Support falters in Europe’s flying taxi efforts

Volocopter, based out of Germany, had planned to introduce its electric two-seater aircraft, the VoloCity, as a flying taxi service during the Paris Olympics. However, the company only conducted demonstration flights, as the necessary engine certification was not obtained in time.

In addition to this setback, Volocopter faced financial challenges. A proposed €100 million government loan fell through in April, leading the company to seek alternative funding sources.

Currently, Zhejiang Geely Holding Group, a Chinese multinational, is in discussions to acquire an 85% stake in Volocopter in exchange for $95 million. This potential deal could result in future manufacturing operations being relocated to China.

Volocopter is among several companies worldwide developing electric vertical take-off and landing (eVTOL) aircraft, which offer the versatility of helicopters with reduced noise and emissions. However, the substantial costs associated with regulatory approval and establishing manufacturing capabilities have led some investors to withdraw support.

The future of urban air mobility remains uncertain, as companies like Volocopter navigate financial and regulatory hurdles to bring innovative transportation solutions to market.

Troubles elsewhere in the industry

Lilium, a German company specialising in electric vertical take-off and landing (eVTOL) aircraft, has become a notable casualty in the nascent urban air mobility sector. Renowned for its cutting-edge design, which integrates 30 tilting electric jets to enable smooth transitions between vertical and forward flight, the company had attracted significant attention. It claimed to have secured commitments for 780 jets worldwide through orders and memoranda of understanding, signalling broad interest in its technology.

The company achieved early milestones, including showcasing its concept with a remote-controlled scale model and commencing construction of full-scale aircraft. Even as recent as June 2024, the company saw positive updates. However, financial challenges soon began to mount. Lilium had aimed to begin testing its first full-sized jet in early 2025 but failed to obtain a critical €100million loan from the German development bank KfW. This funding depended on guarantees from national and regional governments, which were ultimately not provided.

By November, Lilium’s primary operations had entered insolvency proceedings, and its shares were delisted from the Nasdaq stock exchange. While development of its e-jet technology continues, the project’s future remains uncertain. The company is now collaborating with restructuring specialists to attract new investment or potentially sell the business, as production hurdles persist.

The UK-based Vertical Aerospace, founded in 2016 by Stephen Fitzpatrick, has emerged as a prominent player in the eVTOL market. The Bristol-based company’s VX4 aircraft stands out with its eight large propellers mounted on slim, aircraft-style wings, designed to make it quieter, safer, and more cost-effective than traditional helicopters. Fitzpatrick claimed the VX4 would be "100 times" safer and quieter than a helicopter, at 20% of the cost.

Vertical Aerospace has made notable progress. After completing a programme of remote-controlled testing, the company began piloted tests earlier this year. Initially tethered to the ground, the VX4 achieved its first untethered take-off and landing in November.

However, the company has also faced significant setbacks. In August 2023, a remotely-piloted prototype crashed at Cotswold Airport after a propeller blade detached. Earlier this year, Rolls-Royce, a key partner, withdrew from a deal to supply electric motors for the aircraft.

Financial difficulties have added to Vertical Aerospace’s challenges. Fitzpatrick invested an additional $25 million into the company in March, but another $25 million commitment due in August was not fulfilled. As of September, the company held $57.4 million in cash reserves but projected a burn rate of nearly twice that over the coming year.

Vertical Aerospace’s future now hinges on negotiations with American financier Jason Mudrick of Mudrick Capital Management, who is already a significant creditor. Mudrick has proposed a $75 million investment to stabilise the company but has warned that rejecting his plan would lead to insolvency. However, the deal is controversial, as it would result in Fitzpatrick losing control of the company he founded.

Despite the tension, sources close to the talks have indicated that an agreement is near. Vertical Aerospace hopes that finalising the deal will unlock further fundraising opportunities, allowing it to move forward with its ambitions to deliver 150 aircraft by the end of the decade and scale production to 200 units annually.

The struggles of both Lilium and Vertical Aerospace underscore the immense financial and technical challenges facing the eVTOL industry as it seeks to revolutionise urban mobility. While the potential of these technologies remains significant, the path to commercial viability is fraught with hurdles.

A beacon in the dark

Amid industry turbulence, one European initiative is quietly progressing, according to Bjorn Fehrm, an aeronautical engineer and former Swedish Air Force combat pilot. Now working at aerospace consultancy Leeham, Mr Fehrm identified Airbus’s electric vertical take-off and landing (eVTOL) project as a strong contender for success.

The CityAirbus NextGen, a four-seater aircraft with eight propellers and an 80km range, benefits from Airbus’s resources and expertise. Mr Fehrm explained that the project serves as a technology development initiative for Airbus engineers, supported by substantial funding and technical know-how.

Globally, other well-funded start-ups, including Joby and Archer in the US, are also positioned to advance their aircraft into production. However, mass production marks only the beginning, as establishing a profitable market remains a significant challenge. Initial routes are expected to connect airports and city centres, but profitability is uncertain.

Key cost drivers include pilot salaries and battery maintenance, with batteries requiring replacement multiple times per year. Despite these challenges, investors continue to back new electric aircraft ventures. According to Mr Fehrm, this enthusiasm stems from a desire to capitalise on what could become the next major breakthrough in transportation, akin to the success of Tesla in the automotive sector.