Chinese conglomerate Geely is making significant moves to take control of Volocopter, the promising but troubled flying taxi startup based in Germany. The talks, now advanced, could potentially save Volocopter from looming bankruptcy, as confirmed by sources familiar with the discussions.
The Zhejiang Geely Holding Group Co. is exploring plans to purchase a majority stake in Volocopter by leading a consortium meant to inject fresh capital—around $95 million—into the beleaguered company. This funding would reportedly yield approximately 85% ownership of the startup, with support from the family office of German industrialist Gerhard Sturm also involved. Currently, the two parties are engaged in due diligence, with hopes to finalize the agreement next month.
These developments come at a difficult time for Volocopter, which is facing substantial financial challenges. The firm's valuation has plummeted remarkably from its peak of $1.9 billion just last year to approximately $110 million under the terms of the impending deal.
Despite the potential for revitalization through Geely's investment, Volocopter has also explored discussions with other potential bidders, emphasizing the uncertainty of the negotiations. Volocopter’s struggle highlights the difficulties plaguing the flying taxi industry, where numerous startups have encountered hurdles long before they can offer commercial rides.
Unlike the chaos seen with many ventures in Europe and the U.S., the Chinese government has prioritized the expansion of the ‘low-altitude’ economy, promoting the growth of its electric vehicle industry to compete with traditional automakers, particularly those in Germany.
A spokesperson for Geely declined to comment, reflecting the secrecy often surrounding financial negotiations of this nature. Volocopter, too, took a cautious approach, with representatives stating, “Due to our financing commitments, we will not disclose investor names or amounts raised.” They added, “We strategically look at multiple strands of financing available to us.”
The discussions are not only about financial contributions but also include the potential relocation of Volocopter’s future aircraft manufacturing to China. Although the company currently builds its smaller model at its facility in Germany, it speaks about the German operation serving as a reference point for effective production, aiding future expansion overseas.
The company began its operations back in 2011 and became one of many startups attempting to develop electric vertical take-off and landing vehicles (EVTOL). Over the years, Volocopter raised approximately $600 million from various significant investors, among them the Mercedes-Benz Group AG and investment management firm BlackRock. Despite this backing, the startup faced challenges, including substantial cash burn rates, leadership changes, and missed timelines for launching its first commercial aircraft.
Initially, Volocopter aimed to debut its two-seater aircraft, named VoloCity, during this summer's Olympic Games held in Paris. Unfortunately, the company missed this ambitious deadline. CEO Dirk Hoke recently stated the revised expectation to commence operations now is shifted to the first half of 2025, mentioning they have secured enough funding to navigate the regulatory approval process necessary for flying.
Geely, which is also the largest shareholder of Volvo Car AB, ventured its first investment back in 2019 and is surrounded by other EVTOL competitors within China. These companies are striving to introduce air-taxis at more cost-effective prices than their American counterparts. Just this past October, Chinese authorities permitted EHang Holdings to initiate trials for its own air-taxi services within the year.
Meanwhile, various other international companies have faced setbacks; Kittyhawk, backed by Google co-founder Larry Page, shuttered its operations last year. Another firm, Lilium NV, with ties to Tencent Holdings Ltd., filed for insolvency this past October due to persistent financial struggles, even as they hope to maintain operations with the aim of having their first piloted test flight next year.
Volocopter also made attempts to obtain a €100 million loan from the government, but discussions surrounding this option fell through earlier this year. CEO Hoke had expressed optimism about having secured funding from European investors at the time, maintaining there were no plans to sell the company.
Adding to the leadership changes, Volocopter announced the appointment of Dieter Zetsche, the former Daimler CEO, as chair of its board. Hoke is expected to step down as CEO early next year, with the company still on the lookout for his successor.
The future remains uncertain, but with Geely's potential investment, Volocopter holds onto hope for recovery and progress, aiming to finally see its vision of flying taxis take to the skies.
