Europe’s eVTOL flying taxi leaders are burning through cash — and investors aren’t rushing to fill the gap.
So-called flying taxis are better known as eVTOLs, or electric vertical take off and landing aircraft, and have been hovering on the horizon to disrupt urban air mobility for years — pending certification of course.
But three of the biggest European players have hit financial woes of late. British Vertical Aerospace lost a key supplier, revealed net losses had climbed 45% to $17m in its latest round of annual results, and admitted it was seeking new investment — though there has been good news, with an untethered, piloted test of its VX4 aircraft.
German startup Lilium has burned through more than $1.5bn as it seeks to design an electric, vertical take-off and landing aircraft, but the German government refused a loan guarantee, sending the company into insolvency.
Fellow German firm Volocopoter also attempted to borrow from the government, failing to pin down the requested €100m, instead reportedly turning to China’s Geely — which could see the manufacturing shift to China. It’s since brought in a new CFO — former Lilium staffer Oliver Vogelgesang — and admitted its type certification will take until next year.
Source of European eVTOL woes
Why is it proving so difficult to get finance for eVTOL companies? Sergio Cecutta, an analyst at SMG Consulting, says it’s no coincidence, and there’s a simple main answer: there’s not enough money sloshing around Europe. “Raising capital in Europe, it’s more difficult than raising capital in the US or China,” he tells me.
After all, American rivals Archer Aviation and Joby Aviation have no trouble raising funds — no wonder when both companies are soaring past test flight and certification milestones, appearing increasingly ready to launch commercial services imminently, though work remains.
Cecutta says the three European companies have come on far enough in their development that they’ve started to “experience some of the pains of aerospace programs that some US manufacturers or other manufacturers have not experienced yet.”
He points to Volocopter, which this summer failed to get necessary motors delivered to produce its aircraft and finish certification after Rolls-Royce pulled out of the market. That’s just life in aerospace, Cecutta suggested, but it can be enough to derail a startup that doesn’t have the deep pockets of more established companies.
And developing an eVTOL is an expensive prospect. Cecutta says it’s likely $1.5bn to $2bn just to get fully certified, and there will be further costs to setting up an operational business. That’s exacerbated by the complexity of the designs and components, given the reliance on the development of batteries that aren’t yet available.
The lack of money available to even the big players in Europe suggests tougher times ahead for newer entrants to the market. “One of the trends we’ve seen is money going to the companies that already have money — it’s normal and typical in the startup sector to continue to fund the companies that have already accomplished certain progress,” Cecutta says. “The question is: if you’ve raised $30 million, $100 million, where is the rest of the money going to come from right? It’s difficult there, unless you’re bringing something very different.”
Don’t blame eVTOL regulators
Regulators are often blamed for delays to future technologies, but Cecutta says that’s not the case here. Instead, the European Union Aviation Safety Agency (EASA) has done well to get regulations in place ahead of the industry requiring them, says Cecutta.
“Now, what happens when the regulations are in place?” he asks. “There’s no airplanes to certify.”
He adds: “The regulator did a great job, but the companies didn’t follow through with that.”
In the meantime, the US continues to lead the eVTOL market, Cecutta says, with leader Joby Aviation already filing for certification in the UK. Plus, he added, China is making “progress at a pace that is unheard of in the West.”
If the European eVTOL manufacturers do fail to deliver, that could leave Europe as a key battleground for products: the US will be dominated by local firms, says Cecutta, while the lower prices of Chinese models will offer inroads in key markets in Asia and the Middle East, he predicts, saying it’s similar to the electric vehicle market. But without a homegrown hero, Europe could be where US and Chinese models truly compete for market share.
Real danger for European eVTOLs?
But don’t yet count out Europe’s eVTOL market. All three companies are still operational, seeking solutions to their various funding issues. UK-based Vertical Aerospace hadn’t responded to a request for comment at the time of writing, but the BBC suggested a deal worth $75m in investment was imminent.
A spokesperson for Lilium told me the company was speaking to investors and considering M&A options, adding that though the company is in insolvency, work was continuing with plans in place for a first flight in early 2025. The spokesperson noted that the failure to win a loan guarantee from the German government wasn’t down to Lilium’s technology, but instead was blamed on disagreement in parliament from the Green Party over funding an air travel company. The German government has since collapsed.
Volocopter also reportedly failed to raise €100m from the German government in April — perhaps the eVTOL woes have as much to do with German politics than anything else — and a report from Bloomberg suggested Chinese giant Geely may step in.
In an email, Volocopter told me it was constantly working with multiple private investors on funding, given it remains a pre-revenue, private company. “It is not just the eVTOL market or EU that is having difficulties raising capital,” the spokesperson said. “However, the global market has been extremely tough and a completely different landscape since 2020/2021.”
But overall, these financial struggles are not a good sign for the eVTOL market, says Cecutta. “These internal troubles that they’re having when it comes to funding and investors… does not bode well,” Cecutta adds. “When it comes to startups, you have to be all hands pushing in the same direction. When you begin to have issues with company control and investors, it doesn’t make things easier.”
