Amid a relatively dry landscape for new investment capital, US air taxi developers have entered a critical phase.
The cash holdings of publicly traded companies such as Archer Aviation, Eve Air Mobility and Joby Aviation are in the spotlight as German air taxi developer Lilium engages in insolvency proceedings, having recently appointed accountancy firm KPMG to sell the business. Lilium’s troubles have highlighted financial risks faced by other sector leaders.
The start-ups have some regulatory momentum. On 22 October, the FAA released a final rule outlining operational and pilot-training requirements for “powered-lift” aircraft, clearing the way for air taxi operations to potentially take off in the USA.
But that is no guarantee of financial success, and the next 18 months are particularly critical for Archer and Joby. Both hope to certificate their electric vertical take-off and landing (eVTOL) aircraft next year and to launch passenger-carrying operations shortly after.
Consultancy McKinsey & Company notes in a recent report that funding for “future air mobility” has slowed since a post-pandemic investment boom saw dozens of start-ups launch new and novel aircraft designs. That category, which McKinsey says includes eVTOLs as well as surveillance and cargo drones, attracted in 2023 about $3.9 billion in disclosed funding, compared with investment of $6.8 billion in 2021.
That downward trend is “in line with a broader decline in venture funding”, McKinsey notes.
Investment capital has dried up just as several companies, which fall into a larger market known as “urban air mobility” (UAM), are pushing to certificate and commercialise ambitious new aviation technologies. Another innovative aerospace technology company, advanced propulsion developer Universal Hydrogen, collapsed in June after burning cash reserves and failing to secure “any new investment”.
More recently, UK-based air taxi developer Vertical Aerospace has entered a critical phase of funding talks with the company’s largest creditor, Mudrick Capital, in an attempt to stave off a cash crisis.
“The major drop in UAM/eVTOL funding comes at a particularly bad time for companies in this segment,”McKinsey says. “Some leading eVTOL companies are getting close to commercialisation, with about a dozen already flying full-scale prototypes and some testing conforming aircraft as part of the certification programme.”
Both Archer and Joby likely need more cash to push their products over the finish line. By some estimates, achieving type certification with the Federal Aviation Administration will require $1-$2 billion – not to mention the high costs associated with their planned mass-manufacturing operations.
McKinsey says “eVTOL players will also need funds to develop manufacturing and supply chain capabilities, which are often quite capital intensive, and companies planning to operate aircraft will need capital to build or acquire their initial fleet”.
“Aircraft-manufacturing programmes tend to be both margin- and cash-negative for many years post-certification,” the firm says, “so the industry-wide funding decline spells a major challenge for eVTOL players.”
Santa Cruz-based Joby held on 30 September $710 million in cash, cash equivalents and short-term investments, down from about $1 billion on 31 December 2023.
But it raised some $222 million in October and expects an additional $500 million investment from Toyota, chief financial officer Matt Field said on 6 November, bringing its “total available balances to approximately $1.4 billion”.
The expected Toyota funding is to be provided in two tranches – one due late this year or early the next, and another expected later in 2025.
“The work streams to support the first tranche are well underway, and we hope to complete them by year-end, or potentially early next year, depending on the timing of regulatory approvals,” Field says. “With the second tranche of the Toyota investment, we are already starting discussions to scope the manufacturing strategic alliance for our commercial production.”
The company reports a loss of $144 million in the July-September period, including a $157 million loss from operations. It burned $361 million during the first nine months of 2024.
“We remain on track with our full-year 2024 cash spending outlook of $440-$470 million and anticipate we will come in toward the bottom end of this range,” Field says.
The company’s quarterly loss reflects higher operating expenses related to its acquisition of Xwing and subsequent addition of more personnel. Notably, the company also reports reduced research and development contract payments “from fewer Agility Prime deliverables per our contracts”, Joby says.
Spending wisely is “really, really important”, Greg , Joby’s head of government policy, told FlightGlobal during last month’s NBAA-BACE show in Las Vegas.
“We’ve been extremely fortunate,” he says. “We’ve been able to raise money with key partners; most recently, we announced a $500 million investment from Toyota. In a time where, broadly, financial investment is tight, getting that kind of confidence from a company that understands us so well and is so knowledgeable and capable is a reinforcement for us.”
“That’s not something we look at like we can get casual,” he adds. “For us, it means we get even more serious… as we finish up the certification.”
ARCHER AND EVE
Archer reports a loss of $115 million during the third quarter, compared with a loss of $52 million in the same period last year. It attributes the higher rate of cash burn to increased spending ”to support the Midnight programme, including our related test and manufacturing capabilities”.
Archer holds $502 million in cash and equivalents as of 30 September, “a position as strong as it has been over the last 18 months”, the start-up says.
Additionally, the Santa Clara-based company discloses it is seeking an additional $400 million cash infusion from automotive partner Stellantis “to help scale the manufacturing of our Midnight aircraft”.
Chief executive Adam Goldstein says the company is still on track to hit its ambitious certification and service-entry targets both in the USA and internationally.
“Our commercialisation strategy is focused on markets where we can deploy hundreds of aircraft over time, backed by strong top-down government support and the regulatory commitment to make this vision a reality,” he says. ”Right now, we’re seeing this potential in the US and in key countries across the Middle East and Asia.
”Once we identify a market, our priority is to secure top-tier strategic partners, those who not only bring substantial passenger demands and potential for financing, but also have the influence and relationships to support our commercial service.”
Goldstein says the UAE “continues to lead the way”, as Archer has established a consortium with the Abu Dhabi Investment Office that plans to launch air taxi operations as early as the fourth quarter of 2025.
Whereas Joby plans to be the sole operator of its electric air taxis, Archer plans to roll out its own air taxi service in addition to selling its aircraft to other operators. For example, Archer recently struck a deal to sell up to 100 of its Midnight aircraft to newly established Japanese operator Soracle – for a total purchase price of $500 million – bringing the value of its conditional order book to more than $6 billion.
Archer plans to launch piloted demonstration flights with production-conforming aircraft sometime next year, though company executives declined on 7 November to cite a specific target date.
Florida-based Eve, meanwhile, appears to be in a stronger cash position than ever. As of 30 September, Eve held $25 million in cash and $255 million of investments. On the same date of last year, Eve held $10 million in cash and $164 million of investments.
While Archer and Joby have more cash, Eve is owned by and has backing from Brazilian airframer Embraer, which has pledged to support Eve through the expensive and technically challenging certification process.
“We have cash to run the company for the next three years,” Embraer chief executive Francisco Gomes Neto said of Eve during Embraer’s third-quarter earnings call on 8 November. He added that the team expects Eve’s aircraft will be certificated in the USA and Brazil in 2027.
Eve lost $35.8 million in the third quarter, compared to a $31.2 million loss during the prior-year period. It burned $97.5 million in the nine months ending 30 September.
”These are costs and activities necessary to advance in the development of our suite of products and solutions for the urban air mobility market,” the company says.
Eve is currently working through systems and integration ground-tests ahead of the planned first flight of its pre-production prototype, a landmark the company hopes to pass sometime next year.
Eve on 4 November disclosed that its air taxi had received final airworthiness criteria from Brazil’s National Civil Aviation Agency.
