Following the Money in the Air-Taxi Craze

Are eVTOLs the “mother of all aerospace bubbles”?

8 min read
A Joby Aviation Inc. electric vertical take-off and landing aircraft outside the New York Stock Exchange.

Joby Aviation displayed one of its S4 aircraft outside the New York Stock Exchange on 11 August 2021, the day of the company's initial public offering.

Michael Nagle/Bloomberg/Getty Images

When entrepreneur JoeBen Bevirt launched Joby Aviation 12 years ago, it was just one of a slew of offbeat tech projects at his Sproutwerx ranch in the Santa Cruz mountains. Today, Joby has more than 1,000 employees and it’s backed by close to US $2 billion in investments, including $400 million from Toyota Motor Corporation along with big infusions from Uber and JetBlue.

Having raked in perhaps 30 percent of all the money invested in electrically-powered vertical takeoff and landing (eVTOL) aircraft so far, Joby is the colossus in an emerging class of startups working on these radical, battery-powered commercial flyers. All told, at least 250 companies worldwide are angling to revolutionize transportation in and around cities with a new category of aviation, called urban air mobility or advanced air mobility. With Joby at the apex, the category’s top seven companies together have hauled in more than $5 billion in funding—a figure that doesn’t include private firms, whose finances haven’t been disclosed.

But with some of these companies pledging to start commercial operations in 2024, there is no clear answer to a fundamental question: Are we on the verge of a stunning revolution in urban transportation, or are we witnessing, as aviation analyst Richard Aboulafia puts it, the “mother of all aerospace bubbles”?

Even by the standards of big-money tech investment, the vision is giddily audacious. During rush hour, the skies over a large city, such as Dubai or Madrid or Los Angeles, would swarm with hundreds, and eventually thousands, of eVTOL “air taxis.” Each would seat between one and perhaps half a dozen passengers, and would, eventually, be autonomous. Hailing a ride would be no more complicated than scheduling a trip on a ride-sharing app.

“We’re going to have to get the consumer used to thinking about flying in a small aircraft without a pilot on board. I have reservations about the general public’s willingness to accept that vision.”
—Laurie Garrow, Georgia Tech

And somehow, the cost would be no greater, either. In a discussion hosted by the Washington Post last July, Bevirt declared, “Our initial price point would be comparable to the cost of a taxi or an Uber, but our target is to move quickly down to the cost of what it costs you to drive your own car. And we believe that's the critical unlock to making this transformative to the world and for people’s daily lives.” Asked to put some dollar figures on his projection, Bevirt said, “Our goal is to launch this service [in 2024] at an average price of around $3 a mile and to move that down below $1 a mile over time.” The cost of an Uber varies by city and time of day, but it’s usually between $1 and $2 per mile, not including fees.

Industry analysts tend to have more restrained expectations. With the notable exception of China, they suggest, limited commercial flights will begin with eVTOL aircraft flown by human pilots, a phase that is expected to last six to eight years at least. Costs will be similar to those of helicopter trips, which tend to be in the range of $6 to $10 per mile or more. Of the 250+ startups in the field, only three—Kittyhawk, Wisk Aero (a joint venture of Kittyhawk and Boeing), and Ehang—plan to go straight to full autonomy without a preliminary phase involving pilots, says Chris Anderson, Chief Operating Officer at Kittyhawk.

To some, the autonomy issue is the heart of whether this entire enterprise can succeed economically. “When you figure in autonomy, you go from $3 a mile to 50 cents a mile,” says Anderson, citing studies done by his company. “You can’t do that with a pilot in the seat.”

Laurie A. Garrow, a professor at the Georgia Institute of Technology, agrees. “For the large-scale vision, autonomy will be critical,” she says. “In order to get to the vision that people have, where this is a ubiquitous mode of transportation with a high market share, the only way to get that is by… eliminating the pilot.” Garrow, a civil engineer who co-directs the university’s Center for Urban and Regional Air Mobility, adds that autonomy presents challenges beyond technology: “We’re going to have to get the consumer used to thinking about flying in a small aircraft without a pilot on board. I have reservations about the general public’s willingness to accept that vision, especially early on.”

“The technical problems are, if not solved, then solvable. The main limiters are laws and regulations.”
—Chris Anderson, COO, Kittyhawk

Some analysts have much more fundamental doubts. Aboulafia, managing director at the consultancy AeroDynamic Advisory, says the figures simply don’t add up. eVTOL startups are counting on mass-manufacturing techniques to reduce the costs of these exotic aircraft, but such techniques have never been applied to producing aircraft on the scale specified in the projections. Even the anticipated lower operating costs, Aboulafia adds, won’t compensate. “If I started a car service here in Washington, D.C., using Rolls Royces, you’d think I was out of my mind, right?,” he asks. “But if I put batteries in those Rolls Royces, would you think I was any less crazy?”

