Europe's ambitions for flying taxis face setbacks as funding dwindles.

One of the much-anticipated innovations at this year's Paris Olympics was meant to be an electric flying taxi service. Germany's Volocopter had promised that its two-seater electric aircraft, the VoloCity, would ferry passengers around the city.But that vision never took off. Instead, the company settled for demonstration flights. While missing the deadline was disappointing, a more pressing issue was unfolding behind the scenes—Volocopter was scrambling to secure fresh investments to stay afloat.

In April, its attempts to borrow €100m (£83m; $106m) from the government fell through. Now, the company is pinning its hopes on China's Geely. According to a Bloomberg report, Geely is in talks to acquire an 85% stake in Volocopter in exchange for $95m in funding. If the deal goes through, future manufacturing could move to China.

Volocopter is just one of many companies worldwide racing to develop electric vertical take-off and landing (eVTOL) aircraft. These futuristic machines promise the versatility of helicopters, but with lower costs, less noise, and no emissions. However, the steep costs of regulatory approvals and manufacturing are causing some investors to walk away.

Lilium's Struggles

One of the highest-profile casualties in this field is another German company, Lilium. It had developed a bold and innovative eVTOL concept featuring 30 electric jets that tilt to transition between vertical lift and forward flight.

The design was compelling, attracting interest globally, with claims of 780 orders and agreements from various buyers. Lilium even demonstrated its technology with a remote-controlled scale model and began constructing full-sized jets, with testing slated for early 2025.

At the Farnborough Airshow in July, Lilium’s Chief Operating Officer, Sebastian Borel, remained optimistic. “We are definitely burning through cash," he told the BBC. “But this is a good sign because it means we are producing the aircraft. We’re going to have three aircraft in production by the end of the year, and we have also raised €1.5bn.”

However, the money soon ran out. Lilium tried to secure a €100m loan from Germany's KfW development bank, but the loan required guarantees from national and state governments, which never materialized.

By early November, Lilium's main operating businesses entered insolvency proceedings, and its shares were delisted from the Nasdaq stock exchange. For now, work on the aircraft continues as the company collaborates with restructuring experts to find a buyer or new investment. Still, the path to production looks increasingly difficult.

Vertical Aerospace: High Hopes and Setbacks

The UK's Vertical Aerospace, another eVTOL contender, is making progress despite challenges. Founded in 2016 by entrepreneur Stephen Fitzpatrick, the company is known for its VX4 model, which uses eight large propellers on slim wings for lift. Fitzpatrick boasts the VX4 will be “100 times” safer and quieter than a helicopter at just 20% of the cost.

After remote-controlled testing, the company began piloted tests earlier this year, starting with tethered flights. In November, it achieved its first untethered take-off and landing.But Vertical Aerospace has faced obstacles. In August 2022, a prototype was badly damaged in a crash caused by a broken propeller blade. In May, Rolls-Royce, one of its key partners, withdrew from a deal to supply electric motors.Despite this, the company remains ambitious. It aims to deliver 150 aircraft by the end of the decade, scale production to 200 units annually, and achieve cash break-even.

To stabilize financially, Vertical Aerospace struck a deal with its largest creditor, US-based Mudrick Capital. Under the agreement, Mudrick will invest up to $50m, while $130m in loans will be converted into shares, giving Mudrick a 70% stake in the company. Fitzpatrick’s own stake will drop from 70% to 20%.In a statement, Fitzpatrick said the deal, combined with recent piloted flight progress, positions Vertical Aerospace as a frontrunner in “one of the 21st century’s most exciting technologies.”

Airbus Stands Strong

While several European projects struggle, Airbus seems to be navigating the eVTOL market steadily. Its CityAirbus NextGen, a four-seater aircraft with eight propellers and an 80km range, appears to have a secure future.

“This is a technology project for their engineers, and they've got the money and know-how,” says Bjorn Fehrm, a former Swedish Air Force pilot and aerospace consultant.

Looking Ahead

Globally, some well-funded startups, like Joby and Archer in the US, are progressing toward production. However, even if these aircraft make it to market, profitability remains uncertain.Initial routes will likely focus on connecting airports with city centers. But, as Fehrm points out, operational costs—especially pilots and battery replacements—could be significant. Batteries may need replacing multiple times a year, adding to the expense.

Given the high costs and risks, why are investors still interested in electric aircraft? “No one wanted to miss out on the next Tesla,” Fehrm says with a laugh.