eVTOLFeaturedNews

“Lilium Faces Financial Crunch-Time After Potential Loss of German Government Loan”

What a week it has been for Ger­man com­pa­ny, Lil­i­um. Twit­ter was all aflut­ter on Tues­day when a series of tweets set alarms bells ring­ing across the eVTOL indus­try.

One stat­ed, ”Strug­gling air taxi start­up Lil­i­um, which faces insol­ven­cy if it doesn’t soon raise more cap­i­tal, has been in talks with the Ger­man gov­ern­ment about the pos­si­bil­i­ty of receiv­ing state sup­port for over a year — a life­line that is now off the table, report­ed Der Spiegel yes­ter­day.” 

This was fol­lowed by:-

“In response, over 650 founders and investors — and count­ing — have come out in sup­port of a fed­er­al guar­an­tee for the Bavar­i­an start­up, hav­ing signed an ini­tia­tive called ‘Enable loans for Lil­i­um, strength­en Ger­many as a deep tech loca­tion.’”

Ger­many’s BILD news­pa­per pub­lished an inter­view that day with Lil­i­um co-Founder, Daniel Wie­gand, who was quot­ed, “If we get a no on Wednes­day, we will not be able to keep the com­pa­ny in its cur­rent form in Ger­many. This means that this future tech­nol­o­gy will either move abroad – or go bank­rupt. It’s about Germany’s tech­no­log­i­cal lead­er­ship in elec­tric fly­ing. That would ben­e­fit every­one.”

The com­pa­ny has been wait­ing close on a year for a deci­sion by the fed­er­al gov­ern­ment on a loan of EUR50 mil­lion. If agreed, the state of Bavaria will match that sum. Yet, accord­ing to news reports, the gov­ern­ment coali­tion is split over the deci­sion, with Fed­er­al Chan­cel­lor Olaf Scholz (Social Demo­c­ra­t­ic Par­ty SPD), the Greens and Trans­port Min­is­ter Volk­er Wiss­ing (Free Demo­c­ra­t­ic Par­ty, FDP) are under­stood to be in favour of the loan, while some mem­bers of the FDP are against it.

Lil­i­um’s eVTOL Jet Wow­ing the Crowd at the Farn­bor­ough Air­show in July (Cred­it: Lil­i­um)

The online news web­site, sifted.eu, also post­ed an arti­cle that same morn­ing, head­lined, “Ger­man start­up founders and investors call on fed­er­al gov­ern­ment to sup­port strug­gling air taxi start­up Lil­i­um.” with a sub-head­ing, “The com­pa­ny faces insol­ven­cy if it doesn’t soon raise more cap­i­tal.”

Writ­ten by Miri­am Part­ing­ton, she says, “In a press release, the Ger­man Start­up Asso­ci­a­tion makes clear that if Ger­many wants to com­pete glob­al­ly, it needs to back star­tups work­ing on inno­v­a­tive deep-tech tech­nolo­gies. The Asso­ci­a­tion was quot­ed, “We want to make our coun­try a glob­al­ly lead­ing deep-tech loca­tion by 2030. This area is cap­i­tal and research inten­sive, but it is here that the future of Ger­many as a loca­tion for inno­va­tion will be decid­ed.””

The signed names sup­port­ing Lil­i­um include Daniel Met­zler, co-Founder and CEO of Isar Aero­space; Bas­t­ian Nom­i­nach­er, co-Founder of Celo­nis; and Miri­am Wohl­far­th, co-Founder and CEO of Banxware; as well as Ver­e­na Paus­der, the Chair­per­son of The Ger­man Start­up Asso­ci­a­tion.

In Lilium’s lat­est accounts, the com­pa­ny said it has secured com­mit­ments of approx­i­mate­ly EUR32 mil­lion from exist­ing investors ‘to meet the imme­di­ate liq­uid­i­ty require­ments’. Although, secur­ing some of the mon­ey depends on whether the fed­er­al gov­ern­ment choos­es to sup­port Lil­i­um with state aid.

Christoph Stresing, MD of the Ger­man Start­up Asso­ci­a­tion, remarked, “Polit­i­cal deci­sions should not only take into account the con­se­quences of action, but also the con­se­quences of inac­tion. In the case of Lil­i­um, this means that if the fed­er­al gov­ern­ment does not grant the EUR50 mil­lion guar­an­tee in ques­tion, this would prob­a­bly not only result in the lit­er­al col­lapse of the com­pa­ny itself,  but there would be a risk of last­ing dam­age to the rep­u­ta­tion of Ger­many as a deep-tech loca­tion, the long-term costs of which are dif­fi­cult to quan­ti­fy.” 

Christoph Stresing

In a LinkedIn post on Mon­day, Lil­i­um CEO Klaus Roewe, wrote that the com­pa­ny wants to receive a fixed-rate loan of EUR100 mil­lion as a sig­nal to its investors that Ger­many sup­ports the entry into elec­tric avi­a­tion. 

“It is not about res­cu­ing a cri­sis-rid­den com­pa­ny with lost sub­si­dies,” he point­ed out. “The loan is ful­ly repayable, the con­di­tions are very advan­ta­geous for KfW (the Ger­man state-owned invest­ment bank), and thus for Ger­many, and it is high­ly like­ly that this will mobilise fur­ther pri­vate investor mon­ey from home and abroad.”

Lil­i­um has always been the under­dog and punched above its weight. The eVTOL com­pa­ny has nev­er had the finan­cial back­ing of a large car man­u­fac­tur­er or the sup­port from a major air­line, yet some­how has kept gath­er­ing momen­tum, where in the Mid­dle East it has not only com­pet­ed with lead­ing eVTOL com­pa­nies like Archer and Joby for poten­tial sales, but is show­ing that Euro­pean avi­a­tion start-ups are just as capa­ble as Amer­i­can or Chi­nese ones.

There­fore, it would be gut­less and myopic behav­iour from the Ger­man gov­ern­ment, if it decides not to finan­cial­ly sup­port Lil­i­um. This could not only cause the eVTOL com­pa­ny to go bank­rupt, but leave a ter­ri­ble and ran­cid smell of fail­ure across the Euro­pean Union.

Let us hope Lilium’s gam­ble of polit­i­cal pres­sure via the media pays off for both the com­pa­ny and the eVTOL indus­try as a whole. After the recent humil­i­a­tion of anoth­er Ger­man elec­tric air taxi com­pa­ny, Volo­copter, being refused flights over Paris dur­ing the recent Olympic Games due to yet more “polit­i­cal wran­gling”, this poten­tial bank­rupt­cy would be a dev­as­tat­ing blow for Europe’s nascent green avi­a­tion indus­try.

For more infor­ma­tion

https://lilium.com

(News Source: https://sifted.eu)

(The impres­sive Lil­i­um Jet dis­played at Farn­bor­ough Air­show in July — Cred­it: Lil­i­um)

For the lat­est news, insights and con­tent regard­ing the glob­al Advanced Air Mobil­i­ty mar­ket, please join the fol­low­ing eVTOL Insights chan­nels: What­sApp, Face­book, Insta­gramSpo­ti­fyApple Pod­castsYouTubeand LinkedIn.

eVTOL Insights is part of the Industry Insights Group. Registered in the UK. Company No: 14395769