On a crisp early morning in southern Spain, amid rolling fields of olive trees, a small white aircraft sits on a runway. With 30 tiny jet engines pointing down from the trailing edge of its four wings, it resembles a big, scary beetle. Then, with a soft whine, the battery-powered craft ascends vertically, hovers aloft for a few seconds and flies off into the distance with surprising grace.
Three minutes later, it loops back, slows to a controlled hover and descends gently to the ground. The engineers and pilots who have guided it remotely from a nearby shack look relieved. The previous morning, a technical glitch had prevented it from making the three-kilometre test flight. “Just a short slingshot,” says Matthias Meiner, the 35-year-old chief engineer of the test project.
We walk down the runway of the Atlas flight test centre in Andalucía to take a closer look at the Phoenix, the vehicle made by Lilium, the German electric aircraft start-up of which Meiner is a co-founder. It sits silently, its cabin loaded with batteries and its wings taped with black strings that help track airflow as it flies. This could be aviation’s future: a craft to carry people high above congested roads, an electric Uber for the skies.
People have dreamt of flying cars for decades. Small aerial craft often feature in science fiction, including the 1960s US comedy cartoon The Jetsons and the 1982 film Blade Runner. Entrepreneurs kept trying to build them. (Henry Ford drew up a single-seat aircraft called the Ford Flivver in 1926.) Some have flown but none has been cheap, appealing and safe enough to reach the mass market.
Still, the dream never seems to die and, over the past few years, it has moved closer to becoming reality. Investors have poured US$7 billion (NZ$10.8b) into a new generation of electric vertical take-off and landing aircraft, also known as eVTOL, in the past three years. As well as Lilium’s jet, Volocopter of Germany and Ehang of China are making electric helicopters, while the UK’s Vertical Aerospace and Joby Aviation in the US are among those developing hybrids with rotors and wings. All are powered by lithium-ion batteries, like electric cars, and won’t produce carbon emissions in flight.
These contenders are competing to be approved by regulators and to launch first. “A whole new era of aviation is about to take off. What looks like something out of a movie or a cartoon is really happening,” says Billy Nolen, acting head of the US Federal Aviation Administration. The aircraft could make short hops from airports to city centres, cross cities or link islands in Greece or south-east Asia. Lilium wants to go further, with a physical range of up to 250km.
But flying prototypes is not the same as launching the real thing. Target dates have slipped and raising funding is harder as investors increasingly shun risk. The era of start-ups rushing ahead with little regard to regulation is over. Kittyhawk, a venture backed by Google’s co-founder Larry Page, shut in September, and Brian Foley, an aviation analyst, says time is getting short for other hopefuls: “For many, the flame of hope will flicker out.”
‘I’m starting a company with three lunatics’
When Daniel Wiegand was eight, he went on holiday with his parents to the bird islands of Norway. “I kept watching the birds landing on a cliff and flying away, how they managed to land on one spot,” he says. “That is incredibly difficult.” Wiegand is remembering his boyhood in a neat office at Lilium’s headquarters at a small airport south-west of Munich. It was once home to Dornier, which built Luftwaffe bombers in World War II, and was later occupied by the US Air Force. Now it’s one piece of Bavaria’s ambition to match its strength in luxury carmaking in aerospace.
Wiegand, now 37, is the son of a biochemist and a teacher raised in the university city of Freiburg im Breisgau, in the Black Forest. His fascination with flight lasted and he went to the Technical University of Munich to study aerospace engineering. The moment of inspiration came during a year he spent studying abroad in Glasgow when he watched a YouTube video of the Bell Boeing V-22 Osprey military transport aircraft, which has huge rotors that tilt forwards after a vertical take-off so that it can fly faster.
A similar aircraft, if it were electric, would “solve a bunch of problems”, he thought. Wiegand started making calculations in his room on spreadsheets. After a few days, a flatmate entered, asked him what he was doing, and urged him to start his own company. “I knew it was a bit crazy and a lot of beer was involved,” says Wiegand. “We shook hands and I said, ‘I’m going to go back to Germany and do it.’”
In Munich, he scouted for co-founders by gathering all the PhDs in his department. Two signed up, and he also persuaded Meiner to join on walks around the city, capped by a spaghetti dinner for the four co-founders. Meiner recalls apologising to his parents for leaving his PhD programme, “but I’m starting a company with three lunatics”.
Germany has a long history of entrepreneurship; its Mittelstand of family-owned companies powered its postwar economic miracle. It also has deep engineering expertise. But it has not matched Silicon Valley in disruptive innovation. “If you fail there, it’s part of the game. In Germany, it’s a stigma that you have for life,” says Meiner.
