050, the eVTOL concept fits right in with that objective.
According to a recent Morgan Stanley report, as demand for sustainable solutions in air travel grows, the eVTOL market could be worth US$1.5tn, annually, by 2040. So, there’s a huge amount at stake for the industry’s eVTOL forerunners to succeed.
Zero carbon and lower noise emissions as well as ‘lighter’ infrastructure requirements (compared to airports and large helipad facilities) are all a part of the eVTOL attraction, while from an operational perspective eVTOLs will come with significantly lower direct hourly costs.
Opportunity abounds in as many different shapes and sizes as the eVTOL concepts themselves. Cargo, priority parcel delivery, emergency medical services (including transporting donor organs), passenger transportation, and more, could be executed without delay.
Industry veterans may recall with a wry grin that the ‘skies would be darkened’ by the sheer volume of ‘Very Light Jets’ flying. Hindsight is a wonderful thing! Back at the start of this century, several companies appeared out of nowhere with various Very Light Jet concepts, made possible by new, lighter jet engine technology.
Some of those concepts made it beyond the design phase and into actual flight testing, fewer still achieved certification, and you can count on one hand how many went on to achieve market success.
Today, we have a far larger number of companies working on a significantly greater number of eVTOL concepts, and it’s still too early to identify which will be well-enough funded to certify and successfully market their vehicles.
In reality, the vast majority of the 700 concepts will fail. As safety and certification goes hand in hand, many of those who move beyond design into flight testing will falter at the rigorous certification processes, lacking the funding, management and technical expertise required to navigate this phase.
In my opinion, those programs launched and associated with the established OEMs – Airbus, Boeing, and Embraer – could see light at the end of the long tunnel ahead, due to the OEMs’ expertise in aircraft design, flight test programs, certification, production, supply chain and marketing.
Expect to see some consolidation, too – the pooling of resources among some of the other concepts. Most likely, only a handful of non-OEM-backed companies will succeed in penetrating the market towards the end of the 2020s.
For those who succeed, long-term funding will be needed, along with a positive public perception of their aircraft’s safety and reliability.