Europe's pursuit of electric flying taxis, once seen as the future of urban transportation, is now encountering significant financial turbulence. Companies like Volocopter and Lilium, which had ambitious plans to usher in this new era, are now grappling with cash shortages and investor hesitation, casting doubt on their viability.
Volocopter, based in Germany, had hoped to launch its electric two-seater aircraft, the VoloCity, during the Paris Olympics. Instead of ferrying excited passengers around the city, the company could only manage demonstration flights. Behind the scenes, the financial situation was less rosy. Volocopter attempted to secure €100 million from the German government to stabilize its operations, but those talks fell through earlier this year.
Now, Volocopter's fate seems intertwined with China's Geely, which is reportedly negotiating to acquire 85% of the company for $95 million. This potential deal could shift manufacturing operations to China, raising alarms about the future of European innovations.
The story of Volocopter is echoed across the European eVTOL (electric Vertical Takeoff and Landing) market. Lilium, another prominent player, is facing its own demise after raising substantial funds. The company had initially made waves by securing orders for 780 jets and boasting €1.5 billion in funding. But just like Volocopter, Lilium's financial footing has crumbled. Efforts to secure another €100 million loan from the German development bank failed due to the lack of government guarantees, culminating in the company initiating insolvency proceedings.
Meanwhile, Vertical Aerospace, based in the UK, is also battling its own financial storm. Founded by entrepreneur Stephen Fitzpatrick, the company had plans to deliver 150 flying taxis by the end of the decade. Their VX4 aircraft, which can carry four passengers and has origins from years of technological development, recently flew successfully. Yet, setbacks like a damaged prototype during tests and the withdrawal of significant partners have left the company precariously close to insolvency.
The race to develop flying taxis had gathered pace with massive investments from both venture capitalists and corporate entities eager to claim they were creating the "Tesla of the skies." Major aviation names like Airbus, Boeing, and Embraer have also played their hand, entering the eVTOL sector through various subsidiaries. But with rising interest rates and ballooning costs, the excitement appears to be fading.
Vertical recently announced they had to push back the date for expected regulatory approval by two additional years. Initially, they aimed to start passenger services by 2025 but are now eyeing 2028. Their financial outlook has worsened significantly; shares have plunged 95% since their peak during the pandemic boom. Current estimates place their market valuation at only $110 million.
This decline is mirrored by Lilium's recent bankruptcy filing for its German subsidiaries, seeking buyers to rescue it. The situation for Volocopter appears equally grim, with their valuation also suffering heavily. Even Rolls-Royce, once seen as a leader with plans for flying taxis, has now abandoned its project.
Investors are cautious. The soaring interest rates and demands for immediate profitability are deterring funding. Although Vertical's need for $100 million for the next year hangs over them like a dark cloud, discussions with potential investors – especially distressed asset investors like Jason Mudrick – might provide some hope. He has suggested converting half of his outstanding loans to equity to infuse up to $50 million. Yet, this could cost founder Fitzpatrick control of the company.
Despite these challenges, the eVTOL market isn't done yet. The aerospace consultancy Leeham indicates Airbus's CityAirbus NextGen project is on track. With established resource backing, the four-seater aircraft could lead the charge amid the chaos. CityAirbus has eight propellers and aims for short city hops, representing one of the few projects appearing stable. Meanwhile, other startups like Joby and Archer have begun to raise fresh capital, albeit with growing scrutiny around their profitability.
Questions remain about the future of this ambitious industry. Despite all the setbacks and financial quandaries, can flying taxis eventually recapture their earlier promise? Will they be able to strike the balance between innovation, cost, and regulatory approval? Observers wonder if the turbulence is simply the industry's growing pains or if it signals the end of the flying taxi dream.