Lilium’s founders were undeterred: “We were like, ‘We come from here. Let’s prove that it can be done here,’” Wiegand says. Their first idea, in 2014, was for an “ultralight” aircraft for amateur pilots. It was a utopian time: Tesla had popularised electric sports cars, autonomous driving looked like it was just around the corner, and many thought that battery-driven, even pilotless, aircraft could be in the air by 2020. Investment capital was still relatively cheap, the term “unicorn” barely a year old.
Even by Silicon Valley standards, Lilium was ambitious. Most of its competitors’ aircraft have helicopter-like rotors to lift them into the air and then power forward. Lilium is using jet engines. It is a similar idea to vertical take-off military jets such as the Hawker Siddeley Harrier and the Lockheed Martin F-35 strike fighter, but there are no widely used civil-aviation equivalents.
Several early Lilium prototypes are on display in Munich, slightly battered and looking more like student projects than the future of flight. But jet engines dominate civil aviation because of their power and safety. Lilium’s founders believed that an aircraft with ducted fan jets embedded in four wings (including two “canards” at the front for balance) would feel reassuringly familiar to passengers and be capable of flying further.
Distance is at the heart of a divide among eVTOL start-ups. Most are placing their bets on urban air mobility: short flights in cities from “vertiport” landing pads with aircraft powered by rotors rather than jets. “There’s a sweet spot between 20 and 30 miles, where there is a lot of congestion and car trips can take a long time,” says Eric Allison, head of product for Joby, the American eVTOL start-up.
The ecological impact of flying would be lessened by the fact that the new eVTOL craft run on batteries, while their smaller rotors make them quieter than traditional helicopters, whose large blades produce a thudding sound at lower altitude. Joby claims that its aircraft will be no noisier than the sound of conversation at a distance of 100m.
It may also make financial sense to draw passengers to vertiports for short shuttle trips. This is how helicopters are already used to avoid traffic in São Paulo in Brazil, one of the world’s most congested cities. Blade, a US helicopter shuttle company, offers a five-minute trip from Manhattan to John F Kennedy airport, starting at US$195 per seat. Rob Wiesenthal, Blade’s chief executive, believes the crucial advantage of the new aircraft is quietness, making them easier to operate in cities. Blade flies from two sites on the edges of Manhattan, but “if we had one vertiport between 47th Street and Central Park [by corporate head offices in midtown Manhattan], that alone could be a half-billion-dollar-a-year business”.
Lilium’s Wiegand argues that there is a weakness at the heart of the air taxi idea: the need for passengers to reach vertiports first, and to transfer to their final destination at the other end. In Blade Runner, Spinner cars landed in city streets beside their passengers but that is science fiction. In reality, time spent in the air would be only one part of the journey. “Even on a bad day, crossing Munich takes 45 minutes, so an air taxi would not save any time. I would ask a driver to take me and work in the car,” he says.
Lilium has set its sights on longer flights, where the time spent on getting to the aircraft is less significant. It plans a statewide service in Florida from an estimated 14 vertiports developed by Ferrovial, and in October signed another deal with Saudia to supply it with 100 aircraft in the Middle East.
Lilium’s jets would come into their own over ranges of 250km or more. There is no prospect of batteries replacing jet fuel for long-haul flights. But UK entrepreneur Alex Asseily, a Lilium investor and its former strategy director, has high hopes for short-haul. “I don’t know how much will be vertical take-off, but by 2030 you should be able to fly [electric] from London to anywhere in Europe.”
The safety factor
The most telling number in commercial aviation is 10-⁹ or one-billionth. This is the safety standard new airliners must meet to be approved by regulators for commercial service. Most crashes are caused by pilot error, but the aircraft itself must be at risk of suffering a catastrophic failure no more than once in a billion flying hours.
Helicopters are riskier than twin-engined jets because a failure of their main rotors can be disastrous. Their operators make up for this by servicing them constantly, and their pilots have to be trained in vertical take-off and landing, as well as normal flying. “People don’t feel that helicopters are as safe to fly in as planes, and statistically they’re right,” Asseily says.
The new generation of electric aircraft spans the categories: those being built by start-ups such as Joby and Vertical Aerospace use rotors but also have wings for mid-air flight. The switch between their two modes is called transition: when their rotors or, in Lilium’s case, jets, swivel horizontally in mid-air and the wings start to provide lift.
