eVTOL Take-off: Four Trends Shaping 2021

A Year of Rapid Advancement in eVTOL Technology

The electric Vertical Takeoff and Landing (eVTOL) sector experienced a remarkable year, marked by substantial financial investment – totaling billions of dollars – numerous commercial agreements, and significant legal challenges.

This period of accelerated development occurred concurrently with the broader aviation industry’s gradual recovery following the disruptions caused by the COVID-19 pandemic.

Key Trends Shaping the eVTOL Landscape

To understand the pivotal shifts within the eVTOL market, we’ve consulted with prominent analysts and investors.

Their insights reveal the most important trends that defined the industry this year and are projected to have lasting effects in the future.

• Increased Investment: A surge in funding demonstrates growing confidence in the viability of eVTOL technology.
• Dealmaking Activity: Numerous partnerships and agreements were forged, indicating a collaborative approach to development.
• Regulatory Scrutiny: Legal battles highlight the evolving regulatory framework surrounding eVTOL aircraft.

These factors collectively contributed to a dynamic and transformative year for the eVTOL industry.

Continued monitoring of these trends will be crucial for stakeholders seeking to navigate this rapidly evolving space.

The Rise of SPACs in the eVTOL Sector

Companies like Archer Aviation, Joby Aviation, Lilium, and Vertical Aerospace share a commonality beyond their development of eVTOL aircraft. Each has either finalized or announced a merger with a special-purpose acquisition company (SPAC) this year, resulting in a substantial capital infusion into this previously developing technology.

2021 will likely be remembered as the year of significant financial investment in the eVTOL world. The SPAC transactions involving Joby, Archer, and Lilium collectively generated over $2.5 billion in gross proceeds. Joby’s deal alone accounted for nearly half of this total, reaching $1.1 billion.

Increased Capital Access

While not exclusive to eVTOL, the prevalence of SPACs as a route to public markets is a defining trend of the year. Access to capital represents a key difference between the current state of the eVTOL industry and its position just a year ago, according to Kristine Liwag, senior aerospace and defense analyst at Morgan Stanley.

This considerable influx of funds empowers these companies to navigate the extensive and rigorous aircraft certification process with the Federal Aviation Administration. Successful certification is essential before commencing commercial operations.

The Cost of Certification

The substantial costs associated with bringing eVTOL technology to market likely fueled the popularity of SPACs. Aviation is inherently capital-intensive, with estimates suggesting it could require up to $1 billion to progress an eVTOL from the design stage through manufacturing and certification.

David Wyatt, a technology analyst at IDTechEx, highlighted that leading startups have secured budgets sufficient to advance their aircraft towards full certification. This represents a significant leap in the probability of seeing more functional eVTOL aircraft move beyond the prototype phase.

Beyond SPACs: Venture Funding

Investment in eVTOL companies extended beyond SPACs, with substantial venture capital rounds also occurring in 2021. Notable examples include Beta Technologies’ $368 million Series A funding and HT Aero’s $500 million Series A, backed by Xpeng.

Shifting Focus: From "If" to "When"

Sergio Cecutta, founder and partner at SMG Consulting, noted a fundamental shift in the industry’s focus. The primary question has moved from whether eVTOL aircraft can be certified to when they will be certified. Concerns about the feasibility of flight and certification have largely been addressed.

The industry is now focused on the practical work required to achieve certification and launch commercial operations.

Ground Infrastructure Development

Developers of air taxis are concentrating their efforts not solely on aircraft design. Realizing a viable market for electric aviation necessitates comprehensive ground infrastructure. This includes facilities like vertiports, designated areas within existing airports, and robust charging stations capable of delivering sufficient power to these vehicles.

Significant development remains in this domain, as detailed further in part two. However, 2021 witnessed substantial progress by eVTOL operators toward establishing the infrastructure crucial for commencing commercial operations by the mid-2020s.

Notable initiatives include a collaboration between Lilium and ABB E-mobility to provide charging solutions for the Lilium Jet. Furthermore, Joby and Archer have each forged partnerships with REEF Technology, a major parking garage operator.

Vertical Aerospace is also working with Heathrow Airport to assess the integration of eVTOL aircraft into the airport’s existing operational framework.

Collaboration is also occurring at a city level. Archer, Hyundai, and Volocopter are jointly working with Urban Movement Labs in Los Angeles to investigate the incorporation of urban air mobility into the city’s current infrastructure and transportation systems.

Amy Burr, President of JetBlue Technology Ventures, noted the growing awareness among airports. “Airports are increasingly prioritizing the potential need for vertiport integration into any new infrastructure project.”

Orders for eVTOL Aircraft in 2021

A notable trend emerged in 2021: a rise in orders for eVTOL aircraft. This began with United Airlines announcing a $1 billion order with Archer Aviation.

Subsequently, a series of orders were placed for aircraft from Eve Urban Air Mobility, a company supported by Embraer. UPS also committed to purchasing aircraft from Beta Technologies.

Furthermore, Vertical Aerospace accumulated conditional preorders exceeding 1,350 aircraft.

Understanding Order Contingencies

It is crucial to recognize that these orders are not yet finalized. This is logical, given that the commercial versions of these aircraft are still under development.

These orders are dependent on factors such as successful development completion, regulatory certification, and the achievement of specified performance benchmarks.

Despite this, Wyatt suggests that these orders represent a positive indicator for the entire industry.

Industry Confidence and Market Interest

“The increasing number of orders demonstrates a clear market demand for these types of aircraft,” Wyatt stated.

“Should these aircraft receive flight certification and become operational, substantial market interest is anticipated.”

This suggests a growing confidence in the potential of eVTOL technology and its future applications.

• Key Takeaway: While not firm commitments, the orders signal potential market acceptance.
• Important Note: Certification and performance are critical for order fulfillment.

Growing Automotive Sector Participation

A significant development observed throughout 2021 was the escalating engagement of traditional automotive manufacturers. Although newer companies often dominated news coverage, these well-established businesses have also begun to recognize the potential inherent in electric aviation.

Established aerospace leaders, such as Boeing and Airbus, have consistently demonstrated interest in eVTOL technology. Boeing's involvement is channeled through its collaboration with Kitty Hawk/Wisk Aero, while Airbus is pursuing its CityAirbus NextGen eVTOL concept.

Hyundai stands out among the automakers. Following the unveiling of an eVTOL concept at CES in 2020, the company formally established Supernal as its dedicated urban air mobility division this year.

Honda similarly announced its intention to create a hybrid eVTOL, envisioning it as an integral component of a broader “mobility ecosystem.” This system will incorporate connected applications and existing Honda vehicles.

Furthermore, Xpeng Motors, a Chinese automotive manufacturer, revealed in late October that its urban air mobility arm, HT Aero, had secured $500 million in funding to advance its eVTOL car concept.

Why This Matters

The involvement of these major automakers is noteworthy due to their substantial financial resources and existing manufacturing capabilities, which are crucial for eVTOL project advancement.

While financial strength and infrastructure don't guarantee success, and these larger entities may operate with different priorities than startups, their progress warrants close observation as the industry evolves.

Important Note: A correction is necessary regarding a previous inaccuracy. Joby Aviation was incorrectly identified as a partner with Urban Movement Labs; this was not the case, and we apologize for the error.