DO EVTOL AIR TAXIS NEED A $1 BILLION RUNWAY?
Updated: Sep 6
Certifying a new aircraft is complicated and expensive, even if it's a 'normal' aeroplane or helicopter. Throw in an all-electric powertrain, take away the ailerons, rudder and elevator found on most planes (but keep a wing perhaps), add some rotors like a helicopter but shrink them a bit and maybe have some of them rotate on pods and you end up with something that is as much like a multicopter drone as it is a fixed-wing or rotary aircraft. eVTOL prototypes as are different to 'normal' flying machines as they are to each other - rarely has so much aeronautical innovation been seen in such a short space of time.
Spare a thought then for the EASA and FAA analysts tasked with certifying the myriad exotic designs put across their desks in the past few years - the FAA alone recently unveiled that they are working on the certification of at least 16 different eVTOL designs as of January 2020.
Welcome to the wild world of eVTOL aircraft certification - it presents a series of challenges that might be greater than any of the (not insignificant) technical barriers facing the nascent Urban Air Mobility (UAM) industry. For now we'll leave aside the operational requirements that'll also need to be met before high volume operations in these new aircraft - over cities, with or without pilots - can even be considered.
The vision of city skies filled with zero-emissions flying vehicles holds enough promise that the holders of some of the biggest purse strings on the planet have been convinced to dip hands into their very deep pockets. Billions of dollars in capital have now been deployed to this end - there's an emerging consensus in the business world that air transport will indeed be electrified.
Electricfied aircraft are good news for the environment and will be increasingly in-demand as sustainability soars up the list of public priorities - but it must also be affordable. Financial forecasts and models suggest that Urban Air Mobility will be both profitable and sustainable. The time for sustainable aviation is now. As the electricity in the grids that charge our electrical vehicles comes increasingly from renewable sources of generation, the environmental case for electric aviation becomes only more powerful. As CEO of Vertical Aerospace Stephen Fitzpatrick put it in an interview with Wired:
"Electric grids and batteries are the perfect partner for intermittent renewables the same way the combustion engine was the perfect partner for the oil industry"
FIGHTING OVER A $1.5 TRILLION PIE
eVTOL air taxis hold the promise not only of helping create cleaner skies but of delivering stellar returns. If Morgan Stanley are to be believed therethe market for urban autonomous aircraft will represent a $1.5 trillion pie to fight over by 2040. But will we see something akin to the Boeing / Airbus duopoly emerge in this new segment of the aviation market? It's impossible to tell but a market undergoing consolidation before it's generated any revenue suggests that the few big players capable of getting an aircraft to market first will be those that reap the majority of the financial reward, as is so often the case. This is especially true in a technically complex industry where deep pockets are required to get through certification - our estimate based on funding rounds announced to date is that a company will need somewhere in the region of $500m - $1bn to get an eVTOL aircraft certified for passenger carrying commercial operations in 2022-23 at the earliest. Burn rates at aerospace startups are truly eye-watering.
But it's worth getting to market first, even if at colossal cost. Much as Tesla realised early on with electric cars - training autonomous systems requires a firehose of sensor data to let machine learning algorithms loose on. Learning how to wrangle, filter, analyse and learn from this fusion of information from the real world is of enormous value. As miles driven on public roads are the currency for valuing self-driving car companies, 'flight hours' in both uncontrolled and controlled airspace will be the measure of an eVTOL manufacturers progress and value.
Two to three years ahead of even small-scale commercial operations, it's worth considering just what has been presented in the investor decks by some of the companies listed below. They've secured phenomenal levels of funding for investment propositions that could be considered at best 'alternative' if not downright speculative by a conservative investment professional. Urban Air Mobility is truly putting the 'Venture' back into Venture Capital.
WE ALSO MAKE CARS
Long aware that the days of fossil fuel powered mobility are inevitably numbered the world's big automotive manufacturers are showing an active interest in Urban Air Mobility and starting to invest. Big South-East Asian players are moving first and fastest whilst low volume European manufacturers Aston Martin and Porsche could be accused of 'greenwash' with their renderings of luxury personal electric aircraft to date but little of substance or investment announced to back it up. That said Porsche are partnering with Boeing and their subsidiary Aurora Flight Sciences and Aston Martin with Rolls-Royce and Cranfield Aerospace Solutions - so watch this space.
Hyundai Motor Company announced just this month (Jan 2020) that they were becoming an Uber Elevate partner. Whilst they freely admit that the design shown below is little more than one picked from Uber's design suggestions with a new logo pasted on it, don't underestimate the impact their entry could have on the market. This is a company that manufactuers over four million cars every year. Furthermore their Hyundai Kona and sister Kia eNiro electric cars are selling so well that waiting lists are up to 12 months in some markets. Hyundai have a proven capability to produce working electric powertrains at scale and the knowledge and experience of testing and integrating all the related systems for consumer-ready, real-world application. They have an electric mobility product on sale and selling well across the world.
