DALLAS — In recent years, we've covered the advanced air mobility (AAM) sector and the innovations that were to come from various electric vertical take-off and landing (eVTOL) aircraft manufacturers here in the U.S. and abroad.
You can peruse our future flight series, from Eve unveiling its eVTOL Design, Cabin Mockup at FIA2022, Air Greenland (GL) and Avolon partnering up to tackle climate change by looking to offer zero-emission travel in the region with the VX4 eVTOL, ITA Airways (AZ) and Airbus revealing the launch of a partnership to develop an air taxi network in Italy, to Lilium showcasing its eVTOL Jet at Houston Hobby Airport (HOU) in September 2024.
This technology emerged from significant advancements in electric propulsion components, such as motors, batteries, fuel cells, and electronic controllers, alongside an alleged growing demand for innovative aerial vehicles for Advanced and Urban Air Mobility (UAM) that facilitate greener and quieter flights. Electric and hybrid propulsion systems (EHPS) also promised to reduce aircraft operating costs.
These aircraft promise to take us from our neighborhood vertiport to the nearest airport and close-by communities with just a short hop, avoiding traffic jams on the road and making urban transportation less cumbersome for us and less harmful for the planet.
However, the transformative force in AAM and UAM promised by these startups has encountered some turbulence in recent months. Two major German eVTOL (electric vertical takeoff and landing) companies—Volocopter and Lilium—have filed for insolvency, highlighting the industry's financial and operational challenges.
Granted, there are still manufacturers like Joby Aviation, a company developing electric air taxis for commercial passenger service in sunny California. Joby announced on February 26, 2025, that it had made progress on the fourth of five stages required "to certify our aircraft for commercial passenger use in the US."
The Santa Cruz-based manufacturer expects Type Inspection Authorization (TIA) flight testing to begin in the next 12 months and plans to deliver an aircraft to Dubai in the middle of 2025 to complete flight testing ahead of carrying its "first passengers in late 2025 or early 2026."
Other eVTOL companies are also in the clear—we'll mention them below; however, the recent bankruptcy developments in the sector underscore the fragility of startups operating in capital-intensive, regulatory-heavy markets, even as they approach critical certification milestones.
Below, we analyze the circumstances leading to these insolvencies, their broader implications for the eVTOL ecosystem, and the unresolved questions surrounding the viability of urban air mobility. We'll also end on a positive note, mentioning the companies that are set for success, if all goes according to plan.
The German Contenders: Volocopter and Lilium
Volocopter’s Provisional Insolvency and Restructuring Efforts
Volocopter GmbH, founded in 2011 and headquartered in Bruchsal, Germany, filed for provisional insolvency at the Karlsruhe Local Court on 26 December 2024. The company faced insurmountable liquidity challenges despite raising over US$750 million from investors like Mercedes-Benz, Honeywell, and BlackRock.
Court-appointed administrator Tobias Wahl emphasized that Volocopter required immediate financing to finalize its certification process and enter the market with its two-seat VoloCity aircraft. The aircraft had already received design organization approval from the European Union Aviation Safety Agency (EASA).
Volocopter’s leadership attributed the insolvency to delayed funding rounds and an unfavorable financial climate. While the company maintained one of the lowest cash burn rates in the industry, its inability to secure bridge funding forced it into provisional administration.
Wahl oversees business operations, and a restructuring plan is slated for investor review by late February 2025. Notably, Volocopter’s technological progress—including international flight tests and software ecosystem development—has been cited as a potential attractor of new investment.
Lilium’s Dual Insolvency, Terminal Collapse
Lilium’s trajectory proved even more tumultuous. The Munich-based firm, founded in 2015, filed for insolvency in October 2024 after failing to secure a €50 million (US$54 million) loan guarantee from the German government.
This initial filing triggered the insolvency of its subsidiaries, Lilium GmbH and Lilium eAircraft GmbH, which had collectively raised over US$1 billion from private investors.
A proposed rescue deal emerged in December 2024, when the MUC Mobile Uplift Corporation consortium pledged €200 million (US$217 million) to revive the company. However, the funding failed to materialize, leading to a second insolvency filing in February 2025 and the cessation of operations.
Lilium’s collapse marked a stark reversal for a company that had secured orders for 120 jets from UrbanLink and Saudi Arabia’s flag carrier. Its six-passenger eVTOL, designed for ranges up to 250 km/h, faced certification delays and mounting skepticism over its hybrid propulsion system. Employees reported unpaid wages and resorting to crowdfunding for basic needs, while investors like Christian Reber and Marian Boček withdrew commitments.
CEO Klaus Roewe acknowledged the improbability of restructuring, leaving Lilium’s intellectual property and partially completed prototypes in limbo.
