How big is the global market demand for eVTOL?
According to forecasts by analysts such as Morgan Stanley and Deloitte, the global eVTOL market will reach US$1 trillion in 2040.
They broke it down into three core markets: shared travel, freight, and short-haul aviation.
1. The core logic of the shared travel field is to replace a small part of the taxi market and the traditional commercial helicopter commuting market, and ultimately become a time-saving and economical short- and medium-distance travel.
The main value lies in avoiding traffic congestion in big cities or super urban agglomerations and improving travel efficiency.
Morgan Stanley predicts that the U.S. market size in 2040 will be US$128 billion. This figure is based on the total mileage of eVTOLs of 65 billion miles, corresponding to 1.5% of U.S. vehicle mileage. If the development of eVTOL exceeds expectations, the assumption of exceeding expectations will be US$344 billion. If the development does not meet expectations, it will only correspond to US$44 billion.
2. In the field of freight transportation, eVTOL will be launched earlier, replacing some of the traditional short-distance air freight and short- and medium-distance truck freight.
Morgan Stanley predicts that the average payload of eVTOLs will exceed 50 pounds in 2035 and reach an average flight speed of 150 miles per hour in 2040. Under these two assumptions, the freight market size in 2040 is predicted to reach $144 billion. It mainly covers the delivery market from central warehouses in core cities to suburban distribution sites (front warehouses), replacing part of traditional air freight and short- and medium-distance truck freight, as well as the delivery market in remote areas, which is the strength of drones.
3. In terms of short-haul aviation, new eVTOL operating companies will replace some short-haul flights, but the replacement volume will be very limited.
Since short-haul flights represent a small proportion of total air travel today and are limited by battery technology, the market for eVTOLs in this area is only forecast to be $5 billion (2040e).
That is to say, in 2040, eVTOL will reach a penetration rate of 15% in the market with a range of less than 200 miles, and account for 5% in the market with a range of 200-500 miles. If eVTOL wants to expand the market in this area, unless revolutionary technologies such as solid-state batteries emerge to extend the flight range of eVTOL to 500-1,000 miles.
Finally, based on the U.S. forecast model and adjusting forecasts for Europe, China and other regions of the world based on GDP, shared car penetration, electric vehicle penetration, autonomous driving penetration and other indicators, Morgan Stanley calculated that $1 trillion The total market capacity (2040e).
Analysis of the current competitive environment of the global eVTOL industry
Before eVTOL startups can start commercial operations, they must obtain a standard airworthiness certificate issued by the civil aviation regulatory authority.
As of the date of publication, no eVTOL company in the world has obtained this certificate. Judging from the public information disclosed by the five manufacturers that have entered the U.S. capital market, in the next three years, they are likely to have at least one model certified and put into commercial operation.
This shows that the eVTOL industry is about to bid farewell to the early stage and enter the market introduction period. To this end, we have made the following observations and analysis on its competitive situation:
1. Industry competition is beginning to emerge.
Currently, there are five eVTOL manufacturers in the world listed on the stock market and all of them are in the US stock market. They are: China's EHang, Germany's Lilium, the United States' Joby Aviation, the United Kingdom's Vertical Aerospace, and the United States' Archer.
In the latest research report released in 2021, Morgan Stanley gave a forecast of the size of the UAM urban air traffic market in 2040 - US$1 trillion.
Morgan Stanley also further broke down the market forecast. Among the 1 trillion market size, 52% of the share belongs to freight logistics, 46% of the share belongs to urban manned transportation, and the remaining 3% is intercity navigation and military and political. market.
Among them:
China EHang has laid out market segments such as driverless urban manned vehicles, freight logistics, medical rescue, firefighting, and scenic spot tours. Since the driverless urban manned technology is not yet mature, there is still a question of when it will be put into operation. There are many uncertainties. According to sources, EHang is actively promoting commercial implementation in market segments such as freight logistics, medical rescue, firefighting and scenic spot tourism.
Germany's Lilium made major adjustments to its business strategy since its establishment on February 28, 2022. In the early stage, it will mainly focus on the field of private business jets and sell fractional shared property rights to private users through the American Net Jets business jet operating company ( Fractional Ownership), that is, several users share the property rights of a business jet in a time-sharing manner (hourly card); and then expand to the urban manned and freight logistics markets. It was originally planned to be launched in Europe and Florida in the United States in 2024. Be the first to launch commercial operations.
