Europe And U.S. Jockey For Leadership In Emerging eVTOL Industry

It took decades for the commercial aircraft industry to evolve into a duopoly. It may take a fraction of that time to determine the winners and losers in advanced air mobility. The industry continues to move at a pace not seen in aviation since the 1950s, fueled by a race for leadership in an entirely new market.

Advanced air mobility is akin to a relay race, but one in which every team member must retain their grip on the baton if they are to cross the line successfully: developers, regulators, investors, operators, infrastructure providers and, ultimately, paying customers. So far, the U.S. and Europe are leading the race, but China is accelerating.

• Regulators are setting the pace of progress
• Infrastructure is surfacing as a concern

U.S. Changes Course

U.S. industry was thrown a curve ball in May when the FAA switched direction on certifying winged electric vertical-takeoff-and-landing (eVTOL) vehicles from using Part 23 rules for small airplanes to treating them as powered-lift aircraft under the Part 21.17(b) for special classes of aircraft. The switch was made, the FAA said, to better align certification of aircraft and their pilots to enable operations.

The immediate effect was on companies that had already agreed on their G-1 certification basis with the FAA, which said it did not expect the change to delay projects already underway. So far, this has been borne out, says Joby Aviation, which was the first eVTOL developer to sign a G-1, in 2020, and in July became the first to sign a revised document.

The change has had a slight effect on the next step toward certification, agreeing on the means of demonstrating compliance (MOC) with the regulations, but Joby still expects to complete that stage by year-end, keeping its S4 eVTOL air taxi on track for 2024.

Archer Aviation says it has seen no changes to its G-1 other than to point to Part 21.17(b) rather than Part 23 and also expects to agree on all the MOCs for its Midnight production eVTOL by the end of 2022, with service entry expected in 2025.

But for any eVTOL to enter commercial service in the U.S., the FAA must now develop and publish a Special Federal Aviation Regulation (SFAR) establishing the rules for powered-lift operations and pilot training.

“There is still work to be done to define how the rules for operating our aircraft will work under the revised approach,” Joby founder and CEO JoeBen Bevirt told analysts on Aug. 11. “But the FAA has also committed to making sure these will be ready for us, drawing on existing helicopter and airplane rules.”

The SFAR has been fast-tracked, he said, and the FAA aims to publish a notice of proposed rulemaking (NPRM) before year-end. Representing the industry, the General Aviation Manufacturers Association submitted suggested changes for the SFAR to the FAA in late July.

An NPRM by year-end should support a final SFAR in the second half of 2024. But one industry insider says the FAA has told companies no eVTOL will be certified before the fourth quarter of 2024, and no commercial operations will begin until 2025, to allow sufficient testing to uncover time-based issues such as battery cycling. The FAA declines to comment on certification projects.

“[We] have been reassured . . . that the FAA will take a leading role in bringing eVTOL to market,” Archer co-founder and CEO Adam Goldstein told analysts on Aug. 10. Sergio Cecutta, founder and partner at SMG Consulting, is less confident. “We do not think the SFAR will be in place by 2024,” he says.

“That is why they will work the first years [of eVTOL] under Part 21.17(b), making each aircraft certification unique, with exemptions and waivers,” Cecutta says, adding that this will make it challenging for the FAA and European Union Aviation Safety Agency (EASA) to validate each other’s certifications.

U.S. industry, meanwhile, remains focused on being ready to launch commercial operations in 2024-25. Joby plans to fly a partially conforming “production-intent” prototype this year, followed in 2023 by fully conforming certification test aircraft. Archer has completed the preliminary design review on its production eVTOL, with flight testing also to begin next year.

As they progress, the startups are working to differentiate themselves. Archer says its aircraft will have an “industry-leading” payload exceeding 1,000 lb. This points to a significant difference between its “12-tilt-6” Midnight and Joby’s tiltprop. Both are designed to carry a pilot and four passengers, but Archer’s eVTOL has a gross weight of 6,500 lb., compared with 4,800 lb. for Joby’s S4.

A tiltprop has lower cruise drag than a lift-plus-cruise design, giving it greater speed and range, but assuming a typical battery mass fraction of 30%, a lighter aircraft means less payload. For Archer, the Midnight’s 1,000-lb. payload, plus margin for weight growth, ensures the aircraft can carry a pilot and four passengers on its core 20-30-mi. mission, a key driver of economic viability, Goldstein says.

