Industry giants develop new tech, attract talent with AAM investments

By Paul Brinkmann|June 16, 2022

AAM development pattern follows previous examples, such as the very light jet boom

Large investments by aviation and automobile giants including Boeing, Toyota and United Airlines in advanced air mobility startups represent an effort to develop new technology, attract new talent and begin entering a potentially lucrative new sector, according to experts and company officials.

Among the dozens of companies vying to develop electric vertical takeoff and landing (eVTOL) aircraft or electric short takeoff and landing (eSTOL) aircraft, California-based Joby Aviation has led the AAM market in terms of investment with about $400 million from Toyota and at least $50 million from Uber.

Archer Aviation, another California-based eVTOL developer, says it has investment and a $1 billion order for aircraft from United Airlines.

Meanwhile, Mitsubishi has invested in Lilium of Germany, which has announced plans to fly aircraft in cities including Düsseldorf and Orlando, Florida. Another Germany startup, Volocopter, has struck a different kind of partnership with aerospace supply giant Honeywell. The two firms signed an agreement in 2019 to jointly test and develop new navigation and automatic landing systems for Volocopter’s eVTOLs.

South Korea automaker Hyundai Motor Co. has launched its own company, Supernal, to develop an eVTOL. Its Japanese competitor Honda is developing a hybrid-electric VTOL in-house.

Wisk, yet another AAM company based in California, is among the leaders in the industry in terms of investment dollars. The startup has received more than $450 million of funding from Boeing. 

Boeing believes the potential for the air taxi industry is “massive,” Jason McClain, senior director of ventures and innovation strategy, told me in an email. 

“We see [AAM] as a unique opportunity to bring several emerging technologies to market, including electric propulsion and autonomy,” McClain said. “These new technologies will not only create new market opportunities within urban air mobility, but will build our capabilities that inform how we think about future technology for our core business.”

McClain said Boeing chose Wisk partly because the company is focused entirely on autonomous, unpiloted eVTOL craft. Wisk hopes to earn certification for its passenger aircraft around 2028.

“Autonomy will be a critical capability to enable future mobility markets,” McClain said. “These innovative capabilities will enable the scalability of eVTOL vehicles.” 

By comparison, Lockheed Martin chose a much different AAM contender for an undisclosed investment amount in January: Virginia-based Electra.aero, which is developing a hybrid eSTOL. 

But Lockheed’s interest in Electra is more than just financial, Electra founder and CEO John Langford told me.

“They are an investor, but we also have a team collaboration agreement that provides for us to jointly explore opportunities,” Langford said. “Little companies can move fast, are very flexible and have a very low-cost structure. Big companies have well-established decision-making. Lockheed has very broad reach around the country and around the world. And they have the staying power that it takes to really serve, survive and succeed in our industry, to help scale up operations when that becomes necessary.” 

For Lockheed’s part, the company’s Ventures division believed Electra, and the California-based cargo AAM company Elroy Air, were the best fit for its business niche, Lockheed Martin Ventures said in an email to me.

“Electra.aero and Elroy Air offer hybrid propulsion solutions which gives customers all of the benefits of electric propulsion with the opportunity for greater range and payload capacity,” the company said. “These platforms can also be quick to refuel, especially within the existing infrastructure for more traditional aircraft, which allow these aircrafts to more seamlessly merge with military logistics and operations where mission success and safety is the highest priority.”

The trend of AAM investment by large, established companies was also seen in the early 2000s when many startups emerged to develop very light jets, or VLJs, aerospace consultant Richard Aboulafia told me.

“The VLJ boom produced dozens of failures and really no successes,” said Aboulafia, managing director of the Michigan-based consultancy AeroDynamic Advisory. “Hopefully AAM will fare better, but the VLJ boom saw lots of established players joining the party in one way or another. Most got their asses handed to them.”

One of the most promising VLJ startups, Eclipse Aviation, went bankrupt and out of business in 2009, he pointed out.

Even with the risk involved in AAM startups, Aboulafia thinks giants like Boeing and Lockheed have very good reasons to invest in the new trend.

“First of all, there’s so much cash flowing into the sector, the big companies may try to siphon off some of that,” he said. “Also, developing a completely new electric type of aircraft is an exciting endeavor, so some young people might want to get into this industry. That would be good for legacy companies from a standpoint of workforce retention.”