Summary: The 2024 China (Chengdu) International Low-altitude Economic Partnership Conference and the 2024 Chengdu International Low-altitude Equipment and Services Expo were held in Chengdu on September 19 for three days. At the same time, the first low-altitude economic innovation leading conference was also held in Beijing. Coupled with the 2024 Low-altitude Economic Development Conference held in Wuhu, Anhui Province at the beginning of the month, in September alone, there have been three industry events. At least three more conferences are in preparation in Suzhou, Beijing, Shenzhen and other places, which are expected to kick off in October and November. The intensive holding of industry summits shows how hot the current low-altitude economy is.
EVTOL investment and financing doxxing
Low-altitude economy refers to the flight activities of various manned and unmanned aerial vehicles carried out in low-altitude airspace (usually refers to the airspace with a vertical altitude of less than 1,000 meters and can be extended to within 3,000 meters according to the characteristics of different regions and actual needs), as well as the integrated development of related fields led and driven by these activities.
As a typical representative of new quality productivity and the potential for trillion-level market development, the low-altitude economy has attracted multiple blessings from policies and capital in recent years.
According to incomplete statistics, this year, more than 20 provinces and cities have written the low-altitude economy into the government work report, as well as the release of relevant special policy support, and the low-altitude economic "competition" across the country has officially kicked off.
In addition, Anhui, Jiangxi, Chongqing, Beijing, Guangzhou, Hangzhou, Guiyang, Wuhan, Suzhou, Nanjing, Shenyang and other regions have initiated the establishment of low-altitude economic and industrial funds, with a scale ranging from 1 billion yuan to 20 billion yuan.
In the primary market, the low-altitude economy is undoubtedly one of the hottest tracks this year, with nearly 40 financing cases in 2024 and a financing amount of more than 4 billion yuan. Among them, eVTOL (electric vertical take-off and landing aircraft), which is the "supernova" and "backbone" of the low-altitude economy, has risen rapidly and has become the most eye-catching new track.
According to Laimi's data, since the beginning of 2024, there have been 18 financing cases in the eVTOL track (excluding equity transfer and private placement), exceeding the total of last year by 5, with a financing amount of more than 2.78 billion yuan, an increase of 1.792 billion yuan over last year. It is worth mentioning that Volant Aviation has completed 4 rounds of financing this year. In addition, companies that have completed two rounds of financing during the year include Xpeng Huitian, Wofei Changkong and Blue Wing Airlines.
In 2024, the scale of single investment and financing in the eVTOL track will be large, with as many as 11 financing cases of 100 million yuan or more, accounting for 61.1%, and the investment and financing activities of 100 million yuan and above are mainly concentrated in Series A, with a total of 8 cases.
Exhibit 1: eVTOL track financing events since 2024
Data source: Let's find data
The reason why this industry is "niche" is mainly in terms of the development stage of the industry and the attention of institutions. eVTOL is an emerging industry, eVTOL companies are relatively young, and most of the domestic eVTOL companies were established between 2020 and 2022, so there are few targets to pay attention to in the early years, and the degree of capital attention is naturally not high.
According to Laimi's data, from 2014 to 2019, there were a total of 13 financing cases in the eVTOL track, of which EHang and Zongheng contributed 3 respectively, and Kuhei Technology also contributed 2.
In 2021, the "low-altitude economy" was written into the government report for the first time, and in the same year, the Civil Aviation Administration of China accepted EHang's EH216-S eVTOL type certification application. Hot concepts and policy trends have made more and more capital begin to set their sights on the original "niche" entrepreneurial track.
The investment in the eVTOL track also ushered in a small peak in 2021, with large financing events such as $100 million and $500 million emerging that year. From 2021 to 2023, a total of 32 investment and financing events have occurred. The increasing activity of investment and financing in the eVTOL industry shows that the capital market is full of confidence in the future business potential of the eVTOL industry.
Figure 2: Rime PEVC platform eVTOL track
Data source: Let's find data
eVTOL enterprise inventory
According to incomplete statistics, there are more than 400 eVTOL aircraft research and development companies in the world, and the number of global eVTOL concept products has now exceeded 1,000, but only 5% of them may enter the full-scale prototype research and development stage. At present, more than 30 domestic companies have entered the field of eVTOL machine research and development, and more than 20 products have achieved test flights and are under development.
Domestic eVTOL companies have obvious advantages in policy support, technological progress, complete industrial chain, market potential, cost advantage, innovation ability and airworthiness certification progress, and are expected to occupy an important position in the global eVTOL industry.
