Air Taxi Industry Faces Turbulence as Funding Dries Up
The air taxi industry, once hailed as the future of urban transportation, is facing a major setback. Germany’s Lilium, a prominent player in the electric vertical take-off and landing (eVTOL) aircraft market, has succumbed to a cash crisis, highlighting the significant hurdles the industry must overcome.
A Decade of Promises, But Delays Loom
Air taxi manufacturers have raised a staggering $13 billion since 2019, but the pace of investments has slowed significantly. Despite backing from major investors like Delta Air Lines, Stellantis, and Toyota, analysts estimate that billions more will be needed to achieve certification, large-scale production, and profitability.
Weeding Out the Weak
The industry is witnessing a shakeout, with weaker players struggling to stay afloat. Brian Foley, founder of aviation consultancy Brian Foley Associates, notes, “We’re starting to see the weaker players fall by the side… there will be more to follow.”
Middle East Opportunities Beckon
Regulatory delays, economic uncertainty, and global tensions have weighed heavily on the sector’s fundraising efforts. However, some eVTOL makers are exploring opportunities in the Middle East, where regulators may be more willing to devote resources to certification and create a safe environment for eVTOLs.
Archer, Eve, and Joby Lead the Pack
Industry experts believe that Archer, Eve, and Joby are among the best-positioned companies to continue operating long enough to reach certification. These companies have sufficient cash reserves and are expected to burn through at least $1 billion this year combined.
Challenges Ahead
To succeed, eVTOL companies must consider production-only business models to cut cash burn, and advances towards certification may bring in pre-delivery payments. Mergers may also be necessary to stay afloat. After certification, they will need to ramp up production while reducing eVTOL costs to compete with high-end taxis.
A Glimmer of Hope
Despite the challenges, some analysts remain optimistic about the industry’s potential. Needham analysts recently initiated coverage of Joby and Archer with “buy” ratings, citing a $3 billion early-stage global air taxi revenue opportunity.
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