In this partnership, Hyundai will produce and deploy the air vehicles, and Uber will provide airspace support services, connections to ground transportation, and customer interfaces through an aerial ride share network
Aircraft production is a low-volume business when compared to automotive the mass production of cars. It's not since World War II that the aviation industry has produced planes in anything like the numbers required to bring airframe, component and assembly costs down to anywhere close to those seen in the car industry. In order to support a global electric air transport revolution mass-production and cost reduction will be required. Car makers expertise in high volume, complex manufacturing can really add value to the UAM industry, and these industrial giants also bring much needed capital from their war chests of cash accrued from a world of consumers in love with the motor car.
Case in point is Toyota, producer of some 10 million vehicles in 2019, who announced a staggering $394m investment from their Toyota AI Ventures division in Californian eVTOL manufacturer Joby Aviation who after a decade in stealth mode took the opportunity this month (Jan 2020) to finally unveil their much anticipated aircraft - the Joby S4. With a claimed 200mph top speed and 150+ mile range this could well prove to be the jewel in the crown of the Uber Air offering (in which Joby are participants).
The Series C funding round brought in a total of $590m of new money with Intel Capital and JetBlue Technology Ventures also on board. That makes Joby the best-funded eVTOL manufacturer in the world and with the team they've assembled (and are growing) Stateside and the investors they've got behind them, you'd be brave to bet against Joby Aviation.
However their chosen tilt-rotor architecture has some historical baggage which might make the FAA a little nervous - the Bell Boeing V-22 Osprey military tilt-rotor has crashed at least 12 times killing 42 people and the Agusta Westland AW609 civilian tilt-rotor VTOL aircraft killed two test pilots in 2015. These were of course vastly different aircraft and both powered by turboprop engines rather than batteries and electric motors. That said it's the transitional stage of flight that's always proved the biggest challenge for any VTOL flying vehicle - the complex physics in play when a tilt-rotor aircraft transitions from hovering on columns of thrust to flying forwards with lift generated by a wing - and it's this problem that Joby must convince regulators they've cracked to the highest possible standards of safety and reliability. Regulators have been clear that safety standards for air passenger transport will not be eroded in order to certify eVTOL aircraft, rather these new aircraft must live up to the existing high standards required of passenger carrying commercial aircraft.
Mercedes parent company Daimler recognise the eVTOL opportunity too and have invested in German startup Volocopter alongside Chinese automotive giant Geely (who own Volvo and the London Electric Vehicle Company responsibile for the city's latest, silent iteration of the iconic black cab) in a €50m Series C round of financing announced in September 2019 bringing total funds raised by the company to €85m.
Volocopter are leading the pack in terms of demonstration flights, having successfully flown their aircraft at Helsinki International Airport, in Stuttgart and most spectacularly in Singapore's Marina Bay where they also partnered with Skyports to unveil the world's first full-scale manned vertiport, or 'VoloPort' (pictured earlier in this article). The Helsinki test was of particular note as it is claimed to have successfully tested integration with both commercial Air Traffic Management (ATM) and Unmanned Traffic Management (UTM) systems as part of the Single European Sky ATM Research (SESAR) Programme.
The relative simplicity of the 'big drone' wingless multi-copter style architecture might well be what's helped the company accelerate to the real-world test phase faster than the competition, but as EASA's regulatory wall comes down in 2020 and Accepted Means of Compliance for their VTOL Special Condition are set out - details are expected from the regulator mid-Feb 2020. Some in the industry doubt if Volocopter's chosen architecture will be able to meet the criteria set out for how the aircraft can continue to fly / divert in the event of catastrophic failures, bird strikes or in icing conditions. The 'Enhanced' category requirements may prove especially difficult for a wingless eVTOL aircraft like the VoloCity to satisfy.
It might just be that the future of Volocopter's success lies as much with their unmanned, heavy-lift dorne adaptation of their aircraft as it does in Urban Air Mobility. The 200kg payload and 30-min endurance time are sufficient for John Deere to have already partnered with the company on a crop-spraying iteration of the aircraft unveiled in November 2019.
Conspicuous by their absence from UAM at present are the likes of Honda, General Motors, Jaguar Land Rover and the Volkswagen Audi Group (VAG) - we'd be surprised if their corporate venturing arms aren't at least actively looking at the sector in 2020.
THE AEROSPACE INCUMBENTS
It's not just car companies that are getting involved in Urban Air Mobility - the big aerospace manufacturers are keen to capitalise on their unrivalled knowledge of how to build and certify aircraft.
Whilst Boeing's recently announced partnership with KittyHawk to bring to market their re-branded 'Wisk' air taxi is significant, they'll be going head-to-head with Bell whose core competence has always been VTOL, their main business being helicopters. Their approaches differ markedly.
