Electric VTOL Aircraft Like Joby & Archer Are Making A Wrong Bet On Battery Energy Density (Part 2)

In the first half of this piece, the interesting challenges of the space of rotorcraft were explored. In summary, the market is small and niche, services its demanding customers well, and is flooded with used helicopters. It’s a very hard market to compete in, in other words, and outside of medical air transport, a shrinking one, not a growing one. But that brings to mind a fundamental lesson of disruptive technologies that the current crop of well-funded companies and their investors appear to be ignoring.

Christiansen and Raynor’s disruptive innovation curve courtesy Sandia Labs

Christensen and Raynor wrote one of the fundamental books on innovation as it disrupts markets, The Innovator’s Dilemma. I strongly recommend that everyone involved in the space as an investor or corporate leader reread it if they haven’t recently. It’s clear that Joby, Archer, and Lilium investors at minimum didn’t pay attention to its lessons.

Basically, the helicopter market is in the upper-right hand corner of this graph, with operational and quality niches supplied by machines highly optimized for their demanding clients.

Electric vertical take-off and landing (eVTOL) aircraft like Joby, Lilium, and Archer are trying to leap directly into competition with nearly the most demanding end of the market, and based on talking to the (very small number of) potential clients, adding massive complexity to their aircraft. The urban air mobility people are trying very hard to push the string of lots of additional rotorcraft in city skies up hill, but the odds of them succeeding are incredibly low.

There’s room at the bottom end of the market for something much simpler today, if it’s needed at all. A bog-simple electric rotorcraft capable of carrying four passengers and a pilot 20 kilometers would serve Blade’s Manhattan-JFK run with fast DC charging at either end. It would be 2-4 times cheaper than the price of Joby, Archer, and Lilium’s projected offerings. It would be absurdly easy to maintain and operate by comparison. That’s within range of current battery energy density and would establish a position to incrementally grow. Vancouver’s airport shuttle requirement is even lower, 10 kilometers, should someone want to bother when there’s a 25-minute, dirt cheap, modern light train that goes directly from downtown to the airport (something in existence in other cities such as Toronto, Singapore and Copenhagen, Tokyo, Hong Kong, and Bangkok, many of which I have used), and in plan for cities including Melbourne and Sydney. Helijet in Vancouver doesn’t run an airport shuttle for a reason. Even in New York, I’d be taking the subway that connects to the JFK AirTrain long before I’d bother to fly.

Ehang gets part of this right. Its device is asserted to be able to carry one person 35 kilometers, a low-end but reasonable distance. You can imagine a rich person who lives in the hills above LA getting into one of these in the heliport on the side of their property to take to their office downtown, as LA used to have the weird distinction of having required every tall building to have an emergency helipad. You can imagine this being a joyride for paying passengers who fly over water sightseeing, although 99% of sightseers prefer to do it in groups. You can imagine getting in one of these on side of a river that carves through a major city and getting off a minute later on the other side of the river, in places where bridges are out of the way and congested. Basically a short hop air taxi for one person, albeit a silly one. You can imagine this cheap and simple service slowly getting more range and carrying more passengers.

That said, Ehang clearly gets a lot of things wrong. Its passengers currently have to step through the thicket of rotors at knee level to get into the cabin, so it fails the test of customer acceptance out of the box. It’s unclear why they built it this way, as it just makes the aircraft less stable as well, which I suspect will be another problem. And there’s the requirement that it be permitted to be flown autonomously or remotely out of line of sight from operators, something that the FAA and its sibling regulatory agencies globally frown on deeply over urban centers. But at least it’s dirt simple, cheap, and light. Ehang asserts that it will cost $200-$300,000, which might put it in the range of some applications with the radically lower operating and maintenance costs.

Lilium might have its bet right as well. It won’t be flying anything anywhere in any volume for a long time, as it’s on the outer edge of energy density requirements and hence battery costs. But it is actually an interesting and potentially low maintenance eVTOL device. Its batteries are absurdly expensive right now, but costs per Wh/kg will continue to drop. It’s making its bet on energy density.

However, the major downside of this entire market space is that the current market is tiny, and the used market is flooded with used machines. In my opinion, the current markets for rotorcraft will be served by existing helicopters which increasingly use sustainable biofuels, as Sikorsky recently approved for its workhorse S92 and demonstrated with a flight in Norway.

The total emissions from the small number of rotorcraft operating today are a rounding error on a rounding error, and are better served with biofuels for the foreseeable future. As the battery equation of cost, weight, and density improves, stupidly simple rotorcraft will take over more and more of the bottom of the niche. It’s likely that all but the most absolutely demanding applications — think North Sea rescue — will be served by simple electric rotorcraft by 2100. Betting against batteries for electric rotorcraft is like betting against bandwidth in 2000.

The use cases that the overcomplicated eVTOL aircraft depend on for their valuations are never likely to emerge, and I project that all of the current crop will likely lose money for 20 years, if they last that long.