Sector-Wide Challenges: A Postmortem
Financial Pressures, Capital Intensity
The insolvencies of Volocopter and Lilium reflect systemic issues within the eVTOL industry. Depending on vehicle complexity and regulatory hurdles, developing certifiable aircraft requires US$500 million to US$5 billion in upfront capital. Both companies exhausted their funding runways despite aggressive cost management.
For instance, Lilium’s cash reserves dwindled from US$205 million in mid-2024 to zero within six months despite a US$250 million fundraising attempt. Volocopter’s “low burn rate” strategy delayed but did not prevent its liquidity crisis.
Investor patience has waned as time-to-market stretches. Volocopter, for example, began flight testing its VoloCity in 2017 but now targets a 2025 commercial launch—eight years later. Lilium’s seven-year development cycle yielded no revenue-generating aircraft.
These timelines clash with the rapid iteration expected by venture capital firms, which increasingly favor adjacent sectors like autonomous ground vehicles.
Regulatory, Certification Hurdles
Certification remains a critical bottleneck. The European Union Aviation Safety Agency (EASA) and the U.S. Federal Aviation Administration (FAA) only recently finalized frameworks for eVTOL operations. The FAA’s “power-lift” regulations arrived weeks before Lilium’s collapse.
Volocopter’s proximity to EASA certification (a 2025 target) underscores the precariousness of relying on regulatory progress to attract capital. Delays in this process exacerbate cash flow challenges, as seen in Lilium’s case, where certification timelines directly impacted investor confidence.
Market Readiness, Competitive Threats
The eVTOL sector also faces skepticism about market viability. Urban air mobility (UAM) requires functional aircraft, vertiport infrastructure, air traffic control systems, and public acceptance.
Volocopter’s two-seat VoloCity, designed for short urban hops, targets a niche market with uncertain demand. Meanwhile, competitors like Joby Aviation and Archer Aviation have secured stronger footholds in the U.S., leveraging partnerships with major airlines and regulatory alignment.
Additionally, the rise of robotaxis poses an unexpected threat. Autonomous ground vehicles, which require no new infrastructure or regulatory frameworks, are increasingly viewed as a more scalable solution for urban mobility. This shift in investor focus has diverted capital away from eVTOL startups, compounding their financial struggles.
Implications for the Advanced Air Mobility Ecosystem
Investor Sentiment, Future Funding
The dual insolvencies have chilled investor sentiment toward the eVTOL sector. While Volocopter’s provisional administration offers hope, its success hinges on securing bridge funding by February 2025—a tight deadline given macroeconomic headwinds. The company’s ability to market its certification progress and software platform will be critical.
Lilium’s collapse, however, may deter future investment in hybrid eVTOL designs. Its reliance on a complex, multi-engine propulsion system contrasted with Volocopter’s more straightforward multirotor approach, which could now be perceived as more viable. Investors may prioritize companies with nearer-term certification prospects or partnerships with established aerospace firms, such as Volocopter’s collaboration with Geely and Mercedes-Benz.
Regulatory, Policy Responses
Governments and regulatory bodies face pressure to streamline certification processes without compromising safety. The EU’s “Single European Sky” initiative and the FAA’s Innovate28 plan aim to accelerate AAM integration, but their effectiveness remains untested.
Policymakers must also consider financial safeguards, such as loan guarantees or grants, to prevent further insolvencies among strategically essential startups.
The Frontrunners
While Lilium and Volocopter have succumbed to insolvency, others are demonstrating resilience through strategic funding rounds, certification progress, and industrial scaling.
Below, we list the eVTOL manufacturers that have fortified their positions with recent financing and operational milestones, positioning them as frontrunners in the race to commercialize urban air mobility.
Joby Aviation: Certification Leadership, Strategic Partnerships
Joby Aviation remains the most capitalized and operationally advanced eVTOL developer in the United States. In Q4 2024, the company secured US$1 billion in new funding, including a US$500 million investment from Toyota, split into two tranches. This bolstered Joby’s cash reserves to US$933 million, excluding Toyota’s first US$250 million installment, which cleared regulatory approvals in early 2025.
Joby’s certification progress with the FAA sets it apart. The company has entered the fourth of five stages required for its aircraft’s commercial certification, with TIA flight testing slated to begin within 12 months.
Beyond regulatory strides, Joby has delivered two aircraft to the U.S. Department of Defense and completed a 561-mile test flight using a hybrid hydrogen-electric variant. Internationally, the company plans to deploy an aircraft in Dubai by mid-2025 for pre-commercial testing, targeting passenger operations in late 2025 or early 2026.
Archer Aviation: Production Scaling and Institutional Backing
Archer Aviation solidified its financial position in February 2025 by closing a US$301.75 million funding round led by BlackRock, selling 35.5 million shares at US$8.50 apiece.
This round expanded Archer’s cash reserves beyond US$1 billion, a critical advantage as competitors face liquidity constraints. The funds will accelerate production of its Midnight aircraft, supported by a newly constructed 400,000-square-foot manufacturing facility in Georgia.