Beta Technologies is also targeting FAA certification in 2024 but is differentiating itself by focusing on the cargo market. The startup’s Alia-250c lift-plus-cruise eVTOL is designed to carry a pilot and 1,400-lb. payload up to 250 nm. The conventional-takeoff-and-landing first prototype has logged more than 250 flights and an eVTOL second aircraft more than 50 hover tests, but no transitions have been made yet.

After 2025, once all the rules are in place, a second wave of vehicles is set to enter the market. U.S.-based Eve plans to develop and certify its eVTOL in Brazil, aiming for certification by the end of 2025, while Overair is aiming for 2026, and Hyundai’s U.S.-based Supernal eVTOL division is targeting 2028.

Boeing-backed Wisk will shortly unveil its sixth-generation eVTOL, an autonomous four-seater, but is not expected to launch service before 2028. And Textron eAviation has taken over the former Bell Nexus eVTOL program, targeting market entry at the end of the decade.

Europe Sets the Pace

Europe’s startup landscape may lack the scope of that in the U.S., but it benefits from a regulator that is leaning far forward to enable the eVTOL industry. Since publishing the Special Condition for small-category VTOL aircraft (SC-VTOL) certification regulation in 2019, EASA has followed up with three sets of MOCs, prototype design specifications for vertiports and, in June, the proposed operational framework for eVTOLs.

EASA has welcomed the FAA’s change of direction, as it expects that the shift will make the desired harmonization of eVTOL certification easier in the long run. By treating all eVTOLs as a special class of aircraft, the FAA is adopting the approach EASA took with SC-VTOL. Both sides have drawn heavily on already harmonized performance-based Part 23/CS-23 regulations for small airplanes, but there will be differences that must be reconciled before eVTOL certifications can be brought into alignment.

SC-VTOL sets the same safety level for passenger-carrying eVTOLs as for commercial airliners, a 10^-9 probability of catastrophic failure. While challenging, European manufacturers project that this will give them a competitive advantage over FAA-certified eVTOLs, where the design assurance level could be lower. Other national regulators are widely expected also to embrace SC-VTOL.

While no longer tied to EASA following Brexit, the UK’s Civil Aviation Authority has agreed to use SC-VTOL to certify Vertical Aerospace’s VX4 eVTOL. At the same time, the UK regulator has agreed to validate FAA Part 21.17(b) certification of Joby’s eVTOL, giving it a foot in each camp.

“Our approach has always been to go for the most stringent safety standards globally. And many of our customers increasingly get the significance of SC-VTOL,” says Michael Cervenka, president of UK startup Vertical, which has several airlines in its orderbook. “It’s important for leasing companies because they want portability of the asset. But when you have customers like American, Japan Airlines and Virgin, it really matters.”

Volocopter will be the first to go through EASA certification and FAA validation. The German startup has been flying a conforming prototype of its piloted two-seat VoloCity multicopter eVTOL since last December and is targeting service launch in 2024, at the Paris Olympics and in Singapore. The startup is the only eVTOL developer so far to have design and production organization approvals from EASA and has also been flying its longer-range four-seat eVTOL, the lift-plus-cruise Volo-Connect, since May.

Lilium has slipped certification and service launch to 2025 after unveiling a refined design for its vectored-thrust ducted-fan Lilium Jet following completion of the preliminary design review this year. Flight testing of a subscale demonstrator continues in Spain, and the first full-scale Jet is planned to fly in 2023.

As in the U.S., a second wave of European eVTOLs is expected after 2025, including the Airbus CityAirbus NextGen and hybrid-electric aircraft from startups Ascendance Flight Technologies in France and Dufour Aerospace in Switzerland.

China’s Challengers

China’s EHang may not have been the first to fly an eVTOL, but the 2016 debut of its “passenger drone” at the Consumer Electronics Show in Las Vegas ignited public interest in air taxis. The Guangzhou-based startup was also the first eVTOL developer to go public, in December 2019.

Progress was slowed by the COVID-19 pandemic and other factors, and its lead has narrowed, but EHang remains hopeful that its autonomous two-seat EH216S will be type-certified this year by the Civil Aviation Administration of China, allowing commercial operations to begin.

