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And the Next Market Disruptors are… eVTOL Vehicles?
Formally described as electric take-off and landing vehicles, eVTOLs have seen a major increase in media airtime and publicity over the past year as four companies have chosen to go public via Special Purpose Acquisition Companies. JOBY Aviation ($RTP - $6.6 billion valuation) Archer Aviation ($ACIC - $3.8 billion valuation), Lilium ($QELL - $3.3 billion valuation) and Vertical Aerospace ($BSN - $2.2 billion valuation) are all at various stages of their respective SPAC progress, looking for large infusions of capital (and equally high valuations) to disrupt the transportation industry. There are more than just four companies who are looking to get a share of these newly imagined mode of transportation. Eve Urban Air Mobility (Rumored to merge with $ZNTE ), Wisk (Backed by $BA ) Beta, Ehang, Blade, Volocopter, and Kitty Hawk are all eVTOL companies looking to gain market share in the transportation of people and cargo. But also let’s not forget about legacy aircraft manufacturers who will look (or are already involved) to produce eVTOLs, just as legacy automakers FORD and GENERAL MOTORS have begun production of electric vehicles. For one, Airbus has already begun the development and planning for eVTOL and Bell Flight, a Texas based military and Cessna producer, has begun the approval process through the FAA.
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Primarily focused on Urban Air Mobility (UAM), these companies are looking to revolutionize the way individuals travel in large congested cities to avoid the pitfalls of traffic as well as reduce climate pollution. With an estimated Total Addressable Market of $1.5 trillion dollars per year through their flashy PowerPoint presentations, these companies look to the shared mobility market, airlines, cargo, and military/defense sources for their projected orders and revenue generation.

On the surface, these companies look like they are primed to take over as the next transportation sector disruptor. However, just like the EV SPAC craze of 2020, the market is already getting crowded and questions are arising on the viability of all these companies surviving the grueling process of technology development and regulatory approval. Yet, well known investors and companies are pouring millions of dollars’ worth of investments into these companies and ordering billions of dollars’ worth of aircraft set to be delivered by 2024.
Let’s take a look at the pre-orders to date for these companies:
First, in February of 2021 Archer Aviation landed a $1 billion order of Archer aircraft (representing about 200 aircraft) with the option to purchase an additional $500 million more. In order to facilitate this order, Archer partnered with automotive conglomerate Stellantis (newly formed partnership between Fiat Chrysler Automobiles and the PSA Group) to ramp up manufacturing and production in order to meet the delivery timeline of 2023.

Next, Vertical Aerospace just recently (June 12th) announced that it has 1,000 preorders for its aircraft, announcing American Airlines, Virgin Atlantic, and Microsoft as some of its major supporters. Of these 1,000 pre-ordered aircraft, American Airlines has agreed to order 250 with an option for 100 more, Virgin Galactic has a pre-order option for up to 150, and aircraft leasing company Avolon has pre-orders and options for 500. With additional partnerships with Rolls-Royce and Honeywell, Vertical Aerospace looks to quickly secure regulatory approvals for its aircraft across the European Union.
Additionally, Beta, a still private company focused on eVTOL production, secured an order of 150 aircraft from UPS in April of 2021, with the first ten aircraft to be delivered by 2024.
While Joby Aviation has yet to announce any major partnerships or preorders (that I could find), it was the company that bought Uber Elevate in December of 2020 and received over $100 million dollars of investment from Uber through part of that deal. Also through part of this deal, Joby will use Uber’s app to offer these air taxi rides when the aircraft enter service.

The goal of these companies is to provide rapid, cheap, and climate friendly transportation intra-city as well as intercity depending on the distance. For example, Joby Aviation lists Hollywood to Palm Springs California as one of its proposed routes, cutting a 2 and a half hour drive to a 52 minute flight at a estimated cost of around $3.30 per mile, comparable to an UberX ride. Archer lists downtown Manhattan to JFK Airport as one of its proposed routes, cutting an estimated drive time of an hour and a half to 7 minutes, costing a passenger $50. Right now, the projections for these aircrafts are to be able to travel approximately 60 miles at 150 mph with a trip much quieter than a traditional helicopter, approximately 100 times quitter according to presentations.
Yet, there are some major hurdles that they companies must surpass to be successful. To start, these companies do not yet have any streams of revenue. Preorders are nice, but as we have seen with the likes of Lordstown Motors ($RIDE), preorders don’t mean a whole lot until deliveries are made and transactions are processed. With a cash flow breakeven goal of Q4 2025, a lot will have to go right for this to happen. Another hurdle is successful regulatory approval from the FAA for their design, technology, and ability to travel through airspace.

With a projected approval date of 2024 for Archer, there is a long way to go with a lot that can happen in the meantime. Lastly, while these companies may be able to deliver on their product, that is not enough. So much infrastructure development will need to be built out for these vehicles to be able to travel, take off, and land from large metropolitan cities and travel to either airports or other points of locations.
One bright spot? Cathie Wood owns Archer Aviation ($33 million) and Joby Aviation ($12 million) in her ARKX fund, albeit not very much. In my opinion, the concept is solid. With the rise of Uber, helicopter use, and continued increase of traffic congestion in major cities, these companies have a chance. However, with so many companies vying for market share, major hurdles of regulatory approval and infrastructure development, there is a long horizon for these investments if you choose to hold.
Has anyone bought into any of these SPACs or are holding these companies for the long term?

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