These eVTOL companies in China can be roughly divided into four categories, each with its own characteristics and advantages. The first type is scientific and technological innovation enterprises, which usually focus on the design and research and development of eVTOL with technological innovation as the core, and they may have key technologies with independent intellectual property rights, such as advanced flight control systems, battery technology, lightweight materials, etc., and they are the backbone of the eVTOL industry. In addition, such companies are currently leading in aircraft manufacturing and certification, such as EHang has completed three certificates, Fengfei Aviation has obtained TC, and TC applications for Volant, Time Technology, and Yufeng Future have also been accepted.
According to the Regulations on the Qualification Examination of Civil Aviation Products and Parts issued by the Civil Aviation Administration of China (CAAC), there are three main types of certifications required for the legal use of aircraft: type certificate (TC), production license (PC), and operation license (AC).
The second category is large aerospace companies, which have deep industry experience and technology accumulation, and can provide products with high standards and reliability. The representative enterprises include COMAC North Research Institute, Aviation Research Institute/602 Institute, Aerospace Times Feipeng, China Aviation General Flight, etc.
The third category is automotive companies, which have expertise in electrification, automation and intelligent technologies, and can provide technical support and brand influence. And it can combine the existing automobile production and market channels to quickly promote eVTOL products. Representative companies include Xiaopeng, GAC, Geely, Great Wall Motor, etc.
The fourth category is UAV companies, which have rich accumulation in aircraft design, flight control and automation technology, and can quickly adapt to market and technological changes. Representative enterprises include Shenzhen Lingyue, Tianjin Colorful and so on.
Figure 3: Product characteristics and financing profiles of some domestic eVTOL companies
Data source: public information, data collation
Full "take-off" still has challenges to be addressed
Thanks to the promotion of low-altitude economic policies and the acceleration of the commercialization process of eVTOLs, the eVTOL market space is expected to achieve significant growth in the next few years and become an important part of the low-altitude economy. According to estimates by relevant institutions, the size of China's eVTOL market will reach 980 million yuan in 2023, a year-on-year increase of 77.3%, and the market size is expected to increase to 1.72 billion yuan in 2024. By 2040, the global eVTOL market will exceed one trillion US dollars, and China is expected to account for more than 20% of the market.
The future market space is large, but the challenges are not small. The challenges faced by the eVTOL industry mainly include technology maturity, airworthiness certification, market acceptance, infrastructure construction, regulations and policies, investment and financing, and other aspects.
The level of battery technology needs to be improved: At present, due to the limitation of battery technology, eVTOL is generally positioned as a means of transportation in cities or urban agglomerations, and the range and speed are limited to a certain extent. eVTOLs need to address technical issues including battery energy density, safety, and lifespan.
Airworthiness certification: Airworthiness certification is an important gateway for eVTOL commercialization, and although significant progress has been made in the field of eVTOL airworthiness certification in China, there are still many challenges. First of all, eVTOLs belong to an emerging category of aircraft, and their technical standards and safety specifications are not yet complete, especially in urban low-altitude traffic management. Secondly, the technical difficulties and potential legal risks encountered in the process of airworthiness certification are worthy of attention. In addition, how to balance the relationship between technological innovation and airworthiness safety is also a major challenge, such as the need to balance various factors such as payload, noise, power distribution, safety, etc.
Market acceptance: Social awareness and public acceptance are important barriers to successful application of eVTOL. Concerns about eVTOL safety, noise, visual pollution, and privacy need to be alleviated, and trust needs to be built, which will take time and ongoing market education.
Infrastructure construction: The operation of eVTOLs requires supporting infrastructure such as take-off and landing sites, charging facilities, etc., which require a large amount of upfront investment and planning.
Regulations and policies: As an emerging thing, the relevant regulations and policies are not yet perfect. In particular, the challenges in terms of safety regulation are enormous, and as a manned vehicle, the safety of eVTOLs is also the most concerned issue. Any security incident can lead to a significant decline in public trust, negatively impacting the industry as a whole. In terms of safety supervision, there is a big gap between us and European and United States countries, and it is urgent to establish an effective and leading safety supervision system, so that it can escort the "take-off" of the mainland eVTOL industry.
Investment and financing: eVTOL is undoubtedly a very money-burning track, although the eVTOL industry has attracted billions of investments, but these funds alone are far from enough, and tens of billions or hundreds of billions of funds are needed to accelerate the R&D and commercialization process of eVTOLs. However, it has to be mentioned that the current primary market is generally facing this problem of fundraising, so in the long run, a sustained and large amount of long-term capital input may face certain pressure.
However, as long as the above problems and challenges are gradually solved, the commercialization process of eVTOL will be further accelerated, and the development prospects will be clearer.
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