BERLIN, Jan. 15 (Xinhua) -- The insolvency of German air taxi pioneer Volocopter, formerly regarded as a frontrunner in electric vertical take-off and landing (eVTOL) technology, has sent shockwaves through the global mobility sector.
Founded in 2011, the company raised over 600 million U.S. dollars from industry giants such as Mercedes-Benz, Geely, and Intel. Despite its technical breakthroughs and ambitious goals, Volocopter's insolvency highlighted the challenges facing the eVTOL industry in achieving technological maturity, developing the required infrastructure, and finding sustainable business models. The case with Volocopter has raised concerns about the future of the global low-altitude economy.
A PROMISING VISION CUT SHORT
Volocopter's vision of air taxis transforming urban mobility resonated with investors and policymakers alike. Studies by the German Aerospace Center showcased the efficiency of eVTOL vehicles in congested cities. For example, a route from Hamburg's central train station to the Airbus factory in Finkenwerder would take just 11 minutes (with 12 km) by air taxi, compared with 40 minutes (with 23 km) by car. However, the air taxi costs are projected to be between 175 euros and 350 euros (roughly the same amount of U.S. dollars at current prices) per trip versus 54 euros for a car journey, putting economic viability into question.
Volocopter had ambitious plans to launch commercial air taxi services during the 2024 Paris Olympics, only to be thwarted by delays in obtaining certification from the European Union Aviation Safety Agency (EASA). In absence of this essential certification, the company was unable to generate income from commercial operations and became entirely reliant on funding from investors.
Escalating research-and-development expenses, drawn-out regulatory processes, and repeated setbacks in commercialization ultimately rendered the business unsustainable.
Volocopter's collapse was not an isolated case. Fellow German eVTOL startup Lilium declared insolvency late last year after struggling to secure funding. These failures raise questions about Europe's competitiveness in low-altitude economy.
POLICY AND MARKET FAILURES
The collapse of Volocopter underscored the fragility of investor confidence in the eVTOL sector. Heinrich Grossbongardt, an aviation expert in Germany, noted that the regulatory challenges, combined with high operating costs, are undermining investor confidence in the sector.
Analysts have pointed to the limited economic viability of two-seat air taxis like those developed by Volocopter. Grossbongart suggested that profitability is more likely to be realized with larger-capacity models.
Others, however, saw the potential for a turnaround. Anna Straubinger, an analyst at the European Economic Research Center, believed that Volocopter still possesses a solid technological foundation, and that if any investors are willing to take the risk, the company could recover. However, she warned that public acceptance of air taxis in Germany remains low, with limited potential for widespread adoption in the near future.
Volocopter's insolvency has reignited criticism of Germany's startup ecosystem and its ability to support high-tech innovation. Gerald Wissel, head of Germany's Drone Association, warned that Germany's cautious approach risks losing another critical industry to competitors in China and the United States. He cautioned that without decisive action, the country could replicate its past missteps in fields such as solar energy and artificial intelligence.
Volocopter CEO Dirk Hoke echoed these sentiments, calling for stronger government support in capital-intensive sectors like eVTOL. He stressed that public backing is crucial for advancing in such a complex and resource-intensive industry.
The European regulatory environment has also been a source of frustration. Lengthy certification processes and fragmented regulations have created significant barriers to commercialization. The missed opportunity to launch services at the Paris Olympics exemplified how delays could undermine business plans and investor confidence.
GLOBAL COMPETITORS FORGE AHEAD
The challenges facing European eVTOL companies stand in stark contrast to the progress made in the United States and China.
U.S. companies like Joby Aviation and Archer Aviation have benefited from government contracts and substantial private investment. These firms have also secured pre-orders from major players like United Airlines and Toyota, providing a clearer path to commercialization despite ongoing financial losses.
China has adopted a flexible regulatory framework, allowing phased pilot operations that reduce barriers to market entry. According to CCID Consulting, over 50,000 companies had engaged in related low-altitude industries as of September last year, with firms like XPeng AeroHT and EHang achieving significant milestones in testing and commercialization.
Volocopter's insolvency serves as a cautionary tale for the low-altitude industry. While the eVTOL industry has immense potential to revolutionize urban transportation, success requires more than technological innovation. Robust financial management, streamlined regulatory frameworks and effective policy support are critical.
For Germany and Europe, addressing these shortcomings will be essential to remaining competitive in the low-altitude economy. ■