Since 2016, Europe and the U.S. have emerged as the centers of gravity for eVTOL development, but China is staging a comeback, with multiple startups entering the market. Companies such as Pantuo Aviation, TCab Techn and Volant Aerotech are flying subscale models, while AutoFlight, XPeng AeroHT and Volkswagen Group China are flying full-scale aircraft.

“Chinese companies operate in a different capital and regulatory environment,” Cecutta says. “And this is different from traditional aerospace, where China needs to rely on Western suppliers for some critical subsystems. They have a complete and competitive domestic eVTOL supply chain. I think this new wave of Chinese companies might also surpass EHang or force it to introduce new vehicles.”

Majority-owned by Chinese electric-vehicle manufacturer XPeng AeroHT has made the most progress and is flying both the single-seat, open-cockpit Voyager X1 and two-seat closed-cabin X2. The company secured $500 million Series A funding last October to develop a sixth-generation fly/drive eVTOL, more details of which will be released by year-end, founder and President Deli Zhao said in June.

Founded in 2017, Shanghai-based AutoFlight is taking the unusual route of certifying its eVTOL with EASA. The startup secured $100 million in Series A funding from Europe-based Team Global last November, and AutoFlight Europe was established in January in Augsburg, Germany. The company is aiming for SC-VTOL certification and initial piloted passenger operations in 2025-26.

AutoFlight plans to fly a third full-scale proof-of-concept (PoC) aircraft for its Prosperity 1 lift-plus-cruise eVTOL in China in September. The company is moving fast. The first uncrewed PoC flew last October and completed its first transition in January. The second PoC followed in April and has made more than 50 transitions. The third PoC will introduce a longer wing.

Volkswagen sprang a surprise in July when the automaker’s Chinese operation unveiled the first prototype of an autonomous passenger eVTOL. The full-scale validation model, dubbed the V.MO, is planned to fly this year. An improved prototype is scheduled to fly in 2023, and a future production version of the self-flying aircraft would carry four passengers up to 200 km (125 mi.).

Many of the Chinese startups have been formed by personnel with eVTOL experience from other companies. Shanghai-based TCab was founded in May 2021 by engineers from the eVTOL division of Chinese carmaker Geely. Also based in Shanghai, Volant was established in June 2021 by a team drawn from AutoFlight as well as China’s Avic and Comac. China’s growing electric-vehicle industry is providing both experienced personnel and a ready supply base.

Cecutta sees China as “a bit of a puzzle.” The government’s latest five-year plan promotes both the technology and the development of general aviation, and China so far is the only country prepared to certify autonomous air taxis.

“[But] the geopolitical climate will make their vehicles not easy to certify outside China,” he says, adding that he would not be surprised if some of the Chinese companies move their headquarters to Europe or the U.S. “I do not think they will come to dominate as they do in drones, as drones were electronics that fly, while these vehicles are aircraft and, irrespective of Chinese expertise in electrification, they are not on par with the West in commercial aviation.”

Investors on the Hook

After a multibillion-dollar fundraising wave crested last year, a realization is growing that even the most well-funded eVTOL startups will have to raise more money as they move into production and operation. Some will need to move sooner than others. At the end of the second quarter, cash in hand across the publicly traded eVTOL developers ranged from almost $1.2 billion at Joby to barely $31 million at EHang, while quarterly cash burn on R&D ranged from $75 million at Joby to under $5 million at EHang.

“Everyone is worried about cash burn right now. But I think that with some share dilution and external loans, most companies will have the cash they need for certification,” Cecutta says. “I worry about production. That is when the cash burn ramps up significantly.” Electric-vehicle startups are a few years ahead of their eVTOL counterparts, and many are in trouble or failing, he points out, as they reach the production stage and burn though substantial amounts of cash.

Joby remains confident it has the capital in hand to support continued progress on certification, manufacturing and early operations but is looking for new funding to scale up production. The company is trimming planned spending for 2022 by $20 million to $320-340 million, citing the uncertain financial environment. Joby is also counting on growing its defense business, and the potential value of its prototyping contract with the U.S. Air Force’s Agility Prime program has grown by $45 million to $75 million.

Other public players are already tapping into additional funding sources, ranging from bank loans to customer down payments. EHang in June secured a 1 billion Chinese yuan ($150 million) credit facility with the Agricultural Bank of China (ABC), in which the government is the biggest shareholder. The facility will support credit loans, financial leasing, supply chain financing and other needs.