American Joby focuses on the urban manned and intercity aviation market. Since it is also a member of the U.S. Air Force’s Agility Prime program, it may also be supplied to the military and is the same version as the civilian model; according to Bloomberg It was reported in June 2021 that Joby is expected to take the lead in starting commercial passenger transportation, including urban air taxi services, in cities such as Los Angeles, Miami, New York and San Francisco in 2024. Its products will not be sold to private customers.
The British Vertical Aerospace vertical flight space focuses on the urban manned and intercity aviation market. According to an article in Flight Global in March 2021, Vertical Aerospace is expected to start commercial operations and achieve profitability around 2024-2025.
The American Archer focuses on the urban manned market. As it is also a member of the US Air Force's Agility Prime "Agility First" program, it may also be supplied to the military and is the same version as the civilian model; February 13, 2021 Archer announced that it will begin air taxi operations in Los Angeles in 2024.
In addition to the above five companies, Beta and Wisk in the United States, Volocopter in Germany, etc. are also strong competitors in the eVTOL industry.
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Beta Beta focuses on the transportation of human organ transplants in the medical industry, cargo logistics and the urban manned market. Since it is also a member of the U.S. Air Force's Agility Prime "Agility First" program, it may also be supplied to the military; according to the Vertical Flight Association website, It is expected to deliver the first eVTOL to UPS in 2024.
Wisk is a joint venture between Boeing and Kitty Hawk, focusing on the urban manned market. Its unmanned driving route is similar to that of China's EHang, that is, it hopes to bring unmanned eVTOL to the urban manned market in one step. However, the US Federal Aviation Administration (FAA) has not yet officially responded to this.
Volocopter focuses on the urban manned and freight logistics market. It plans to start with manned driving and gradually transition to unmanned driving. The first cities it plans to launch air taxi services are Singapore and Paris, and will then enter the U.S. market. The U.S. Federal Aviation Administration (FAA) accepted their certification application in December 2020, and the FAA may need two days. It takes three years to complete the certification. Certification by the European Aviation Safety Agency (EASA) is already underway. Volocopter predicts that it will become the first eVTOL manufacturer in the world to put into air taxi operations.
Based on the above, we believe that the penetration of the eVTOL industry into the air transportation market may go through the following three stages:
(1) In the first phase, the main players in the eVTOL industry will first launch freight logistics, intercity navigation (within super city agglomerations), and fixed services from urban areas to airports and airports, high-speed rail stations to mountainous tourist attractions in the next 3-5 years. Route operations.
(2) In the second phase, based on the 3-5 years of successful operation in the first phase, air taxi services with fixed routes in the city will be gradually opened; however, it is still unclear whether air taxi services without fixed routes will be available. possible future directions.
(3) The third phase, based on the successful operation of the second phase for 3-5 years, gradually liberalizes the application scenarios and is based on the private home market with fixed routes in the vast countryside; or it is optimistically expected that the third phase will be the same as the second phase. stages occur simultaneously.
So, who will win a place in the future market competition? At present, it is difficult to judge, but it is certain that among the five manufacturers that have been listed, whichever one can obtain the standard airworthiness certificate faster and put it into commercial operation will be more likely to survive.
2. As technology, policy, regulation, and markets mature, the threat of potential entrants with disruptive power increases significantly.
Currently, there are four main types of players in the entire eVTOL market. One is traditional aircraft manufacturers such as Boeing and Airbus; the other is car companies such as Geely, Honda, Xpeng, and Great Wall; the other is companies that originally made drones such as Ehang and Fengfei Airlines; and the other is They are “new eVTOL forces” such as Joby, Lilium, and Pantuo Aviation.
But we cannot predict whether, if the market prospect is broad, entrepreneurs and companies like Musk and Huawei will flood into the track at some point and bring disruptive changes to industry competition.
3. Alternative threats such as subways, light rails, electric taxis, electric trucks, high-speed rail, and trains all have their own advantages that eVTOL does not have.
We believe that the time efficiency advantage alone is not enough to support the core competitiveness of eVTOL.