Wisk are focused on building a air taxi business around Kitty Hawk's Cora aircraft which has room for two passengers and a range of just 25 miles / 40km flying at speeds of up to 100mph / 160kph. Though these specs might limit the craft's usefulness they have already gained experimental airworthiness certificates from both the FAA and New Zealand Civil Aviation Authority where much of the test flying has been undertaken since 2017. They're now participating in Airspace Integration Trials in the country.
The Zephyr Airworks team behind Cora have re-branded as 'Wisk New Zealand' as part of the Boeing deal. With the New Zealand government funding general aviation operators to install ADS-B transponders to accelerate the change towards airspace where all aircraft have some form of electronic conspicuity, and with relatively uncongested airspace and plenty of rural areas for safe testing, it might just be that their ambitious vision of an autonomous-first air taxi service comes to fruition, in the Southern Hemisphere at least, long before many expect.
From a technical perspective their aircraft will also please regulators in the separation of lift and thrust devices - 12 propellers are used solely for take-off and landing with some redundancy achieved through the distributed electric propulsion, whereas thrust during cruising, wing borne flight is provided by an entirely separate, large 'pusher prop' at the rear of the aircraft - a concept found in several conventional fixed wing aircraft designs.
Kitty Hawk haven't stopped their eVTOL aircraft development after the Wisk deal, their present offerings are however more targeted towards individual users than passenger transport - take a look at their Flyer vehicle here and the high performance Heaviside aircraft here and shown in the video below. The company is headed by Sebastian Thrun, former founder and head of Google's Special Projects / skunkworks division 'X', machine learning guru and one time head of the Artificial Intelligence lab at Stanford University.
Given that the company is also backed by Google co-founder Larry Page it's a safe bet that Kitty Hawk's stated goal of operating Wisk air taxis autonomously from day one is backed by some serious tech. Fusing sensor data at speed and making navigation decisions that keep people safe is the same set of problems also being addressed by 'X' spinouts 'Wing' and 'Waymo' - for delivery drones and self-driving cars respectively.
Bell have revised their VTOL Urban Air Mobility vehicle 'Nexus' offering recently, adding to their 6-rotored hybrid aircraft concept with the four-rotor, electric-only Nexus 4EX. We suspect this is as a direct result of Uber's Elevate programme refining the specifications for aircraft that will operate on their network, placing size limitations on aircraft and specifying that they must be electric-only.
Airbus shuttered their Vahana test programme at the end of 2019 and one can't help but wonder what's in the works at the European giant besides the 'City Airbus' test vehicle shown flying untethered for the first time last year. The novel tilt-wing configuration might not make it to a commercial vehicle but the knowledge accrued by the team and company in realising the vision and completing the eVTOL's test flight programme is of enormous value.
It's a fair bet that the aerospace giant, their 'A cubed' innovation outfit in Silicon Valley and Airbus Ventures investment arm are quietly working on an awful lot more in the UAM space than just their publicly unveiled CityAirbus prototype which recently undertook its first untethered test flight. The detect-and-avoid autonomy of Vahana for example has already been spun out into a separate project at 'A cubed' called Wayfinder, focused on commercialising the core technologies behind autonomous aircraft.
City Airbus features eight rotors spinning at a low 950rpm in an attempt to reduce the aircraft's noise footprint and will have space to transport up to four passengers at 120kph though range from its 110kwh battery is not yet disclosed.
The aviation supply chain are getting in on the game too with Honeywell creating specialised triple-redundant eVTOL flight control offerings targeted squarely at the Urban Air Mobility Market. Rumour has it that they're re-purposing much of the technology / know-how from working on the F-35 programme to offer a control architecture for eVTOLs that handles much of the complexity of transitional flight dynamics and enables single-stick pilot flying control. They're already working with Vertical Aerospace, Volocopter, Jaunt Air Mobility, Pipistrel and DENSO on Urban Air Mobility projects.
Prepare for the once clear lines between aircraft operators and manufacturers to blur significantly - Airbus is honing its skills here by practicing for UAM operations with the acquisition of helicopter charter operator Voom for example. Whilst Uber are pushing to be the big UAM operator with zero physical assets others like Lilium (see our post here for more details) are opting for vertical integration from design through manufacture all the way to daily operations and a consumer-facing app.
And don't discount the 'smaller' players whose more petite balance sheets might be a perceived disadvantage but whose agility might prove more important. Embraer and Pipistrel are hardly startups but have both unveiled eVTOL concept aircraft and announced participation in the Uber Elevate programme - and are worth keeping an eye on.
Another sleeper in the segment is Rolls-Royce who have announced a hybrid VTOL drivetrain to date, though having acquired Siemens electric aircraft division in 2019 we can expect a raft of announcements coming from the British powerhouse in 2020.