The FAA is treating them as a special class of “powered lift” aircraft, requiring specific pilot training. The agency’s safety standard remains extremely strict, as does that of EASA, the EU regulator, which is certifying Lilium. “Our job is to ensure that they maintain the high level of safety that the public absolutely demands,” says Nolen of the FAA, which was criticised after two fatal crashes of Boeing 737 Max aircraft in 2018 and 2019.
This changes everything for aviation start-ups. Silicon Valley is known for disruption, and Uber’s former chief executive Travis Kalanick personified its “ask for forgiveness, not permission” approach to launching quickly. Uber created its own air taxi division called Uber Elevate in 2016, but sold it to Joby in 2020. The truth is that ambitious founders do not get to decide when an aircraft flies: regulators do. Not only that, but regulators oversee every component of these machines, from the engines to software, and whether a company is capable of building a design once approved.
They dictate who runs things, and if they succeed before the money runs out. “Once there’s a human on board, it’s no longer a drone and regulators treat it very differently,” says Stephen Fitzpatrick, Vertical Aerospace’s founder and chief executive. Its VX4 prototype recently hovered with a pilot in its cockpit at a UK airfield, but stayed tethered to the tarmac. “We got 500 pages of paperwork just to get 12 inches off the ground.”
In 2018, Lilium and its investors, including the Chinese ecommerce group Tencent and the venture capital firm Atomico, realised that four young engineers with a bright idea could not go it alone. “Entrepreneurial is almost an oxymoron in aerospace. You have to take very careful steps,” says Yves Yemsi, Lilium’s chief operating officer, who joined from Airbus in 2019. He was shocked when he arrived from Europe’s leading aircraft maker, which has 125,000 employees. He says he started thinking, “It’s a beautiful concept, but I’m not sure it can work. They don’t have layers of polished processes and systems. They don’t have rows of super-capable people.”
Lilium has expanded a lot since then. It now has 800 staff, including 400 engineers. Aerospace is global by nature: young engineers often move continents for opportunities, and Munich is an affluent city with a pleasant climate, close to hills and lakes. During lunch, the canteen is alive with a young workforce, many chatting in English. The company has also changed at the top. Its chief technology officer is now Alastair McIntosh, a Rolls-Royce veteran, and Wiegand was replaced as chief executive in August by Klaus Roewe, who worked at Airbus for 30 years. “There was a bit of ego involved, but my ego is happy with where we are,” says Wiegand, who has stayed as chief engineer for innovation and is a board director.
Roewe says that a blend of attitudes and aptitudes works well for Lilium. “On the one side we have greybeards from the industry who have kind of seen everything, and on the other young guys with PhDs who want to experiment to death. You only get it done with a mixture of both.”
Regulators not only want experience at the top; they are also reassured by known suppliers. Honeywell will provide Lilium’s flight control software, and the Spanish supplier Aciturri its airframes, while Rolls-Royce is producing the electrical power system for Vertical Aerospace. Veteran engineers at Lilium seem to share a common hope: that they can help to wean their industry off fossil fuels. “I could have sat [at Rolls-Royce] until retirement but, I know this sounds corny, I wanted to do something for the greater good,” McIntosh says.
Julie Spanswick, a former Airbus project manager in Toulouse, is Lilium’s head of industrial readiness. Spanswick knows as well as anyone the challenge of aircraft construction. She is a former Royal Air Force engineer whose father once worked at Dormobile, the UK camper-van company. Her last job at Airbus was automating construction of the rear fuselages of Airbus A320s in Hamburg, using robots to avoid repetitive tasks.
Like other aerospace companies, Lilium’s management is male-dominated and I ask what she thinks of the gender imbalance. “It’s such a shame. I know many ladies who would be excellent at it, but they got put off engineering at school. They’re good at getting people behind them and enthusing them. You know, ‘Let’s get the job done.’”
‘They are not going to fly any time soon’
Arnaud Vagner is a financial whistleblower. His short-selling hedge fund Iceberg Research is dedicated to finding “earnings misrepresentation and accounting irregularities” at public companies. His 2015 attack on Noble Group, a commodities trading group at which he had worked, triggered its near-collapse. Vagner’s view of Lilium is not much better: “It looks like a school project, and they are just here to waste money in the capital markets. They are not going to fly any time soon because the process [of certification] takes a lot of effort.” He thinks it will run out of cash.