What everyone agrees on is that achieving even a modest amount of success for eVTOLs will require surmounting entire categories of challenges, including regulations and certification, technology development, and the operational considerations of safely flying large numbers of aircraft in a small airspace.

To some, certification will be the highest hurdle. “The technical problems are, if not solved, then solvable,” says Anderson. “The main limiters are laws and regulations.”

There are dozens of aviation certification agencies in the world. But the three most important ones for these new aircraft are the Federal Aviation Administration (FAA) in the U.S., the European Union Aviation Safety Agency (EASA), and the Civil Aviation Administration of China (CAAC). Of the three, the FAA is considered the most challenging, for several reasons. One is that, to deal with eVTOLs, the agency has chosen to adapt its existing certification rules. That gives some observers pause, because the FAA does not have a body of knowledge and experience for certifying aircraft that fly by means of battery systems and electric motors. The EASA, on the other hand, has created an entirely new set of regulations tailored for eVTOL aircraft and related technology, according to Erin Rivera, senior associate for regulatory affairs at Lilium.

To clear an aircraft for commercial flight, the FAA actually requires three certifications: one for the aircraft itself, one for its operations, and one for its manufacturing. For the aircraft, the agency designates different categories, or “parts,” for different kinds of fliers. For eVTOLs (other than multicopters), the applicable category seems to be Title 14 Code of Federal Regulations, Part 23, which covers “normal, utility, acrobatic, and commuter category airplanes.” The certification process itself is performance based, meaning that the FAA establishes performance criteria that an aircraft must meet, but does not specify how it must meet them.

Because eVTOLs are so novel, the FAA is expected to lean on industry-developed standards referred to as Means of Compliance (MOC). The proposed MOCs must be acceptable to the FAA. Through a certification scheme known as the “issue paper process,” the applicant begins by submitting what’s known as a G1 proposal, which specifies the applicable certification standards and special conditions that must be met to achieve certification. The FAA reviews and then either approves or rejects the proposal. If it’s rejected, the applicant revises the proposal to address the FAA’s concerns and tries again.

“If very high levels of automation are critical to scaling, that will be very difficult to certify. How do you certify all the algorithms?”
—Matt Metcalfe, Deloitte Consulting

Some participants are wary. When he was the chief executive of drone maker 3D Robotics, Anderson participated in an analogous experiment in which the FAA had pledged to work more closely with industry to expedite certification of drone aircraft such as multicopters. “That was five years ago, and none of the drones have been certified,” Anderson points out. “It was supposed to be agile and streamlined, and it has been anything but.”

Nobody knows how many eVTOL startups have started the certification process with the FAA, although a good guess seems to be one or two dozen. Joby is furthest along in the process, according to Mark Moore, CEO of Whisper Aero, a maker of advanced electric propulsor systems in Crossville, Tenn. The G1 certification proposals are not public, but when the FAA accepts one (presumably Joby’s), it will become available through the U.S. Federal Register for public comment. Observers expect that to happen any day now.

This certification phase of piloted aircraft is fraught with unknowns because of the novelty of the eVTOL craft themselves. But experts say a greater challenge lies ahead, when manufacturers seek to certify the vehicles for autonomous flight. “If very high levels of automation are critical to scaling, that will be very difficult to certify,” says Matt Metcalfe, a managing director in Deloitte Consulting's Future of Mobility and Aviation practice. “That’s a real challenge, because it’s so complicated. How do you certify all the algorithms?”

“It’s a matter of, how do you ensure that autonomous technology is going to be as safe as a pilot?,” says an executive at one of the startups. “How do you certify that it’s always going to be able to do what it says? With true autonomous technology, the system itself can make an undetermined number of decisions, within its programming. And the way the current certification regulations work, is that they want to be able to know the inputs and outcome of every decision that the aircraft system makes. With a fully autonomous system, you can’t do that.”

Perhaps surprisingly, most experts contacted for this story agreed with Kittyhawk's Anderson that the technical challenges of building the aircraft themselves are solvable. Even autonomy—certification challenges aside—is within reach, most say. The Chinese company EHang has already offered fully autonomous, trial flights of its EH216 multicopter to tourists in the northeastern port city of Yantai and is now building a flight hub in its home city of Guangzhou. Wisk, Kittyhawk, Joby, and other companies have collectively conducted thousands of flights that were at least partially autonomous, without a pilot on board.

Experts foresee eVTOLs largely replacing helicopters for niche applications. There’s less agreement on whether middle-class people will ever be routinely whisked around cities for pennies a mile.

