Who's gonna finance the eVTOL revolution? Volocopter's got someone

Picture: Volocopter

It may still be early days, but the financial side of the much-awaited eVTOL revolution has been so far among the least conspicuous aspects of the public conversation about this emerging new industry.

If the technical and regulatory risks are notable, the financial ones are no less formidable. “Traditional” aviation has a well established ecosystem of financial operators able to appraise asset values, provide credit at competitive rates, etc. It also helps that most aircraft types currently in service are made by a very limited number of suppliers, their operational lives are long and their secondary market values, well known.

But this is hardly the case with eVTOLs and, more broadly, the advanced air mobility space. There are around 200 projects currently underway with a similar number of aircraft under development, with different but often overlapping use cases. What’s more, even if the roll-out of this technology is smooth, it is likely to have very fast development cycles that would render each generation of aircraft obsolete within a short number of years (think about the first decades of the aviation industry!).

Perhaps more importantly, it is not clear what is going to be the business model. Is it going to resemble that of the airline industry, with a clear task division between OEMs, airlines, leasing companies, etc. or, as it is currently the case, the industry boundaries are going to be more blurred, with OEMs operating their own fleets and financial players and VCs becoming involved as well, or, is it going to be more like a marketplace model, with Uber-like platforms aggregating and matching demand in supply provided by many fragmented players?

All of these are concerns that have been voiced in some industry media outlets, for example in this two-part series by Lobo Leasing or on this very skeptical analysis by Michael Barnard on Cleantechnica, although rarely in more mainstream channels that often prefer to focus on the hype/futuristic side of things.

All of this makes any move on the financial front of particular interest and today we’ve got one such announcement, with Aviation Capital Group (ACG), an established “traditional” aircraft leasing firm, making available up to $1B of financing for future Volocopter customers. This is, of course, subject to Volocopter delivering product-wise and obtaining the necessary regulatory approvals. Note also that ACG is a Volocopter investor.

Are you aware of any similar deals? (if you do, do not hesitate to reach out and let me know!)