Cargo drones and air taxi — Industry report 2021
Over the recent years, there has been a growing interest in unmanned aerial taxis and cargo drones. Here at Phystech Ventures, we have been observing this segment for more than 4 years. We publish a 2021 industry report, where we share our observations and present an analyst review of the air taxi and cargo VTOL market. Our insights are based on open sources, so we understand that the actual figures may be somewhat different.
Underdeveloped tech, overblown valuations
Our report reveals a disparity in the quickly developing air taxi industry, where valuations have run too far ahead of the actual maturity of the underlying tech. Between the beginning of 2020 and now, various funds have invested over $5B in the sector. This is more than 10x the amount invested during the entire decade before that (2009–2019) — nothing short of an explosion.
- In 2020 and 2021, $5 billion has been invested in air taxi and cargo drones, $4.6b of which were raised by six companies from the US and EU: Joby Aviation, Lilium, Paragon, Archer Aviation, Beta Technologies, and Volocopter.
By cargo drones we mean a vertical takeoff and landing (VTOL) aircraft that can carry 20+kg payload
- Today there are 129 companies developing air taxi or cargo VTOL, of which only 13 companies are currently selling final products. Out of those, ten companies are working on cargo-only aircraft, while the other three companies, Beta Technologies, Volocopter, and Ehang, are developing both passenger and cargo versions.
- All emission targets notwithstanding, current batteries do not offer sufficient power density and cannot provide long flight ranges and times. Of the 169 identified VTOL projects, 35% employ internal combustion engine (ICE) or hybrid technology. Only three companies offer pure battery electric vehicles today, with the rest supplying conventionally driven VTOLs.
- Zero-emission technology meets practicality in the 13% of the electric VTOL designs that use hydrogen fuel cells, a promising technology in terms of both power density and temperature envelope.
- Today, 6 VTOL companies are valued more than $1b. All VTOL unicorns appeared during the last 2 years: Joby Aviation (U.S.) Lilium (Germany) Archer Aviation (U.S.) Beta Technologies (U.S.) EHang (China), Volocopter (Germany). Together they account for 72% of all sector investments. All of the companies on the list make all-electric VTOLs. On average it takes 7.5 years and $450m of investment to achieve unicorn status.
Over the last 5 years, an average of about 12 new heavy payload VTOL companies have appeared, annually. There are several reasons for this modest figure, including the long development cycle of VTOL vehicles, their high capital intensity, the limitations of current power systems, and regulatory uncertainty, which all create additional risks for investment in the industry.
Of the 13 companies currently selling aircraft, only Ehang ships the electric version today, with the rest supplying VTOL using ICE or hybrid engines. Based on our analysis of the current power density of electric systems, we don’t expect logistics VTOLs to be fully electric. Instead, it is likely that ICE or hybrid versions will dominate the market over the next several years.
In the next 5 years, we predict that there will be a mass deployment of drones for cargo delivery. It is likely that heavy payload UAVs are going to replace helicopters in a wide number of use cases, since they are both 5–10x cheaper, and do not risk the lives of pilots. As a result, we predict that VTOL aircraft will be used to deliver cargo to densely populated areas, over rivers, water, and to other hard-to-reach places where ground transport cannot easily be used. Rotorcraft and Lift & Cruise design types are the most efficient VTOL aircraft today, in terms of energy consumption. We consequently expect these design types to dominate in logistical use cases. In addition, the temperature limitations of batteries make ICE VTOLs practically the only option in cold climates.
Comparatively, air taxis are forecasted to commence mass operation in 5–10 years. This is because not all engineering problems have yet been solved, including outstanding aerodynamic and safety issues. Air taxis will push their batteries to the max, limit the range of their routes, and wait for more energy-efficient batteries and for hydrogen fuel cells to enter the market before passenger applications can occur on a wide scale. The safe deployment of passenger VTOLs will also require long and thorough testing procedures, as well as further certification of the vehicles. Additionally, a certification system for passenger VTOLs will need to be formed in parallel with their development, and VTOL urban mobility control systems will also need to be implemented. For urban mobility, the Vectored Thrust and multicopter VTOL types are currently the most ideal designs, due to their sound properties, safety, and compact size.
The report and industry expert’s quotes could be found by the link.