Archer’s partnership with United Airlines (UA) provides a clear route to market, with the carrier committing to purchase up to 200 Midnight aircraft for UAM routes. The company has also leveraged Stellantis’ automotive manufacturing expertise to streamline assembly processes, aiming to reduce unit costs by 30% compared to initial prototypes.
Beta Technologies: Private Funding and Cargo-First Strategy
Beta Technologies has adopted a distinct approach by remaining privately held while securing US$375 million in Series B funding in January 2025, bringing its total raised to nearly US$800 million. Led by TPG Rise Climate and Fidelity, this round underscores investor confidence in Beta’s Alia eVTOL, a cargo-focused aircraft designed for 250-nautical-mile ranges and 1,400-pound payloads.
The company’s certification strategy prioritizes cargo applications, which face fewer regulatory hurdles than passenger services. Beta has already conducted U.S. Air Force flight tests under the Agility Prime program and plans to finalize FAA type certification by late 2025. Production facilities in Vermont and Arkansas are operational, with long-term supply agreements secured for battery systems and composite materials.
Vertical Aerospace: Debt Restructuring and Flight Testing Milestones
Despite raising less capital than U.S. rivals, Vertical Aerospace has navigated funding challenges through creative financing. In January 2025, the UK-based firm closed a US$90 million public offering, upsized from an initial US$75 million target, while converting US$130 million of debt into equity. Mudrick Capital contributed US$25 million, complementing earlier investments from American Airlines and Rolls-Royce.
Vertical’s VX4 prototype achieved piloted thrust-borne flight maneuvers in late 2024, a critical step toward wingborne transition testing scheduled for 2025. The company holds 1,500 pre-orders—more than Archer (1,141) and Beta (559)—though its US$535 million total funding lags behind competitors. To bridge this gap, Vertical plans to initiate certification aircraft production in late 2025 using proceeds from its latest raise.
EHang: Order Book Strength Amid Funding Scrutiny
Finally, EHang’s trajectory highlights the divergence between order volume and financial health. The Chinese manufacturer reports 1,300 pre-orders for its EH216-S passenger drone, surpassing Vertical’s 1,500 but with only US$97.4 million in raised capital.
A 2023 short position by Hindenburg Research questioned EHang’s funding strategy, yet the company has maintained flight testing momentum, securing Civil Aviation Administration of China (CAAC) approval for urban demo flights.
EHang’s reliance on municipal government partnerships in China provides a captive market, with deployments planned in Guangzhou and Shenzhen. However, international expansion remains constrained by geopolitical tensions and stricter Western certification requirements.
A Sector at a Crossroads
On one side, the insolvencies of Volocopter and Lilium highlight the precarious balance between innovation and financial sustainability in the eVTOL industry. The sector's future hinges on resolving systemic challenges while technological advancements continue—evidenced by Volocopter’s certification progress and Lilium’s abandoned jet prototypes.
Key priorities include:
- Accelerating Certification Timelines: Regulatory bodies must work closely with manufacturers to reduce delays while maintaining safety standards.
- Diversifying Revenue Streams: To broaden their market appeal, eVTOL firms should explore cargo applications, military contracts, or hybrid-electric models.
- Strengthening Public-Private Partnerships: Governments could de-risk investments through subsidies, infrastructure development, or guaranteed purchase agreements.
On the other side, the eVTOL sector is bifurcating into cash-strapped strugglers and well-funded contenders. Joby, Archer, and Beta exemplify the latter, leveraging billion-dollar war chests to advance certification and production. Vertical Aerospace and EHang face steeper challenges due to thinner funding runways but retain viability through large order books and niche market strategies.
For investors, the critical metrics are:
- Certification proximity: Joby’s FAA progress and Beta’s cargo focus reduce time-to-revenue risks.
- Industrial partnerships: Archer’s Stellantis alliance and Vertical’s Rolls-Royce collaboration provide manufacturing leverage.
- Alternative applications: Beta’s cargo emphasis and EHang’s municipal deployments diversify revenue streams beyond passenger mobility.
As the AAM sector approaches its long-promised “make-or-break” year in 2025, the fate of Volocopter and the lessons from Lilium’s collapse will serve as critical benchmarks, while it remains to be seen if those in the clear are best positioned to withstand the capital-intensive final stretch toward certified, revenue-generating operations.
All this to ask the biggest question: Will urban air mobility evolve into a mainstream transportation mode or remain a niche experiment that will fizzle into a novelty for a few.
Sources: tech.eu, newatlas.com, all-about-industries.com, flyingmag.com, aerospaceglobalnews.com, cargoforwarder.eu, autoweek.com, revolution.aero, aerotime.aero, vtta.org, evetolinsights.org, rictor.com, flightplan.forecasterinternational.com
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Featured image Lilium via X
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