A more imposing challenge, and one likely to determine whether the grand vision of urban air mobility comes to pass, is whether municipal and aviation authorities can solve the challenges of integrating large numbers of eVTOLs into the airspace over major cities. Some of these challenges are, like the aircraft themselves, totally new. For example, most viable scenarios require the construction of “vertiports” in and around cities. These would be like mini airports where the eVTOLs would take off and land, be recharged, and take on and discharge passengers. Right now, it’s not clear who would pay for these. “Manufacturers probably won’t have the money to do it,” says Metcalfe at Deloitte.

As Georgia Tech's Garrow sees it, “vertiports may be one of the greatest constraints on scalability of UAM.” Vertiports, she explains, will be the “pinch points,” because at urban facilities, space will likely be limited to accommodating several aircraft at most. And yet at such a facility, room will be needed during rush hours to accommodate dozens of aircraft needing to land, be charged, take on passengers, and take off. “So the scalability of operations at the vertiports, and the amount of land space required to do that, are going to be two major challenges.”

Despite all the challenges, Garrow, Metcalfe, and others are cautiously optimistic that air mobility will eventually become part of the urban fabric in many cities. They foresee an initial period in which the eVTOLs largely replace helicopters in a few niche applications, such as linking downtown transportation depots to airports for those who can afford it, taking tourists on sightseeing tours, and transporting organs and high-risk patients among hospitals. There’s less agreement on whether middle-class people will ever be routinely whisked around cities for pennies a mile. Even some advocates think that’s more than 10 years away, if it happens at all.

If it does happen, a few studies have predicted that travel times and greenhouse-gas and pollutant emissions could all be reduced. A 2020 study published by the U.S. National Academy of Sciences found a substantial reduction in overall energy use for transportation under “optimistic” scenarios for urban air mobility. And a 2021 study at the University of California, Berkeley, found that in the San Francisco Bay area, overall travel times could be reduced with as few as 10 vertiports. The benefits went up as the number of vertiports increased and as the transfer times at the vertiports went down. But the study also warned that “vertiport scheduling and capacity may become bottlenecks that limit the value of UAM.”

Metacalfe notes that ubiquitous modern conveniences like online shopping have already unleashed tech-based revolutions on a par with the grand vision for UAM. “We tend to look at this through the lens of today,” he says. “And that may be the wrong way to look at it. Ten years ago we never would have thought we’d be getting two or three packages a day. Similarly, the way we move people and goods in the future could be very, very different from the way we do it today.”

This article appears in the March 2022 print issue as “What’s Behind the Air-Taxi Craze.”

The Conversation (4)
Michael DeKort23 Feb, 2022
M

Excellent article. A couple issues.-Beyond Vertiports the FAA and NASA have no design for complex environments. Or even where Vertiport coverage overlap-- The industry needs to ignore Chris Anderson. Look at his past. He is the Andy Levandowski of the air domain. He cuts dangerous corners and tries to pass off Px4 etc as suitable flight and control system.- No one is getting close to Autonomy in the next 10 years even if they do it right and most are not. They over use the real-world, don't use proper simulation technology and rely on general and deep learning vs rules.Urban Air Mobility – Four Paths to Disasterhttps://imispgh.medium.com/urban-air-mobility-four-paths-to-disaster-9dd3966f85e2

Edward Sweeney17 Feb, 2022
INDV

Very interesting article and question. I do not want to put cold water on anyone's dreams, but the reality is hard to escape. The very idea that the FAA would or could in a short time endorse (certify) a man carrying vehicle with NO PILOT on board is very unlikely. That includes aerial package delivery systems. The problem is NOT technology, itself. But, we still do not have self driving cars. Are you-or we- willing to get into a self driving car, let alone a self flying aerial mobility thing?

I have and fly one of the 1956 AEROCARs. Licensed as N102D. It was certified by CAA in 1956 (predecessor of FAA). It is one of four and one of the two which are flyable. To fly it, requires at least a Private pilot's license, an FAA medical and every year an annual inspection signed off by an FAA authorized inspector! Then there is the matter of flying these Air Mobility things. My AEROCAR has to be operated in accordance with all Federal Aviation Regulations. That includes Part 91. I can not fly below 1000ft over an assembly or persons or town/city, etc. These Uber or Lyft things are not much use at 1000 ft, but do we want them at 500 ft or even down to 200 ft over us??

Again a good article, but so much ore to learn and FAA Regulations do come first.

Ed Sweeney

Brian Josephson10 Feb, 2022
H

During rush hour, the skies over a large city, such as Dubai or Madrid or Los Angeles, would swarm with hundreds, and eventually thousands, of eVTOL “air taxis.”

And since there are no roads in the sky, how do you stop them crashing into each other? All done with automation?

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