The balance between time efficiency and economy of high-speed rail has posed a greater threat to the civil aviation passenger transport industry, and it will undoubtedly threaten the intercity navigation market of eVTOL; at the same time, the economic impact brought by the large volumes and large loads of subways and light rails It is difficult for eVTOL to have the sexual advantage; the unrestricted convenience advantage of "call it and go" of electric taxi, eVTOL will definitely not be able to achieve it in the short term; the low-cost advantage of electric truck and the large number of train freight Function, large load capacity, and economical advantages, eVTOL will definitely not be able to achieve it in the short term.
4. eVTOL is an emerging branch of the civil aviation industry and an emerging industry. It is an incremental market for supply chain partners.
The eVTOL industry brings together semiconductor chips, batteries, motors, electronic controls, composite materials, flight controls, ICT, propellers and other industries. Among them, the three electric vehicles, as the key power part, have benefited from the rapid development of the electric vehicle industry.
Although the market capacity of eVTOL cannot be truly confirmed at present, the imagination space it brings is still very tempting. Supply chain partners have no reason to sit back and give up the huge potential incremental market in the future.
5. Due to the threat of substitution, if it cannot bring value to customers in terms of cost reduction or profit creation, the market space and profitability of the eVTOL industry will be relatively limited.
In a sense, we can refer to the comparison of the advantages and disadvantages of electric vehicles and fuel vehicles in terms of purchase cost, use cost and maintenance cost.
Of course, as a revolutionary means of transportation, eVTOL must not only compete with traditional helicopters and general aviation aircraft, but also compete with subways, light rails, high-speed rails, trains, electric taxis, and electric trucks in all aspects, and may even compete in the future. Compete with large civil aviation aircraft.
The main challenges currently faced by eVTOL startups and countermeasures and suggestions for Chinese companies
1. Main challenges
(1) The fixed investment before commercial operation is huge: product research and development and airworthiness certification have long cycles, high risks, and large capital requirements.
(2) Huge public safety risks, it will be difficult to break through the regulatory constraints of the urban manned market in the short term
eVTOL is a new thing. The main application scenarios currently proposed are in densely populated large cities or urban agglomerations. Although in theory its DEP distributed electric propulsion and other technologies can effectively improve reliability and safety, there is still a lack of practical testing. . And if it crashes in a densely populated urban area, the consequences may be unbearable for all parties.
Whether eVTOL's urban air taxi shared travel can be released in cities in the short term or in what manner, at least in the Chinese market, there is still great uncertainty.
Of course, the methods and steps taken by the Korean government to promote UAM commercial operations may be worth our thinking and reference.
On September 28, 2021, based on the cooperation between Korea Telecom, one of the initiators of the "K-UAM" Korean urban air traffic planning roadmap, and eVTOL manufacturer Joby of the United States, and shared travel giant Uber, South Korea's land and infrastructure The Ministry of Facilities and Transportation released the "Korea Urban Air Mobility (K-UAM) Operations Concept (ConOps)".
According to the plan, South Korea will set up an air channel specifically for UAM trial operations in the airspace connecting downtown Seoul and the airport in 2025, and plans to start commercial operations in 2030.
Before commercial operation, the UAM Challenge will be held in 2023 for the purposes of "supporting industry testing", "setting safety standards" and "safety verification", that is, conducting eVTOL and communication system safety at South Korea's National Integrated Flight Performance Test Site test, and comprehensive operation demonstration of the K-UAM air traffic control system, and then conduct trial operation testing in 2024 to achieve the goal of starting UAM trial operation between downtown Seoul and the airport in 2025, as a basis for commercial operation in 2030 Lay the foundation.
(3) Insufficient battery power density greatly limits the energy cost advantage of eVTOL
Due to the limitations of physical laws, the power density required by aircraft far exceeds that of cars. The current rapid development of battery technology is fundamentally due to the electrification revolution of automobiles, which means that the current development level of battery technology cannot meet the development needs of eVTOL.
It is reported that currently, including the five major manufacturers that have been launched in the world, except for the JOBY 4S, which can fly 247 kilometers on a single charge, the others cannot break through the 50-kilometer range. The limitations of battery technology on range hinder the energy cost advantage of eVTOL.
According to a new study conducted by researchers from the University of Michigan and Ford Motor Company, electric vertical take-off and landing flying cars use more energy for short-distance travel and less energy for long-distance travel compared with ordinary cars. The emissions (in the current global energy structure, eVTOL’s electricity consumption mainly comes from thermal power with carbon emissions) are lower and the time is shorter.
