Europe's flying taxi dreams falter as cash runs short

In Europe, the dream of flying taxis is facing significant challenges as financial support dwindles. The VoloCity, a two-seater aircraft resembling a large drone, was expected to be a highlight of the Paris Olympics, providing an electric flying taxi service for passengers. Unfortunately, this service never materialized, and instead, the company, Volocopter, conducted only demonstration flights. While this missed deadline was embarrassing, a more pressing issue was unfolding behind the scenes. Volocopter was in urgent need of fresh investment to sustain its operations. The company was in discussions to secure a loan of €100 million from the government, but these talks have not yet yielded results. Currently, hopes are pinned on a potential investment from China's Geely, which is negotiating to acquire an 85% stake in Volocopter in exchange for $95 million in funding. If this deal goes through, it could lead to the relocation of future manufacturing to China. Volocopter is one of many companies globally that are developing electric vertical take-off and landing (eVTOL) aircraft. These innovative machines promise the convenience of helicopters without the associated costs, noise, and emissions. However, the high expenses involved in obtaining regulatory approval for such novel aircraft and establishing manufacturing capabilities have led some investors to withdraw their support. One notable casualty in this sector is Lilium, a German company that had developed a unique aircraft design featuring 30 electric jets that can tilt for vertical take-off and forward flight. Lilium's concept attracted significant interest, with claims of orders and agreements for 780 jets from various clients worldwide. The company had even begun constructing full-sized jets, with testing scheduled to commence in early 2025. At the Farnborough Airshow in July, Lilium's COO, Sebastian Borel, expressed confidence, stating, 'We are definitely burning through cash, but this is a good sign because it means we are producing the aircraft. ' However, the financial situation took a turn for the worse when Lilium attempted to secure a €100 million loan from the German development bank, KfW. This loan required guarantees from national and state governments, which were not forthcoming. In early November, Lilium had to initiate insolvency proceedings for its main operating businesses, and its shares were delisted from the Nasdaq stock exchange. Despite these challenges, work on the new aircraft continues as the company collaborates with restructuring experts to either sell the business or attract new investment. However, the path to bringing the new e-jet into production is becoming increasingly difficult. Another player in the eVTOL market is Vertical Aerospace, a British company founded in 2016 by Stephen Fitzpatrick, who also established OVO Energy. Their VX4 design features eight large propellers mounted on slender wings, generating lift. Fitzpatrick has made ambitious claims about the aircraft, asserting it would be '100 times' safer and quieter than a helicopter, at only 20% of the cost. Vertical Aerospace has made progress, completing a series of remote-controlled tests and beginning piloted tests earlier this year. However, they have also encountered significant setbacks, including a crash of a remotely-piloted prototype during testing. In May, one of their key partners, Rolls Royce, withdrew from supplying electric motors for the aircraft. Despite these challenges, Vertical Aerospace remains optimistic, aiming to deliver 150 aircraft to customers by the end of the decade and produce 200 units annually. However, financial pressures are mounting. Fitzpatrick invested an additional $25 million into the company in March, but a further $25 million, contingent on finding alternative investment, has not been secured. As of September, Vertical Aerospace had $57. 4 million in cash but anticipates spending nearly double that amount in the coming year. The future of the company hinges on a potential deal with American financier Jason Mudrick, who has offered to invest $75 million. However, Fitzpatrick is hesitant to accept this offer, fearing he would lose control of the company he founded. Sources close to the negotiations suggest that an agreement is imminent, which could open up further fundraising opportunities. Amidst these challenges, the CityAirbus project appears to be on a more stable path. This four-seater aircraft, equipped with eight propellers, has a range of 80 kilometers. Experts believe that CityAirbus is likely to survive due to its solid funding and engineering expertise. Other well-funded startups, such as Joby and Archer in the US, also have a good chance of successfully bringing their aircraft to market. However, once these aircraft are in production, the next hurdle will be determining if there is a profitable market for them. The initial routes are expected to connect airports with city centers, but the question remains: will they be financially viable? The primary cost factors will be pilot salaries and battery maintenance, which requires changing batteries multiple times a year. Given the uncertainties and expenses involved, one might wonder why investors continue to pour money into electric aircraft. As one expert humorously noted, 'No one wanted to miss out on the next Tesla.