ABC is one of the world’s largest commercial banks, and the credit facility indicates that “traditional financial institutions have started to tap into this new type of industry,” EHang Chief Financial Officer Richard Liu told analysts on Aug. 18. “So it is a good sign, not only for EHang, but also for the industry.”

Financial regulations bar newly public companies from issuing more shares for 12 months after listing, but Lilium and Vertical have been able to bolster their capital by tapping into a mechanism called an equity line of credit (ELOC). Both eVTOL startups have acknowledged that they will need to raise additional funding to achieve certification and enter production.

An ELOC allows a public company to sell stock to an investor from time to time, based on trading volumes and share prices. Lilium went public in September 2021 and in June established a $75 million ELOC with Tumim Stone Capital; Vertical listed last December and signed a $100 million ELOC with Nomura in August.

With a backlog of more than 1,400 nonbinding preorders, Vertical also plans to use predelivery payments from customers to help fund development of its VX4 eVTOL (see page 64). In July, the UK startup secured its a commitment from American Airlines to make predelivery payments on its first 50 aircraft. Payment is subject to meeting certain conditions, but Archer quickly followed with a $10 million prepayment from United Airlines on its first 100 Midnight eVTOLs.

“We believe this is the first such predelivery payment of its kind in the eVTOL space,” Archer’s Goldstein said. Predelivery payments secure production slots, and Vertical expects more of its customers to follow American’s lead, suggesting the industry is entering a new phase as aircraft move toward certification.

New investment continues to enter the eVTOL market, although not on the scale of 2021. South Korean conglomerate Hanwha in June increased its investment in U.S. startup Overair by $145 million, to $170 million. In addition to supporting development of the Butterfly eVTOL, with a full-scale prototype planned to fly in 2023, the funding will help lay the groundwork for commercial operation, Overair says.

Also in June, Beta Technologies secured a second investment from Amazon’s Climate Pledge Fund, part of a trend of climate-related funds backing zero-emission aircraft. The amount was not disclosed, but Cecutta estimates it puts the company within striking range of $1 billion, making it the most well-funded of the eVTOL startups that have stayed with private investment and eschewed going public.

Infrastructure Enablers

First it was technology, then regulation, and now the challenge most concerning eVTOL proponents is the availability of vertiport and airspace infrastructure to support the operation of vehicles as they are produced at the rates manufacturers are planning. The few billions of dollars raised by startups so far pale beside the $20-30 billion in infrastructure investment Nexa Capital projects is needed just to facilitate advanced air mobility in the top 38 U.S. metropolitan markets.

Given that airport shuttle services to city centers and business districts are likely the first passenger markets for eVTOLs, airport operators are playing a key early role in planning and developing infrastructure. This is particularly true in Europe, where many of the largest airport operating companies are based. But a growing number of startups are entering the market on the basis that private investment can be deployed more quickly and efficiently than public money to develop vertiports.

Cecutta says the complex infrastructure element of advanced air mobility continues to lag the entry-into-service dates that aircraft manufacturers are predicting. European eVTOL developers have been more open in sharing their network plans, while U.S. startups are holding the infrastructure piece close and have yet to announce launch cities, although Los Angeles, Miami and New York are clear favorites.

“Infrastructure is certainly going to be very challenging,” Goldstein told analysts. “The early infrastructure that likely gets stood up will be around airports. [And] when you walk in to talk to the airport with a big customer like United, it’s a different dynamic. I think that gives us a really unique advantage to get to market.”

Early movers on infrastructure include Paris airport operator Groupe ADP, Spanish multinational Ferrovial and UrbanV, a vertiport development company formed last October by the operators of airports in Rome, Venice and Bologna in Italy and Cote d’Azur in France. ADP, together with Paris public transport operator RATP Group, is working to have a limited network of precommercial routes in place for the 2024 Olympics, centered on Issy-les-Moulineaux Heliport.

Airport operator Ferrovial will develop and operate a network of at least 10 vertiports for Lilium in Florida, centered on Miami, and has announced plans for 25 locations in the UK and more than 20 in Spain. Lilium, meanwhile, is working with several airports in Germany to establish regional air mobility networks in its home country by 2025. Through Urban V, Aeroporti de Roma is working to launch its first eVTOL route by 2024, between Fiumicino International Airport and the city of Rome.

