eVTOLs – A Future Element of 3D Urban Air Mobility
With most major cities already facing substantial congestion issues and many with growing populations year-over-year, new transportation solutions are in high demand. eVOTLs could become an important part of 3D Urban Mobility, which offers a three-dimensional solution for today’s transportation issues.
That being said, eVTOLs are still in their infancy and have a long way to go before the technology has matured enough for mainstream adoption. In this post, you’ll learn what eVTOLs are, what opportunities they offer, and which obstacles they still need to overcome.
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What are eVTOLs?
eVTOL stands for electrical Vertical TakeOff & Landing and is used to refer to electrically powered aircraft that can take off & land vertically, much like a helicopter. However, unlike a traditional helicopter, eVTOLs are better optimized for local/regional air travel, taking noise pollution, safety, and emissions into account. This has resulted in new potential use cases, including their potential use as air taxis and delivery vehicles.
Although the technology is still in its infancy, well over 200 companies are already developing electrical vertical takeoff and landing aircraft, including Airbus, Volocopter, Lilium, Joby Aviation and Vertical Aerospace, among many others.
This offers investors a unique opportunity to enter this market early, potentially generating big returns if risk is properly managed. The recent SPAC trend helps to sweeten the deal for investors somewhat too, providing a potential alternative exit within a more reasonable timeframe.
Their place in 3D urban mobility
eVTOLs have a range of different use cases, from their use by emergency services and delivery companies to their use as air taxis or even as personal transportation. Although there are still many hurdles to overcome, most notably those of regulation, feasibility, and safety, there are already a plethora of notable use cases that would advance urban mobility.
Some of these include:
Air taxis – Air taxis are one of the first uses that come to mind, and for good reason. With many companies already working on eVTOL air taxis, this may be one of the most likely uses in the near future. Large companies like Toyota and Hyundai have recently made large investments in the space, including a $394M investment by Toyota in Joby Aviation and a recent investment by Hyundai’s Supernal into Urban-Air Port, which bodes well for future growth and innovation.
That being said, there are still many challenges facing their implementation as air taxis, which has led some companies to focus on other use cases. Companies focusing on passenger air mobility include Lilium Aviation, Volocopter, EHang, Joby Innovation, Archer, and Wisk Aero.
An interesting article published in April 2020 by Rex Alexander (evtol.com) goes more into detail on the feasibility of eVTOL air taxis and the challenges that the industry still faces.
Delivery – Air delivery vehicles are also often at the top of the list, especially when it comes to the delivery of larger items that would be difficult to deliver by drone. EVTOLs’ use as delivery vehicles faces many of the same challenges as drones and air taxis, however, certain specific uses could have a clear advantage from a safety and/or regulatory standpoint. Beta Technologies is an example of a company with a focus on this market. They’ve recently entered into an option agreement with UPS giving them the option to purchase 150 of their BETA aircraft. In 2021, Volocopter announced a successful joint static proof of concept developed in partnership with DBSchenker as they too try to introduce eVTOL cargo drones onto the market.
Personal use – Although personal use may be a little more difficult to achieve due to the high cost when compared to normal vehicles, as the cost of producing these eVTOLs goes down and as autonomous varieties enter the marketplace, personal use may rise. If autonomy is reached, it will open the door for Mobility as a Service (MaaS), allowing consumers to pay for rides instead of owning vehicles themselves.
Personal use will most likely require a far greater shift in regulation and additional safety requirements when compared to the two aforementioned uses, however, most likely resulting in a longer time-to-market. NeXt is an example of a company currently developing an interesting personal eVTOL. SkyDrive, a Japanese company that has been making significant progress over the past few years, is another notable mention and one that aims to commercialize its eVTOLs as soon as 2025.
Emergency services – The market for eVTOLS in emergency services is often seen as smaller than for air taxis and air delivery vehicles. However, government funding, the high cost of regular emergency services vehicles, and the urgent nature of the services they provide mean that eVTOLs could potentially improve the quality of emergency services and may even offer cost/risk reductions. Companies currently looking into this market include Jump Aero, EHang and Volocopter, as well as the US AirForce in the form of the Heaviside eVTOL.
Depending on the use case, eVTOLs offer an extensive list of advantages over regular forms of transport. Although the extent of these advantages differs depending on the distance, terrain, and available alternatives, some of the most commonly mentioned advantages include...
Congestion is already a major problem in many of the world’s largest cities, and this problem is only expected to get worse. It is generally agreed that spreading commuters among a wider range of transportation solutions is the only way of reducing congestion sustainably.
As we’ve seen in major cities like London and Tokyo over the past few decades, congestion isn’t just limited to road travel. The London Underground and the Tokyo Metro, as well as many other similar underground rail networks around the world, are notorious for being extremely busy during rush hour, to the point that commuting becomes difficult/uncomfortable.
Air taxis and other air-based solutions could help reduce the load on roads, railway lines, and other existing forms of transportation. If the companies that leverage eVTOLs meet or exceed ESG and safety standards, they can also help to reduce the environmental impact that travel has, as well as improve the speed with which we travel from one place to the other.
Although it is still uncertain how environmentally friendly eVTOLs may ultimately be, their impact on the environment is one of the most important focuses. By focusing on their environmental impact from the get-go, companies developing eVTOLs provide early-stage investors exposure to the sustainability trend alongside the deep-tech eVTOL sector.
The planes and helicopters used today cause a lot of noise pollution and the same is true for road and rail transport, although more localized. Noise pollution is another major focus when developing modern transportation solutions, as is the case with electric vehicles (EVs) and eVTOLs.
