Lilium’s future hangs in the balance
October 17, 2024
After failing to secure state aid, Munich-based electric vertical take-off and landing (eVTOL) start-up Lilium now faces an uncertain future.
According to a report in Business Insider, following a federal government meeting on Wednesday 16 October to secure a loan guarantee for €50 million it is now clear “there will be no state support for air taxi start-up Lilium.”
The company’s attempt to secure a total loan worth €100m (guaranteed equally by the federal government and Bavaria) was a significant lifeline for the company as it navigates the complex and capital-intensive process of bringing its eVTOL aircraft to market.
“The state of Bavaria pledged €50 million, but only if the federal government goes along with it, but the traffic light coalition has now rejected this,” the Business Insider report continued.
There have been heated discussions about whether the state should intervene with financial support or not, with many arguing that the government should not be stepping in to bail out the cash-strapped company. However, Daniel Wiegand, co-founder of Lilium, told BILD, “To be specific: If we get a no, we will not be able to keep the company in its current form in Germany.” This means that this future technology will either move abroad or go bankrupt, as he continued, “It’s about Germany’s technological leadership in electric flying. That would benefit everyone.” The decision is also expected to impact Lilium’s 1,100 employees according to Wiegand.
The fixed-rate loan would signal to investors that Germany supports Lilium’s entry into electric aviation, according to Lilium CEO Klaus Roewe in a LinkedIn post earlier this week. He also noted that the loan’s repayment conditions were “very advantageous for KfW” [the German state-owned investment bank] “and thus for Germany and is highly likely that this will mobilise further private investment money from home and abroad.”
Founded in 2015, Lilium has positioned itself at the forefront of the rapidly growing eVTOL market, having already secured $1.5 billion worth of loans mostly from private investors in the US and China. Its flagship model, the Lilium Jet, a prototype of which was showcased by UK distributor eVolare at London Oxford Airport during its 2023 Disruptor Day, is designed to carry up to six passengers, powered by 36 electric engines. According to Roewe it “is the first aircraft programme with the highest number of orders even before the first flight in the history of aviation. More than 100 firm orders and over 600 pre-orders are a world record.”
Underlining that the development of such cutting-edge technology is a costly endeavour, Lilium recorded cumulative losses of $253 million in the 12 months leading up to Q4,2022. The company has also faced delays in the development timeline of its jet and struggled with falling share prices and rising operational costs. However, in August this year Lilium marked a significant achievement when it completed the first systems power-on milestone of its jet at its Munich facility, with the first piloted flight planned for 2025.
Lilium is now at a critical juncture. Many of its direct competitors have received state support, including rival eVTOL aircraft developer Joby, which has received more than $600 in government support and Eve Air Mobility’s eVTOL Aircraft Factory, which will receive $88 million from Brazil’s national development bank BNDES.
The apparent lack of state support from Germany has cast a long shadow on the company’s future. Without a significant cash injection, Lilium’s aspiration to bring electric air taxis to market will likely face further delays, or worse insolvency.