This research result was published in the journal Nature Communications on April 9, 2019.
Researchers found that a fully loaded electric vertical take-off and landing flying car carrying a pilot and three passengers during a 100-kilometer (62-mile) journey emitted 1.54 fewer greenhouse gas emissions than an average land-based car carrying 100 kilometers (62 miles). There should be less gas. The emissions of electric vertical take-off and landing flying cars are 52% lower than fuel vehicles and 6% lower than electric vehicles.
The researchers analyzed the primary energy use and greenhouse gas emissions during the five flight stages of the electric vertical takeoff and landing flying car: takeoff and hover, climb, cruise, descent and landing hover.
The flight process diagram of the electric vertical take-off and landing flying car. Each flight phase has different travel time, speed and power consumption
It uses a lot of energy during takeoff and climb, but is relatively energy-efficient during cruise (at speeds up to 150 mph).
The result is that electric vertical take-off and landing flying cars are the most energy-efficient during long-distance travel (where the cruise phase becomes the most important part of the flight). However, for shorter journeys, below 35 kilometers (22 miles), single-passenger combustion engine vehicles use less energy and emit fewer greenhouse gases than single-passenger electric VTOL flying cars. One important reason is that the average commute distance for land-based vehicles is only about 17 kilometers (11 miles).
Relationship between vehicle kilometers traveled and greenhouse gas emissions. Relationship between greenhouse gas emissions and kilometers traveled for vertical takeoff and landing flying vehicles (VTOLs), land-based vehicles: internal combustion engine vehicles (ICEV), and battery electric vehicles (BEV).
The above-mentioned research shows that only when the range of eVTOL exceeds 35 kilometers can its energy cost advantage be gradually highlighted. This is something that major manufacturers are currently unable to achieve.
2. Countermeasures and suggestions for Chinese eVTOL companies
(1) In the early stage, start-up enterprises can combine their own advantages and choose product technology routes with low risks and short R&D and airworthiness certification cycles.
Airbus's UAM division, a subsidiary of Helicopters, has adopted this strategy.
Balkiz Sarihan, director of strategy implementation and partnerships for the Airbus Urban Air Mobility (UAM) department, explained Airbus’s UAM strategy and related technology routes in an interview with Vetical magazine, an industry media in the helicopter field, in 2022.
She said that through the development and testing of two technology demonstrators, CityAirbus (multi-rotor configuration) and Vahana (tilting wing), Airbus UAM finally chose the design of the new generation CityAirbus NextGen, which does not have any tilting structure. Multi-rotor + fixed wing configuration, that is, composite wing configuration.
AirbusCityAirbus NextGen
The reason is that this configuration has a relatively simple structure, which can shorten the airworthiness certification cycle, simplify operations and reduce costs, while having sufficient speed and range to meet the needs of commercial operations in the city. She said that the 80-kilometer range announced by the design is the actual range based on existing technology, not the maximum range. According to Airbus' market research, this range can meet 90% of urban operation needs. In addition, the design is also easy to expand, which will help to quickly integrate new technologies based on existing designs to improve performance.
(2) Chinese eVTOL companies should establish national industry associations as soon as possible to lobby governments and regulatory authorities at all levels in a variety of reasonable, legal and compliant ways, including market benefit sharing, and use the power of the industry to break through market barriers. Various fundamental difficulties in development and growth to accelerate the large-scale implementation of commercial operations.
(3) It is recommended that qualified and powerful Chinese eVTOL companies, while keeping their feet on the ground, can further look up to the stars, focus on the world and the future, introduce and integrate global intellectual resources, and make breakthroughs in key bottlenecks including battery power density. , to lead the development of the industry, benefit human society better and faster, and obtain excess returns.
(4) We suggest that Chinese eVTOL companies should establish a scientific all-employee shareholding incentive system that matches income with ability, value, contribution, etc. The practice of Huawei and other companies shows that this system may be the best system in the world to build the core competitiveness of companies so far.
global outlook
Chinese, American and European manufacturers stand on three sides, and the global market is divided into three parts.
eVTOL, like traditional aircraft, is the product of the aviation industry. The aviation industry is highly technology-intensive and has extremely stringent requirements for reliability and safety. It is known as the crown of modern industry. The development of the aviation industry is inseparable from long-term and profound scientific research and technological accumulation.
