Electric Air Taxi Pioneer Lilium Crashes into Financial Crisis Despite FAA Breakthrough
In a dramatic turn of events that has shocked the aviation industry, German electric air taxi manufacturer Lilium announced its filing for insolvency on October 25, 2024, after burning through more than $1.1 billion in funding since 2021.
This development comes at a particularly ironic moment, just days after the US Federal Aviation Administration (FAA) issued new regulations that could have helped pave the way for eVTOL (electric vertical takeoff and landing) aircraft operations.
The company, founded in 2015 by four engineers from the Technical University of Munich, had been developing a revolutionary six-passenger electric aircraft capable of vertical takeoff and landing. Under the leadership of CEO Klaus Roewe, a 30-year Airbus veteran, Lilium had secured impressive partnerships and commitments, including:
- US-based UrbanLink has placed an order for 20 Jets.
- Saudi Arabia’s national carrier has struck a deal for 100 Jets.
- There are plans to establish flight networks across Florida, Paris, and northern Italy.
- We have formed partnerships with industry giants such as GE Aerospace and Honeywell Aerospace.
The financial collapse occurred after Lilium failed to secure a critical €50 million ($54 million) loan from the German government. The company’s stock price has plummeted by 75% in just two days, marking a stark contrast to its 2021 public debut via SPAC, which valued the company at $3.3 billion.
Roewe expressed both disappointment and cautious optimism in a statement, saying, “While there is no guarantee for success in insolvency proceedings, we hope that the Lilium Jet will get a chance for a fresh start after the self-administration process is complete.”
The timing of Lilium’s financial crisis highlights the challenging nature of the eVTOL industry, where companies must invest heavily in research, development, and certification before generating any revenue. The sector’s capital-intensive nature has already claimed several victims, with other players like Vertical Aerospace nearly facing similar fates earlier this year.
However, not all news in the eVTOL sector is gloomy. Joby Aviation, a California-based competitor, recently secured $500 million in funding from Toyota and is raising an additional $200 million through a public stock offering.
Similarly, Archer Aviation has made significant progress, completing its first hover-to-horizontal transition flight and logging 400 successful test flights in 2024.
The impact of Lilium’s potential collapse extends beyond the company’s 1,000+ employees. The firm had ambitious plans to revolutionize urban air mobility, promising to reduce airport commutes from 90 minutes to just 7 minutes. These plans included partnerships with multiple airports and regions worldwide, all of which now hang in the balance.
Industry experts point out that while Lilium’s situation is concerning, it may not necessarily spell doom for the entire eVTOL sector. The continued investment in companies like Joby Aviation suggests that investors still believe in the future of electric air mobility, albeit with a more cautious approach to funding and development timelines.
For now, Lilium’s two German subsidiaries—Lilium GmbH and Lilium eAircraft GmbH—will continue operations under custodian supervision while seeking new investors. The company’s journey serves as a sobering reminder of the fine line between innovation and financial sustainability in the high-stakes world of aviation technology.