Among privately backed startups, UK-based Skyports has established a clear lead, with efforts underway in France, Italy, Japan, Malaysia, Singapore, the UK and elsewhere. In August, the company closed a $26.1 million Series B funding round with investments from Groupe ADP, Japan’s Kanematsu, Italy’s 2i Aeroporti and Singapore’s ST Engineering.

Skyports is a key part of Volocopter’s plans to launch services in Paris and Singapore in 2024, followed by Rome. In Singapore, Volocopter is planning a network of 4-6 VoloPorts by 2030, including locations across the border in Indonesia and Malaysia. In Japan, Skyports and Kanematsu intend to establish a vertiport development joint venture by 2024, and the companies are working with Japan Airlines and others to enable trial air taxi services at Expo 2025 in Osaka.

Another UK startup, Urban-Air Port, demonstrated a prototype of its modular AirOne vertiport in Coventry, England, in April. With backing from Hyundai’s Supernal, the company aims to deploy more than 200 vertiports worldwide, and has announced plans for sites in Canada and Japan.

As the infrastructure side of the industry gathers pace, more startups are entering the market. In early August, Montreal-based VPorts announced its first deal, to build and operate a vertiport at Guarulhos International Airport in Sao Paulo, the prototypical market for urban air mobility. The facility is scheduled to be built by late 2023 and ready for eVTOL operations by 2026. In Australia, Skyportz has identified some 400 potential locations.

Operators Line Up

The eVTOL customer base has broadened in recent months, both in quantity and diversity. The publicly traded developers have accumulated preorders and options for almost 5,500 aircraft from external customers. Add in the privately funded startups and the total climbs close to 7,000. The majority are nonbinding, but a growing number are secured by initial deposits as vehicles move toward operation.

At the same time, the customer mix has broadened and now ranges from offshore helicopter operator Bristow Group to defense industry prime BAE Systems. Commercial airlines remain the largest holders of preorders, but the list also includes business jet operators and emergency medical service providers.

The first use cases also are coming into focus. Aerial tourism will be an initial market. EHang has flown 5,700 trial flights from 11 locations in China under its 100 Air Mobility Routes initiative and is planning to set up low-altitude-flight tourism operations in different regions once its EH216 is certified. Volocopter’s first route in Singapore, planned for 2024, will be a 15-min. sightseeing flight over Marina Bay.

Archer’s Goldstein said early flights will be “trunk routes” from airports to city centers. Discussions with United have identified initial locations, and the airline’s deposits on aircraft are tied to specific launch cities and routes, he told analysts. Vertical is working with Virgin Atlantic and London Heathrow Airport on a demonstration planned for 2024 and expects its VX4 to enter service first with Virgin in the UK.

Citing unexpectedly strong private aviation interest, Lilium says its eVTOL will enter service with a four-seat club-class cabin, targeting the premium market before introducing a six-passenger shuttle. Additionally, the German startup’s air taxi operations are to be supported by experienced business-jet operators Luxaviation in Europe and NetJets in Florida.

Joby is progressing with plans for its own air taxi service, securing its Part 135 operating certificate from the FAA in May. The startup is running an internal shuttle service using a Cirrus SR22 to gain experience with the back-office and customer-facing aspects of running an air taxi operation. Joby cautions that initial operations will be limited to a few eVTOLs.

Some industry experts expect cargo, and not passengers, to be the first market to begin to scale. With a focus on the cargo market, Beta has been conducting cross-country test flights with a prototype eVTOL to showcase its capability, flying conventionally from package hubs of customer UPS and investor Amazon. Beta also lists lessor LCI Aviation as a cargo customer.

Beta and Joby view defense as an important market. Under the Agility Prime program, both are working with the U.S. Air Force, which has budgeted to procure an initial five eVTOLs in fiscal 2023. Beta is working also with the U.S. Army and Joby with the U.S. Marine Corps. Potential initial applications include logistic and personnel transport.

BAE and Embraer plan to form a joint venture to develop a defense variant of Eve’s eVTOL, signing a letter of intent for 150 aircraft. “Eve will remain focused on the urban mobility market and provide them with our baseline aircraft,” Eve co-CEO Andre Stein told analysts on Aug. 5. “So we can optimize our aircraft for urban air mobility and at the same time access the defense market.” Access to the defense market will enable technology such as autonomy to be deployed for military uses before the regulatory environment allows its use in civilian applications, he added.