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When Will eVTOL Disruption Pay Off?

THE COWEN INSIGHT

eVTOLs offer disruptive performance / ESG advances well suited for urban air mobility (UAM), air taxi & short-haul cargo apps. They have an estimated total addressable market (TAM) of ~$1T. It’s a fragmented sector with certification / other hurdles to ambitious 2024-26 entry-in-service (EIS) targets, but there are first-to-market advantages.

eVTOLs Offer Key Advantages to Target Markets

eVTOL (electric Vertical Take-Off & Landing) aircraft can take off/land in small spaces, are carbon-neutral, cheaper to operate/quieter than helicopters, and faster than cars. This makes them well suited for urban air mobility to deal with growing traffic density and focus on sustainment. They’re also a fit for shorter regional & cargo applications, but not broad airline use given current battery technology can’t support larger aircraft or longer routes.

eVTOL Sector Is Fragmented

The eVTOL sector includes early leaders, smaller players, and aircraft original equipment manufacturers (OEMs). Vehicles have speeds of 70-250 mph and ranges of 20-250 n.m. with tilt rotor or rotor/pusher designs. Because intracity UAM is a green-field business, would-be players plan to be operators as well as OEMs. UAM first movers will have an edge, but with eVTOLS chasing different geographic- markets, we believe there’s room for several winners.

Urban Air Mobility Is Complicated; Other Targets Are Less Complex

Urban air mobility likely is the largest but most complex market target for eVTOLS. Urban air mobility TAM estimates vary, but 93% of the world’s top 100 airports are within 20 miles of city centers, suggesting large potential. However, securing convenient intracity skyports may be tough. Service won’t be door-to-door; passengers will need to get to a skyport. Also, finding pilots may be challenging if air travel returns to normal. Air space control will be an issue as densities increase.

In contrast, short-haul cargo & regional apps look less glamorous but should be easier to launch, with robust growth potential. OEM sales to cargo/short-haul regional markets will be mostly “plug & play” with easier access to city edge or suburban recharging stations and newer air space constraints.

Certification: The Highest of Hurdles

Many eVTOLS target aircraft certification and EIS in 2024-26. The process is long and complex with 11 iterative steps. Also required is approval of processes, facilities, pilot training, and maintenance procedures. Individual carrier plans need approval as well. Even major OEMs struggle with the process and often are late.

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