His scepticism is reflected in Lilium’s value. It went public on Nasdaq in 2021 at a valuation of US$2.8b via a merger with a speculative Spac investment vehicle, a route also taken by several other eVTOL start-ups. Since then, its market capitalisation has fallen sharply, sinking to just US$447m at the end of 2022. Lilium is not the only one to suffer: Joby’s shares trade at less than half their level when it went public. But Vagner’s onslaught on Lilium, starting with a research report in March last year titled “The losing horse in the eVTOL race”, has taken a toll. German newspapers also cast doubt around that time on its promise to be able to fly long distances.
The technical challenge for Lilium is that it takes immense power to lift the aircraft vertically: about 10 times what’s needed in flight. Although it has 30 jet engines, the overall surface of the engine blades is far smaller than in helicopters with large rotors. This makes it power-hungry when hovering, and could consume a lot of energy from its batteries during take-offs and landings. (Vertical take-off military jets use conventional fuel that delivers many times more usable energy per kilogramme as today’s batteries.)
Professor Volker Gollnick, director of Hamburg’s Institute of Air Transportation Systems, studied Lilium for Iceberg, the hedge fund. He says that the power it will require to hover means it might achieve only 40 per cent of its promised 250km range. “I love the Lilium aircraft, and I started out with the idea that ducted fans were more efficient and quieter,” says Fitzpatrick of Vertical. “But I was convinced by my engineers that the laws of physics say you need a large blade area. It’s not the best design once you scale it up.”
A lot depends on how rapidly batteries improve: Lilium has invested in a California developer, Ionbox, to design lithium-ion batteries that can deliver its promised range. “We’re not going to stop where the technology is,” Meiner says. “In some ways, we need batteries of the future, but we’re developing them right now. By market entry, they will be there.”
Then there’s the expense of running a company with 800 employees that has to invest in new technology and has no revenues. At the end of June, Lilium had about €230m (NZ$385m) in cash, with another €75m in credit, and was burning cash at €60m per quarter. “When you do the maths, sometime next summer the story would be over, so we are looking into more funding,” said Roewe in October, just before it raised a further US$119m in capital from its investors and industrial partners.
The cash pressure accounts for the pivot Lilium announced last autumn. It originally promised that its first product would be fitted with a six-passenger cabin that could fly from New York to Philadelphia or Palo Alto to Napa Valley for fares of US$200 or less per person. But it will now focus first on aircraft equipped with a more luxurious four-seat cabin for wealthy buyers and private-jet operators such as NetJets. The Lilium jet’s base price is likely to be €7m and it may charge €10m for a premium version.
Downpayments on private orders could bring in cash. It is also seeking funding from German public bodies and other companies with which it might partner. Like other aviation start-ups, it is urgently trying to extend its financial runway.
Its shift raises the question of who this new generation of aircraft will really be for: will they democratise flying, or will they mainly be guilt-free substitutes for flying by private jet and helicopter? Airlines including United Airlines and Virgin Atlantic are hoping to use them to ferry business and first-class passengers rapidly to airports to board long-haul flights.
“Even if you’re not a believer in everyone taking to the skies soon, a lot of flights are already made by helicopter,” says Tom Muniz, chief operating officer of Archer Aviation, another US start-up. Roewe believes the market may expand gradually from initially being a luxury or premium service in the same way as electric sports cars: Tesla sold its first Roadster model for US$98,000 or more.
If Lilium’s jet starts out as an aerial Tesla Roadster, it has a particular resonance in Germany since Elon Musk’s bet on luxury electric cars stole a march on companies such as BMW. More German engineers are now willing to take a career chance by joining Lilium, Meiner says: “They know that the old days of BMW and Mercedes safely generating money for 50 years are gone.”
But defying the sceptics by building a new aircraft requires a lot of money and blind faith. The latter is Silicon Valley’s speciality, not Germany’s. One former Lilium employee complains that the country’s conservative instincts outweigh its ambitions for aerospace innovation. “The fact it has got so far in a nation that almost doesn’t want it to work is remarkable.”
Gollnick, the German professor who cast doubt on Lilium, insists that he hopes it will succeed but believes it could take three or four years to fulfil its potential. “It is always amazing to see a new aircraft, so I would be very happy to see it succeed... This is a strategic question for European companies. If they want to take technology leaps, they need to run financial marathons.”
In Andalucía, watching Lilium’s aircraft fly out of sight above the fields of olive trees, I half wonder whether this will be the last I see of it. Then the bug reappears as promised, floating on its jets in the clear blue sky. The flying car dream hasn’t yet come true. But sometimes you have to suspend disbelief.
- John Gapper is a business columnist at FT Weekend
Written by: John Gapper
© Financial Times