CURRENT INVESTMENT INTEREST INTO THE eVTOL MARKET

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Wassaf Akhtar Mohammed | 03/09/2021

Private and public firms, companies, and government agencies are pouring billions of dollars of investments into the emerging electric vertical takeoff and landing (eVTOL) and broader Urban Air Mobility industry AKA Advanced Air Mobility (AAM). In 2020, despite the impact of COVID-19, air mobility companies raised a total of $1.3 billion in private investment, an increase of 80 percent from the pre-COVID year of 2019, according to venture capital research and data provider firm Pitchbook.

The electric Vertical Take-off and Landing (eVTOL) aircraft market is projected to grow from USD 162 million in 2025 to USD 411 million by 2030, at a CAGR of 20.42% from 2025 to 2030. The need to increase operational efficiency, reduction in human intervention for intercity and intracity transportation using eVTOLs, and growing investment activities around the world are key factors expected to drive the market growth.

Based on different types of vertical lift technology, the eVTOL aircraft market has been segmented into vectored thrust, multirotor, and lift plus cruise. The vectored thrust segment is projected to grow at the highest CAGR during the forecast period owing to the higher endurance and efficiency provided by this technology to eVTOL aircraft. In addition to this, increasing investments from various manufacturers for the use of eVTOL aircraft in commercial applications, such as air taxi, passenger air travel, cargo transportation, and air ambulance, are driving the growth of this segment.

Based on type of propulsion, the eVTOL aircraft market has been segmented into electric battery, electric hybrid, and electric hydrogen. The electric battery segment is projected to lead the market during the forecast period. The growth of this segment can be attributed to the development of various eVTOL aircraft by prominent market players. These aircraft are in the flight-testing phase and are expected to get commercialized by the year 2025. This commercialization will enable the companies to generate a huge amount of contracts and partnerships with taxi service providers from 2025.

Findings also reveals that over the next three years, 62 per cent of private equity and venture capital professionals expect to see an increased use in SPACs (special purpose acquisition companies), to buy, invest or raise funds for eVTOL companies. A SPAC is a company with no commercial operations that is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company. When asked what they think are the three main reasons why the level of investment in the eVTOL market is increasing, 64 per cent of private equity and venture capital professionals highlight the fact that more large corporations have entered the sector, providing greater confidence around its prospects. This was followed by 58 per cent who cite more M&A activity in the sector, and the listing of eVTOL companies with attractive valuations, and the third most popular key reason highlighted by 37 per cent of survey respondents is growing public confidence in the market.

The eVTOL market is predicted to enjoy rapid growth over the next few years, and by 2050 there could be 160,000 commercial air taxis or more operating around the world, generating over USD90 billion a year in revenue. This coupled with the fact that the sector is incredibly dynamic and fast moving, means it is attracting a huge amount of interest from investors.

Most experts agreed that the biggest trend they’re watching on the investment side to support assembling and flight testing of eVTOL aircraft, developing electric power, and deploying UAM infrastructure among other things is the entrance of Special Purpose Acquisition Companies (SPACs) into the space.

The capital-intensive, risk-averse nature of startups that need millions of dollars to develop an all-new type of electric-powered air taxi has sparked interest in UAM companies, starting with those making the actual aircraft.

Pitchbook’s latest research notes that the eVTOL companies that have received the largest amounts of investment so far have been those making the actual aircraft. But that could change as more private capital becomes available and investors start to realize the potential value of those other elements such as batteries, infrastructure, and digital services necessary to make passenger-carrying eVTOL operations a reality.

Perhaps one of the most obvious pickaxes for eVTOL vehicles could be the in the e that comes before VTOL, with a number of electric battery and hydrogen fuel cell stack suppliers making technological advancements in recent years. Menlo, Park, California-based HyPoint is one example of such a company, as the venture-backed air-cooled hydrogen fuel cell powertrain maker continues to develop a prototype expected to be ready for commercialization by 2023 at a price point of between $100–500 per kilowatt (if mass-produced).

In January, Deloitte’s “Advanced Air Mobility” report jointly published with the Aerospace Industries Association (AIA) projected that all of the work required to build these new aircraft, deploy the infrastructure to enable their operation, and provide their services and maintenance could create more than 280,000 jobs in the U.S. alone by 2035. Several other reports have levied similar highly positive outlooks for UAM, despite the near-term uncertainty and impact of the COVID-19 global pandemic.

A report published by Frost & Sullivan, “Looking Forward (And Upward) to Urban Aero Mobility,” surveyed nearly 5,000 respondents drawn from a representative sample of 12 smart cities with the potential to launch UAM operations within the next 5–10 years. The survey helped the global consulting firm understand the willingness of potential electric air taxi passenger’s willingness to get onboard, how much they’re prepared to pay, and what changes the UAM supply chain may need to make economically in order to make this a reality.

The last 12 months have featured some of the fastest moving technological innovation, regulatory, and partnership advancements toward enabling a future urban air mobility ecosystem where electric vertical takeoff and landing (eVTOL) air taxis will one day fly new purpose-driven mission sets across a variety of civilian and defense operations.

Considering the rapid pace that the companies building the actual vehicles, or air taxis that are to serve these mission sets over the last year, some have emerged as closer to making eVTOLs that were mostly computer-generated three-dimensional concepts and drawings a few years ago into a reality by the mid to late 2020s.

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