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Is the hype in market capital good for electric aviation?
There has been some very dramatic and significant news recently in electric aviation, which indicate a very important trend and is worth of our all atten- Ttion. The former Airbus CEO Tom Enders went to Lilium to be on the board of directors. When was the last time the former CEO of an incumbent large avia- tion company went to work at a small startup (even though Lilium so far has the most employees, over 700, among all electric aviation companies)? Reports say Lilium is on the way to an initial public offering (IPO) in NASDAQ by the means of “SPAC” (special purpose acquisition corporate) which is basically a fast track to go public.
Meanwhile the stock price of Ehang, which is currently the only eVTOL public company, went up in value four times in one month with the market cap over $4 billion when this editorial was written. In comparison, there’s no single helicop- ter company listed in the stock market by itself. Bell’s mother company Textron has a total market cap of $11 billion. In this sense, if looking individually I dare to say that no helicopter company’s valuation is higher than Ehang which was founded only five years ago and has delivered less than 200 eVTOL. Oh, by the way Ehang’s eVTOL have not yet been certified yet.
According to the report of Vertical Flight Society (VFS), investment in eVTOL has continued at the rate of about $1B per year. Some $5B has been invested into eVTOL aircraft and systems development to date, with much of the fund- ing coming from outside of the traditional aerospace industry. VFS has cata- loged 407 different eVTOL concepts from 245 companies among which more than 150 new designs were added in 2020. When VFS launched the eVTOL di- rectory in April 2017, only a dozen eVTOL programs were under development.
These are clear indicators of the hype of electric aviation nowadays. It is very noteworthy that one of the biggest characteristics of eVTOL development is that it’s tightly bundled with the market capital from the inception of the concept of eVTOL aircraft and urban air mobility use case. Actually eVTOL may well be the first time ever in aviation history where an aviation technology and product are so tightly tied up with the market capital. There have been some attempts in avi- ation to intimidate the growth pattern of technology products but all failed be- cause those products were still too similar with conventional aviation in terms of technology and market characteristics such as ICON light sports airplane (LSA) and the concept of very light jet (VLJ).
We must realize that this development pattern of eVTOL is more similar with a technology product or even an Internet company rather than a conventional avi- ation product, and thus is fundamentally different from a conventional aircraft product. Therefore, we must look at the current hype of eVTOL from the inves- tors’ prospective, instead of just the one of the aeronautical engineers. Looking retrospectively, it’s easy to find out that eVTOL technology began as person- al pursuit such as Larry Page’s Zee Aero and Kitty Hawk ventures and JoeBen