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Levitate Capital releases white paper and summarises future of eVTOL aircraft and drone economy markets

Ven­ture cap­i­tal firm Lev­i­tate Cap­i­tal has released a white paper focus­ing on the future of the drone econ­o­my and advanced aer­i­al mobil­i­ty, and pre­dicts full-scale eVTOL air­craft oper­a­tions won’t start until at least 2028.

Released on Mon­day, the doc­u­ment is a com­pre­hen­sive analy­sis of the eco­nom­ic poten­tial, mar­ket oppor­tu­ni­ties and strate­gic con­sid­er­a­tions in the drone econ­o­my. In par­tic­u­lar, the white paper focus­es on Defense, Enter­prise, Con­sumer, Pub­lic Safe­ty, Logis­tics and Pas­sen­ger Trans­porta­tion.

It pre­dicts the glob­al pas­sen­ger eVTOL air­craft mar­ket to be worth $2 bil­lion by 2030, with 27 mil­lion pas­sen­gers — sig­nif­i­cant­ly less than what Nexa Cap­i­tal Advi­sors, which pre­dicts $244 mil­lion in rev­enue from pas­sen­ger flights between 2030 and 2040.

Lev­i­tate Cap­i­tals white paper esti­mates the pas­sen­ger eVTOL air­craft mar­ket to be worth $2 bil­lion by 2030 by expects it to scale up rapid­ly by the end of 2040 Source Lev­i­tate Cap­i­tal Analy­sis

In terms of pas­sen­ger flights, the white paper’s analy­sis esti­mates that ini­tial trip dis­tances will start with inter­ci­ty com­mutes of less than 30 miles by 2028, and increase to up to 100 miles by 2035 as bat­tery tech­nol­o­gy and propul­sion sys­tems improve.

Its analy­sis also assumes that all eVTOL air­craft oper­a­tions before 2030 will be pilot­ed, and pilots won’t be elim­i­nat­ed from that process until after 2035.

Talk­ing more about this as part of a Ver­ti­cal Flight Soci­ety dis­cus­sion ear­li­er this week, Bas­ti­aan Jan­maat, Man­ag­ing Direc­tor at Linse Cap­i­tal and Lev­i­tate Cap­i­tal, said: “The pur­pose of this white paper was real­ly a roadmap for our­selves as we looked around the indus­try. There are sev­er­al very good indus­try reports out there cov­er­ing the drone and air mobil­i­ty space.

“Some of them are a lit­tle bit out­dat­ed at this point, so we felt we need­ed to get a refreshed look at the over­all space; what are the dif­fer­ent seg­ments, which ones are kick­ing off today, which ones are tak­ing off a lit­tle lat­er and which com­pa­nies can we invest in today, to cap­i­talise on a trend that is a bit more longer term. These are some of the ques­tions we’ve tried to answer with this report.”

Giv­ing an overview of the report, Dario Con­stan­tine, Senior Asso­ciate at Lev­i­tate Cap­i­tal and the pri­ma­ry author, he said the drone econ­o­my is rough­ly worth $15 bil­lion today — even after count­ing for the effects of Covid-19. While Defense cur­rent­ly accounts for 60 per cent of the mar­ket, Con­stan­tine said that Con­sumer and Enter­prise sec­tors are amongst the fastest grow­ing in the space.

“By the end of the decade, after expe­ri­enc­ing years of tech­nol­o­gy and reg­u­la­to­ry progress, as well as per­for­mance improve­ments and shift­ing con­sumer behav­iour to online pur­chased goods…logistics drones will like­ly become the largest sec­tor,” he said.

“It’s worth not­ing that pas­sen­ger drones are a small seg­ment because we think that the indus­try has some way to go to over­come tech­nol­o­gy bar­ri­ers, as well as reg­u­la­to­ry hur­dles — espe­cial­ly as it’s going to be car­ry­ing humans and requires a lot more cau­tion than deliv­ery drones. But it’s per­fect­ly con­ceiv­able that by the end of 2040 it [pas­sen­ger drones] will become one of the largest mar­kets in the drone econ­o­my.”

Lev­i­tate Cap­i­tal has already invest­ed in a few com­pa­nies in the drone and eVTOL air­craft space, includ­ing Elroy Air, Volo­copter, Sky­ports and Sky­dio.

Con­stan­tine said he believes the pas­sen­ger drone mar­ket will take the longest to reach com­mer­cial via­bil­i­ty and despite some com­pa­nies — includ­ing Volo­copter — expect­ed to start oper­a­tions by 2023, he added it will take longer to achieve tru­ly scaled and sus­tain­able oper­a­tions.

“There are hun­dreds of eVTOL designs out there, but only a few will over­come the large cap­i­tal require­ments and reg­u­la­to­ry hur­dles to make it to mar­ket. The FAA indi­cat­ed ear­li­er this year that rough­ly six eVTOL air­craft were far along in the type cer­ti­fi­ca­tion process, how­ev­er that’s just one albeit impor­tant step in the com­mer­cial­i­sa­tion process.

“Real­is­ti­cal­ly, we think the first deploy­ment of eVTOL air­craft will oper­ate in a tourist-like capac­i­ty, so from Point A to A. Even­tu­al­ly as the tech­nol­o­gy improves, and the vehi­cle becomes more capa­ble, we expect to see the mar­ket grow towards a viable air taxi mar­ket that will reach $2 bil­lion by 2030.

Con­stan­tine added that he expects the air taxi mar­ket to then scale quite rapid­ly beyond 2030, going to rough­ly $50 bil­lion to $60 bil­lion by 2040 — approx­i­mate­ly the same amount that major US air­lin­er Delta report­ed in rev­enues in 2019.

The white paper sug­gests that the first eVTOL air­craft oper­a­tions will be from Point A to A in 2025 and esti­mates a cost of $869 per mile or $217 per avail­able seat mile by 2028 Source Lev­i­tate Cap­i­tal Analy­sis

He said: “In sum­ma­ry, there are a lot of com­pa­nies which are pur­su­ing this idea. We think it’s going to take some time to do it, but we do believe the com­pa­nies which are well-fund­ed and clos­est to their reg­u­la­to­ry approval process, will be the ones to make it to mar­ket first and have the strongest chance of suc­cess.”

You can watch Lev­i­tate Cap­i­tal’s dis­cus­sion about its white paper, as part of Ver­ti­cal Flight Soci­ety’s eVTOL Writer’s Group, by click­ing here. For more infor­ma­tion about Lev­i­tate Cap­i­tal’s work, vis­it https://levitatecap.com/

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Jason Pritchard

Jason Pritchard is the Editor of eVTOL Insights. He holds a BA from Leicester's De Montfort University and has worked in Journalism and Public Relations for more than a decade. Outside of work, Jason enjoys playing and watching football and golf. He also has a keen interest in Ancient Egypt.

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