Billions of dollars, dozens of deals, and one legal battle: the year in eVTOL was an unforgettable one, with developers picking up the pace even as the larger aviation sector was busy slowly recovering from the fallout from the COVID-19 pandemic.
Below, we catch up with leading analysts and investors to identify the top trends that shaped eVTOL this year — and will likely continue to reverberate in the years to come.
Did someone say SPAC?
Archer Aviation. Joby Aviation. Lilium. Vertical Aerospace. What do these companies have in common, besides the fact that they’re each developing eVTOL aircraft? They all announced or completed mergers with blank-check firms this year, in an absolutely mind-blowing injection of capital into this once nascent – even far-fetched – technology.
If 2021 should be remembered for anything in the world of eVTOL, it’s principally the massive amount of money that has gone into the sector. Three SPAC deals alone – that of Joby, Archer, and German developer Lilium – raised over $2.5 billion combined in gross proceeds, with Joby’s proceeds constituting nearly half that figure at $1.1 billion. eVTOL aircraft are not the only mobility technology to have flocked to SPACs as a financial vehicle to take them to public markets, but the sheer number of deals is certainly one of the stand-out trends of this year.
“What’s different with the eVTOL industry today and where they were, let’s say a year ago, is access to capital,” Kristine Liwag, senior aerospace and defense analyst at Morgan Stanley, explained.
This outsized influx of cash means these companies now have a meaningful amount of capital to take them through the long and thorough process of certifying their aircraft with the Federal Aviation Administration, a necessary prerequisite to launching commercial operations. Whether it will be enough is another matter and dependent on each company’s progress and cost efficiency.
The high cost of commercializing the technology likely drove the SPAC trend. Aviation is a capital-intensive business, and many believe that it could cost as much as $1 billion to take an eVTOL from design through manufacturing and certification.
“Definitely the standout for me was the fact that a number of leading startups have found a way to get a budget that is capable of getting an aircraft towards full certification,” David Wyatt, technology analyst at IDTechEx, said. “It feels like a big step has been jumped there in terms of the likelihood of getting more of these test aircraft into the air, from a prototype phase into something that is much more of a concrete eVTOL functional aircraft.”
Even beyond SPACs, there has been plenty of venture funding into eVTOL companies. 2021 also saw massive funding rounds, include Beta Technologies’ $368 million Series A and Xpeng-backed HT Aero’s $500 million Series A.
“2021 has been the year where we’re not asking anymore the question of, can it be certified?” Sergio Cecutta, founder and partner at SMG Consulting, said. “Now the question we’re asking is, when will it be certified? We’re beyond, ‘Will these things ever fly? Are they certifiable?’ Yes, they are. Now we need to roll up our sleeves and do it.”
Movement on the ground
Air taxi developers aren’t just focused on their aircraft. In order to make the market for electric aviation a reality, they’ll need a whole lot more: ground infrastructure, like vertiports or specialized areas in airports, plus charging points capable of getting enough juice to their vehicles.
There’s still a lot of work to be done in this area – see part two for more details – but 2021 saw eVTOL operators make notable strides towards at least starting to establish infrastructure required for commercial operations by mid-decade. This includes a partnership between Lilium and ABB E-mobility to supply charging infrastructure for the Lilium Jet; separate partnerships between Joby and Archer with parking garage owner REEF Technology; and a partnership between Vertical and Heathrow Airport to explore how eVTOL could fit into the airport’s operations.
Archer, Joby and Volocopter are also collaborating with Urban Movement Labs in Los Angeles to explore how the city can integrate urban air mobility into existing infrastructure and transportation networks.
“I know that airports are starting to really heavily think about this,” JetBlue Technology Ventures President Amy Burr said. “Anybody who’s doing any infrastructure project at an airport is thinking about whether or not they need to put in a vertiport.”
Finally, in 2021 we saw an increase of orders for eVTOL aircraft – starting, of course, with news from United that it had placed a $1 billion order with Archer Aviation. That was followed by a cascade of orders for aircraft from Embraer-backed air taxi developer Eve Urban Air Mobility, an order from UPS for Beta Technologies, and conditional preorders topping 1,350 aircraft from Vertical Aerospace.
It’s important to be clear that none of these orders are firm, which makes sense because the commercial product doesn’t exist yet. Orders are contingent upon completion of development, certification and likely other performance milestones.
Yet, even if it should be a tempered signal for any individual company, it’s still a promising sign for the industry, Wyatt said.
“I think it’s promising in that obviously there is a market for these aircrafts […] It certainly gives the confidence that if these aircraft are given their flight certification, are able to fly, then there will be considerable interest from the market for these aircraft.”
Auto gets involved
The final notable trend of 2021 is the increased activity from legacy automakers. While startups might’ve grabbed the most headlines, these older and more established companies have also started to notice the promise of electric aviation. (Notably, established aerospace companies, like Boeing and Airbus, have maintained a more established interest in eVTOL — Boeing through its joint venture with Kitty Hawk, Wisk Aero; and Airbus with its CityAirbus NextGen eVTOL concept.)
Amongst automakers, Hyundai is one such example. While the company unveiled an eVTOL concept design at CES in 2020, this year it officially spun out its urban air mobility business, calling it Supernal. Honda also confirmed plans to develop a hybrid eVTOL — notable because the company said it would be one piece of a “mobility ecosystem” that includes connected apps and Honda vehicles. Then, of course, there’s Chinese automaker Xpeng Motors, which announced at the end of October that it’s urban air mobility subsidiary HT Aero had raised $500 million to deliver on an eVTOL car concept.
These efforts are worth paying attention to, because these major automakers have both the capital, as the manufacturing infrastructure to make moves on eVTOL project. That’s no assurance of success, of course, and these larger companies may not face the same pressures (and motivations) as a startup, but it’s definitely something to keep watch of looking to the future.