Robin Riedel: Turbulence ahead for the AAM industry in 2024?
The advanced air mobility (AAM) sector has proved remarkably resilient in 2023 with sustained levels of funding and many timelines for testing being met, but there may yet be some…
The advanced air mobility (AAM) sector has proved remarkably resilient in 2023 with sustained levels of funding and many timelines for testing being met, but there may yet be some bumps in the road in 2024, said Robin Riedel, who co-leads the McKinsey Center for Future Mobility.
Speaking to FINN, he said: “We have seen funding [for AAM] continue in 2023 – it wasn’t quite as strong as you would have hoped for, but it’s been surprising, compared to other industries, how funding has kicked up.
“Overall, it has allowed the industry to continue on progress. We now have dozens of prototypes flying, we now have much more clarity on regulatory topics, so in a way this industry has strangely delivered.
“I say strangely, because there’s a lot of naysayers out there, even myself. I’m sceptical about many things. But I’ve been surprised by just the trajectory of that industry.
“Everybody’s flying, everybody’s pouring concrete into facilities and so it was another year on trajectory and the reason I think that’s worth noticing is because a lot of people suggested that this year would be the year where reality comes down on this industry and all of a sudden we see a bunch of players fail and run out of money, we would see regulators putting a stop to all of it, and that didn’t happen.”
Recent achievements include Joby Aviation performing an exhibition flight with its electric vertical take-off and landing (eVTOL) aircraft in New York City, marking the first ever electric air taxi flight in the city and the first time Joby has flown in an urban setting; Volocopter conducting a multi-day flight test campaign with a crewed aircraft in the Japanese cities of Osaka and Amagasaki; and Lilium starting production of its jet, following the arrival of the first Lilium Jet fuselage at Lilium’s final assembly line.
Riedel said: “2023 was actually a good year for this industry. We’ve seen a lot of progress on flying, a lot of progress in the supply chain, a lot of progress in regulatory and even in public acceptance.
“As we’re heading towards the end of the year, are we starting to see some of the things happening that people are waiting for.”
But with the AAM market becoming increasingly crowded, analysts including Riedel fear the industry may be reaching a crunch point, with consolidation or some players exiting the market entirely.
Riedel added: “There are a couple of indicators where you wonder, are we hitting a little bit of a speed bump. You can look at things like Rolls Royce divesting of its electric powertrain business.
“The funding we’ve seen was actually a lot of follow up funding from current investors rather than new investors jumping in, and funding rounds that aren’t as big as people were hoping for.
“So if you look at, for example, the hydrogen developers, the funding that they’ve announced was significantly smaller than what people had originally projected.
He concluded: “On the one hand you can say it was a good year and things kept on pace, but I think the general thesis is to say look, we’re gonna have to see some people fail. We’re gonna have to see some consolidation. We’re gonna hit some regulatory certification hurdles, I think all are things that are starting to creep in. And it will be very interesting to see what 2024 looks like.”
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