Noise is always going to be a factor, especially when large forces are at play. However, the difference between traditional automobiles and EVs can provide a good reference point when trying to understand the difference in noise pollution between a normal helicopter and eVTOLs.
Costs are one of the first things people consider when judging whether a new transportation solution is sustainable. Although eVTOLs are currently still relatively expensive when compared to other forms of transport, it’s reasonable to assume that the cost to produce these vehicles will reduce significantly over the next five to ten years, as has been the case with technology in the past.
Just how low the price can go is up for debate, however, and future estimated prices for eVTOLs range from a few hundred thousand dollars to around one million dollars.
However, when judging the costs of transportation solutions, infrastructure and maintenance are two important considerations. Where rail and road transport both require substantial maintenance to railway lines, bridges, roads, and general infrastructure, this isn’t the case with air travel. With other maintenance and monitoring requirements being much the same as other forms of transport, eVTOLs could potentially offer a less expensive form of transportation in certain scenario’s.
Much like today’s taxi services, air taxis would be able to help people get where they need to go. However, air transport has the unique advantage that it can travel from one place to another directly, without having to cover additional distance due to inefficient roads.
This, in combination with speeds of well over 250 km/h, make for a very efficient mode of transport that allows for fast travel over any terrain. This benefit increases exponentially in places with difficult to navigate terrain, as this often results in significant extra distances travelled to circumvent obstacles.
Hurdles still to overcome
Although the potential advantages are clear, eVTOLs are not yet ready for mass adoption. Not only does the adoption of disruptive technology often take time, but the introduction of new regulations can cause significant further delays. In addition to this, there are still design and safety hurdles that need to be overcome too.
Regulation is one of the most common obstacles mentioned, although there is already significant progress being made. Unfortunately, regulatory bodies are often slower to adjust to shifts in markets than the current rate of innovation, often resulting in significant delays before a new technology can start being used. This creates additional uncertainty and risk for investors.
Various safety concerns have also been raised since eVTOLs have started gaining traction. These safety concerns aren’t just limited to the safety of the passengers inside the aircraft, however. As mass adoption would lead to a large number of eVTOLs in the air, crashes could create significant risks to the general public and buildings. This is especially true in areas with a dense population like cities, where many of the problems that eVTOLs aim to solve are most apparent.
The components eVTOLs use also still have some hurdles to overcome, since many of the components aren’t used in current aircraft and will therefore need to undergo thorough safety testing.
eVTOLs have extremely high electrical requirements, with systems far different to traditional aircraft. This results in both safety concerns as well as regulatory concerns but also creates other challenges in regards to eVTOLs’ scalability, sustainability, and production.
Since there are still only limited data on how eVTOLs perform during a flight when compared to traditional aircraft, there is still a lot we don’t know about how the electronics used will perform long term.
Scalability may be one of the main challenges, especially considering much of the aforementioned challenges are more time-related than anything else. There’s plenty of reason to believe that, with enough time, regulatory bodies will create clear guidelines for the production and use of eVTOLs. Regarding the electrical and safety concerns, there’s also plenty of reason to believe that these challenges will be solved over time, especially considering the major advancements we’ve seen in technology over the past few years and the inflows of cash to the sectors from investors, companies, and institutions.
Scalability, however, creates a deeper level of uncertainty. Will strict regulation and safety concerns lead to this technology only being implemented for limited uses, for example, solely for emergency services and military use? Or will it scale to allow for their use as air taxis or even as personal transportation?
Back in 2019, Uber unveiled some potential Skyport designs that provide us with an idea as to what hubs for air taxi services might look like. Although this gives us a unique insight into where the industry might be heading, it still seems to be a number of years too early to say for certain where eVTOLs will be implemented and just how scalable the technology is.
Although more of a company risk than an industry risk, near-term consolidation is highly anticipated in this sector. There are hundreds of companies currently developing eVTOLs, but there are most likely only be a handful that can make it. For many companies, this will mean being bought out by larger, more established companies. For others, this may mean the production of a successful product, only to see the go-to-market strategy fail.
On the other hand, this race to market offers investors opportunities too. The recent SPAC trend has seen many eVTOL startups go public in record time through a SPAC, allowing investors to exit easier/quicker than with traditional IPOs. Recent SPAC deals in the eVTOL sector include Eve Urban Air Mobility which was valued at $2,4B on the 21st of December 2021 and Archer Aviation which went public in September of 2021 after merging with Atlas Crest Investment Corp.
As investors, research and due diligence is already an important part of our work. This is even more true in deep-tech investing, however, as the success or failure of a company is often determined by minor differences.
Here at PSION, we support investors, institutions, and family offices in their investment decisions. If you want to learn more about eVTOLs, or would like to find out how we can help support you, please feel free to send us an email or give us a call.
Although there are still some hurdles to overcome, the future for eVTOLs looks promising. As a technology that clearly solves a wide range of problems while also enriching the lives of the people who use it, their adoption for at least a number of potential use cases seems likely.
That being said, it’s unlikely that we’re going to see mass adoption in the next few years. A phased adoption is more likely, and countries like Japan, Singapore, the UEA, Canada and Germany, as well as a number of others, seem poised to be some of the first countries to adopt eVTOLs.
Tetra Aviation, which is based in Tokyo, is set to start delivering its aircraft to clients by the end of 2022. Volocopter expects to have eVTOLs flying around Paris, France, for the 2024 Olympics, just two years later. Many other companies have similar timeframes in mind, with Archer mentioning 2024 as a potential start to their ridesharing service and Lilium stating their commercial operations are planned to launch in 2024 too, giving us all a better idea of when we can expect to see eVTOLs enter the market.