Lilium NV – The Losing Horse in the eVTOL Race

Summary of findings

  • German company Lilium is building an electric vertical take-off and landing aircraft (eVTOL) — the Lilium Jet. Its objective is for the Jet to fly up to 155 miles. But none of Lilium’s demonstrators have flown for more than three minutes even after seven years of work. eVTOL industry leader Joby Aviation Inc. has flown 150 miles on its current model.
  • Many experts have raised serious doubts about the Jet’s ability to fly 155 miles. This is largely due to its configuration of 36 ducted fans (recently reduced to 30) that devour power during takeoff and landing (hovering), and leaves little power for actual flight.
  • Against these criticisms, Lilium argued that battery consumption would be minimized as little time would be spent in hover (take off and landing). One engineer told us that Lilium underestimates the hover time that will be required by aviation regulators.
  • Lilium promises its Jet has ready access to battery cells with energy density of 320-330 Wh/kg. One of the sources it relies on to show these batteries are within reach is Zenlabs Energy Inc. Zenlabs is a 34.8% Lilium-owned associated company whose CEO Sujeet Kumar was accused by General Motors of misrepresenting battery performance, while at his previous company Envia Systems.
  • CEO Daniel Wiegand had no meaningful professional aerospace experience before starting Lilium in 2015. His alma mater, the Technical University of Munich, criticised the Lilium Jet’s concept. The university wanted no association with Lilium.
  • Both Joby and Lilium hope aviation authorities will certify their eVTOLs for commercial flight in 2023. This means both firms must have sufficient test flights for certification credit to hit that target. Joby is closer to the mark with ~1,000 test flights under its belt. Lilium is likely to miss the 2023 target by miles. It has completed less than 50 test flights on its fourth and fifth (current) demonstrators. We believe the design of its Jet further complicates the certification process.
  • We estimate that Lilium has about 18 months before its cash runs dry.
  • Lilium announced in August 2021 that Brazilian airline Azul ordered 220 jets for $1bn. We believe the deal is more akin to a ‘marketing agreement’: Lilium offered cheap shares to Azul in exchange for the right to market an established company as a partner. Such stock-for-image deals rarely lead to real business.
  • Around 177 million Lilium shares (~68% of the company’s total outstanding shares) worth ~$652m will be unlocked for sale today.

Overview of Lilium
Lilium NV was founded in 2015 to develop electric vertical take-off and landing aircraft (eVTOL).
The air-taxi startup has gone through five iterations of its eVTOL — the Lilium Jet — over the last seven years. Its end-goal is to commercialize the Jet in 2024, assuming all aviation regulatory hurdles are cleared, and provide regional air mobility services (ticket sales) and sell aircraft to corporations, cargo companies, and wealthy individuals.
The pitch to investors is for Lilium to transport more passengers with its differentiated technology, and over longer distances [Pg 5 of March 2021 investor presentation] than peers such as Joby Aviation and Archer Aviation. The Jet has an unconventional design with a propulsion system consisting of 36 wing flaps. These flaps serve as lifting and control surfaces and each contains a ducted electric fan — a design that emits less noise according to Lilium.

Lilium is one of many startups in the crowded and competitive electric aviation space (see below). The company went public after its reverse merger with SPAC Qell Acquisition Corp on 14 September 2021. Its market cap was ~$1bn as of 11 March 2022. Source: ‚Iceberg-research‘.

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