CONTRASTING APPROACHES FROM CHINA
Munich-based Lilium (more detail in this article) are backed by Chinese tech behemoth Tencent and have a vision to design, build, own, operate and maintain their own fleets of 'Lilium Jets' worldwide. With $100m in the bank they're moving fast but are rumoured to be looking to raise another cool half a billion to get them through the EASA certification hurdles between now and 2023.
Total vertical integration might be a savvy way to appease Chinese regulators averse to American algorithms combing their airspace in the future and a great way to maintain overall control of the passenger experience at the outset, but we suspect may prove so capital hungry as to be unworkable outside of the Chinese market - we'd guess vertiporm operations and maintenance partners might be the first bits to be unpicked from that vertically integrated air mobility vision.
London-based Venture Capital fund Atomico took a punt on Lilium when they were little more than a few students with a radio-controlled glider and a big idea - the savvy venture capitalists now have a 25% stake in the company. The next round of financing looks certain to value the pre-revenue business at well north of $1bn - making that first few speculative million of Atomico's look increasingly like a very shrewd investment.
Thilwst Tencent took their billions made in Chinese tech and invested it in a foreign aircraft manufacturer domestic Chinese eVTOL manufacturer eHang built a business at home and then sought an injection of foreign capital with a $100m IPO on the Nasdaq in November 2019. Their main offering is the two-seat eHang 216 Autonomous Air Vehicle (AAV) - two passengers, 16 rotors - which is yet to be certified for passenger flights anywhere but has nevertheless gone into serial production. They do however have an ambitious pilot programme agreed with the government in Guangzhou that includes the establishment of a command and control centre for Unmanned Air Traffic Management (UTM) services.
The company's list of achievements and partnerships is impressive, including
Trial pilotless flight in the US in Jan 2020 with FAA approval
Successful IPO on the Nasdaq (Q4 2019)
A growing drone delivery business that includes a partnerhsip with DHL
No round-up of the Urban Air Mobility market would be complete without a mention of Uber Elevate / Uber Air - the ride-sharing giant's big money play in the eVTOL space. They're looking to leverage terabytes of insight about how people move around the planet to become the foremost UAM operator - they plan to launch pilot programmes in their chosen launch cities of Melbourne, Dallas and Los Angeles in 2020 with commercial operations following by 2023.
Much as they've done with ground transportation they seek to be a platform-only player - not building or owning a single aircraft. Their input to date has been significant and in convening a nascent industry and hoovering up talent from the likes of the FAA and NASA the impact the company is already having on global eVTOL development should not be underestimated.
In convening stakeholders at an early stage - regulators, manufacturers, OEMs, cities, and infrastructure experts to name but a few - Uber have not only recognised that there are myriad problems to solve to make their vision of Urban Air Mobility a reality, but have started to do something about it. Much as NASA had a profound and lasting impact in the decades after WWII on aircraft development by effectively 'open sourcing' different wing designs, Uber have put forward vehicle design proposals for their partners to consider - a series of common reference models for electric aircraft or 'eCRM' developed by NASA's Mark Moore who helped pioneer Distributed Electric Propulsion (DEP) at the agency (read about NASA'a first all-electric X-plane the X-57 here) and is now Uber's Director of Elevate Strategy.
They're working extensively to model the integration of air taxis into multi-modal journeys, have more data than perhaps anyone on where demand will be found and a top notch global team of data scientists to crunch all the data. To which end they've established an Advanced Technologies Center in the very city where the original idea for Uber was born - Paris, France. The company are also working on suggested vertiport designs with a range of partners as well as having already announced Boeing, Bell, EmbraerX, Karem, Pipistrel, Jaunt, Hyundai and Joby as vehicle partners.
Last but not least is the UK's Vertical Aerospace who we covered in detail last week. We strongly suspect that their revised vehicle design will look a lot more like Uber's common reference models than their previous Seraph multi-copter prototype, pictured below.
The next iteration from Vertical Aerospace will feature a fixed wing and 150mph top speed. It's rumoured to have gone through its first design review ahead of a planned first flight followed by design unveiling at the Farnborough Airshow in July 2020.
The company are working on the cabin interior based around a carbon tub with room for four passengers and a pilot and are building a full cockpit simulator that will be used for training and remote piloting of the first full-scale prototype. They might well be wise to have held back on locking a final vehicle architecture until now - a regulatory wall will be coming down from EASA in 2020 as the Accepted Means of Compliance (ACM) to their VTOL Special Condition are laid out, as well as operating parameters for VTOL aircraft. Few manufacturers are likely to meet the 'Enhanced Category' criteria by 2023 even, so expect the first flights of eVTOL air taxis to take place under Visual Flight Rules (VFR), which in Northern European markets at least will severely hamper their usefulness given the unpredictability of the weather and the craft's inability to legally fly through cloud.