Since the world's first military aircraft and the first civilian airliner were put into use in the United States and Europe in 1909 and 1919 respectively, the aviation industry in the United States and Europe has developed for more than a hundred years, and has given birth to companies such as Boeing and Airbus. And aviation giants like Lockheed Martin.
In contrast, China's aviation industry almost completely started from the "156 Project" during the Soviet aid period. It has a poor foundation and is affected by a series of factors such as ideology, system, and US and European technology blockade. The development process was tortuous and tortuous. slow.
This is especially true for China's civil aviation sector and private aviation sector.
Although eVTOL abandons the highly complex and sophisticated traditional aviation engines, it has not fundamentally changed the nature of the aviation industry's technology-intensive, high-reliability and high-safety requirements.
Compared with their American and European counterparts, current Chinese eVTOL manufacturers have varying degrees of disadvantages in terms of scientific research, talent, funding, infrastructure, supply chain support, value chain innovation and market environment.
Fortunately, with China's vigorous development in education, scientific research, military aircraft, civil large aircraft, general aviation, electric vehicle industry and venture capital, as well as the Chinese government's continuous attention and the introduction of relevant support policies, Coupled with its huge market, the development soil of China's eVTOL industry is becoming increasingly fertile.
Therefore, we believe that the future global development pattern of the eVTOL industry will most likely be: Chinese, American and European manufacturers will stand on three sides, and the global market will be divided into three parts.
The reasons are as follows:
1. China, the United States and Europe each have their own huge markets and relatively independent and complete education, scientific research, production and supply chain systems in the aviation industry, especially in the military aviation industry. Even if the world returns to the era of prevailing trade protection, relying solely on their respective internal economic cycles, they can still establish a tripartite pattern of dominance among the three in the global eVTOL industry.
2. Although China lags behind the United States and Europe in the aviation industry as a whole, Chinese eVTOL manufacturers have advantages in the following aspects
(1) As one of the main thrusts of the eVTOL industry, the hardware infrastructure of China’s intercity navigation market is rapidly improving.
Like the development of the automobile industry, the growth of demand in the general aviation market must be supported by the ever-expanding general aviation infrastructure.
With the attention of the Chinese government, the climax of nationwide general airport construction has arrived. According to statistics from the Xingyue General Aviation Big Data Platform, as of the end of September 2021, there were a total of 793 airports in the country, and there were 357 general airports nationwide (categories A and B combined), an increase of 74 over the previous year, and 80 airports have been certified. There are 271 registered airports and 6 other take-off and landing sites, including 140 Category A general airports and 217 Category B general airports.
According to the "National General Airport Layout Plan" compiled by the Civil Aviation Administration of China, it is expected that by 2030, the total number of civil airports in my country will reach about 2,300, of which the total number will be about 2,058 general airports and 257 transport airports. In the next eight years, the number of general airports will surge to 5.76 times the current number. A rough estimate is that 72% of counties across the country will open general airports.
(2) The eVTOL industry is an emerging industry. It bypasses the highly complex and sophisticated traditional aerospace engine parts that the United States and Europe have traditional advantages; and thanks to the rapid development of China’s electric vehicle industry, Chinese eVTOL manufacturers have lowered their overall cost, battery Technology and some supply chain supporting facilities are no worse than those in the United States and Europe.
(3) Chinese eVTOL manufacturers enjoy local advantages in terms of corporate decision-making efficiency, market response speed and understanding of Chinese consumer psychology.
(4) Since 2018, the United States has launched a trade war and an intensifying technology war against China. The economic, industrial and technological competition between China and the United States has become increasingly fierce. As an important potential flashpoint for the modern industrial crown, if the eVTOL industry in the United States and Europe There is a growing trend, and the Chinese government will not sit back and watch the country lag behind in this field, and does not rule out supporting eVTOL in the same way it supports electric vehicles.
(5) China is the world's second largest economic power, and will most likely surpass the United States to become the world's largest in the next ten years (data source: Ren Zeping's "The Nature and Future Evolution of the Russia-Ukraine Situation"). Such a huge economic volume can fully support the rapid rise and growth of Chinese eVTOL manufacturers.
(6) After more than 40 years of reform and opening up to the global market, China has cultivated many outstanding entrepreneurs, entrepreneurs, scientific research and engineering talents in the aviation industry. These are one of the most solid guarantees for the rise and growth of Chinese eVTOL manufacturers. one.