When Will eVTOL Disruption Pay Off? Part 2

THE COWEN INSIGHT

This is part 2 of our analysis of eVTOL (electric Vertical Takeoff & Landing) disruption. See part 1.  EVTOLs offer disruptive performance cushioned by ESG advances well suited for UAM (Urban Air Mobility). However, there are numerous entrants, and they all face stiff certification along with other hurdles to ambitious 2024-26 EIS (Environmental Impact Statement) targets.

We’ve done a deep dive into eVTOL markets, vehicles, players, and business strategies. We also examine the hurdles to success and key changes of the past year with a focus on

1. The participants best positioned for success
2. The potential effect of eVTOLs on the rest of the aerospace food chain

THE NEED FOR A LONG-VIEW ON eVTOL

eVTOLs offer disruptive performance/ESG advances:

• carbon neutrality
• lower noise/op costs than helicopters
• ability to land/takeoff in small spaces

EVTOLs are well suited for UAM, air taxi & short-haul cargo/logistics apps. Unfortunately, current battery technology can’t support larger aircraft or longer routes. It’s a dynamic, fragmented sector with many entrants, stiff certification, and other hurdles to ambitious 2024-26 EIS targets. Thus, it is apt to take longer than expected for eVTOLs to win certification (~2/3 aircraft miss certification targets). But we see a large potential global market down the road.

WHERE TO FIRST? POSSIBLE FIRST APPLICATIONS OF eVTOL

With 93% of the world’s top-100 airports within 20 miles of city centers, UAM on-demand air taxi service is likely the largest potential eVTOL market. As a greenfield business, it’s pursued by vertically integrated operators and dedicated service providers. But it has unique challenges. Securing convenient intracity vertiports may be tough, service won’t be door-to-door (given the need to get to the vertiport), and air traffic control will be an issue as densities increase.

Cargo/logistics and “plug & play” replacements of helicopters are more promising initial applications. They have existing end customers, more accessible heliports/recharging facilities, and fewer airspace constraints.

WHAT TO WATCH

1. Milestones toward vehicle certification & operating approval
2. Cash burn
3. Announcements of target launch markets, conditional orders, and partnership agreements