Lilium and Volocopter Turmoil: A Reflection on the eVTOL Industry’s Challenges
The eVTOL (electric vertical takeoff and landing) industry has been regarded as the future of urban mobility, promising to transform how we navigate congested cities and connect distant locations.
However, recent developments have cast a shadow over this ambitious vision (at least for European companies).
Within just a few weeks, two prominent German eVTOL startups—Lilium and Volocopter—have faced insolvency crises.
Lilium narrowly avoided collapse through a last-minute investor consortium, while Volocopter filed for insolvency on December 26, 2024, despite its advanced technological progress.
These events raise pressing questions about the sustainability of the eVTOL sector and whether the industry’s ambitions are outpacing its financial reality.
Let’s unpack what’s happening in the eVTOL space and explore why even well-funded startups with cutting-edge technology are struggling to stay airborne.
The Rise and Stumble of Lilium and Volocopter
Both Lilium and Volocopter were once considered pioneers in the eVTOL industry.
Founded in 2011, Volocopter gained significant attention for its VoloCity air taxi—a sleek two-seater designed for urban air mobility. Backed by major players like Mercedes-Benz and Geely, the company seemed poised to lead the charge toward commercializing eVTOLs.
Lilium, on the other hand, envisioned a future of small electric-powered jets capable of vertical takeoff and landing, aiming to connect cities with regional air mobility solutions.
Yet despite their technological advancements, both companies hit major roadblocks.
For Volocopter, a critical setback occurred when it failed to secure engine certification in time for planned test flights during the Paris Olympics—a high-profile opportunity that could have boosted its credibility.
Meanwhile, Lilium’s financial woes culminated in an October bankruptcy filing before being rescued by investors.
These struggles highlight a harsh reality: technological innovation alone isn’t enough to sustain an eVTOL business. The capital-intensive nature of developing aircraft, achieving regulatory certification, and building supporting infrastructure is proving too heavy a burden for many startups.
Dipesh Dhital
Why Are eVTOL Startups Struggling?
The challenges faced by Lilium and Volocopter are not isolated incidents but symptoms of broader issues within the eVTOL industry.
Here are some key factors contributing to their struggles:
1. High Development Costs
Developing an eVTOL aircraft is an extraordinarily expensive endeavor. Companies must invest heavily in research and development (R&D), flight testing, certification processes, and manufacturing facilities—all before generating any revenue.
For example:
- Certification alone can take years of rigorous testing to meet safety standards set by aviation authorities like EASA (European Union Aviation Safety Agency) or FAA (Federal Aviation Administration).
- eVTOL companies need up to $1 billion just to achieve type certification.
- Infrastructure requirements, such as vertiports and charging stations, add another layer of cost that startups often cannot shoulder alone.
Even with substantial funding from investors like Mercedes-Benz or Honeywell, these costs can quickly deplete cash reserves.
2. Regulatory Bottlenecks
Regulatory approval is one of the biggest hurdles for eVTOL companies.
While Volocopter has made significant progress toward certification—fulfilling 75% of EASA’s criteria for its VoloCity model—it still couldn’t meet the timeline for its Paris Olympics showcase.
Delays like these can erode investor confidence and derail business plans.
Moreover, regulatory frameworks for urban air mobility are still evolving. Governments worldwide are grappling with questions about air traffic management, noise pollution, safety standards, and public acceptance—all of which slow down market entry.
3. Intense Competition
The eVTOL market is crowded with players ranging from startups to established aerospace giants like Airbus and Boeing. There are over 300 eVTOL manufacturers globally, but only fewer than 10% might survive the next decade
This competition creates pressure to innovate rapidly while keeping costs under control—a balancing act that many smaller companies struggle with.
Adding to this challenge is the rise of well-funded competitors from China and the United States.
Companies like Joby Aviation in the U.S., which has already completed third stage of FAA certification process, are pulling ahead thanks to more robust financial backing and supportive regulatory environments.
4. Investor Fatigue
The eVTOL sector has attracted billions in investment over the past decade, but investor enthusiasm appears to be waning.
Many startups have failed to deliver on their promises within expected timelines, leading to skepticism about whether these companies can ever achieve profitability.
In Germany specifically, critics have pointed out a lack of government support for innovative startups compared to countries like the U.S., where public-private partnerships are more common.
This funding gap puts German companies like Lilium and Volocopter at a disadvantage.
5. Economic Headwinds
Broader economic conditions in 2024 have also played a role in tightening access to capital markets.
Rising interest rates and global economic uncertainty have made investors more cautious about funding high-risk ventures like eVTOLs.
What Does This Mean for the Future of eVTOLs?
While the insolvencies of Lilium and Volocopter are sobering reminders of the challenges facing this industry, they don’t spell doom for eVTOLs as a whole.
Instead, they highlight the need for strategic shifts if this sector is to fulfill its transformative potential.
Consolidation Is Inevitable
The current scene of hundreds of competing eVTOL startups is unsustainable.
We’re likely to see consolidation in the coming years as weaker players exit or merge with stronger ones.
Established aerospace companies may also acquire struggling startups to gain access to their technology or intellectual property.
Infrastructure Development Is Key
For eVTOLs to become viable at scale, significant investment in infrastructure is required—not just vertiports but also air traffic management systems tailored for urban environments.
Public-private partnerships (PPP) will be crucial in addressing these needs.
Focus on Niche Markets First
Rather than aiming for mass-market adoption right away, eVTOL companies may need to focus on niche applications where their technology offers clear advantages:
- Emergency medical services
- Cargo delivery
- Tourism in remote areas
These use cases could provide a more manageable path to profitability while building public trust in eVTOL technology.
Government Support Matters
Countries that actively support their domestic aerospace industries through grants, subsidies, or favorable regulations will likely emerge as leaders in this space.
Germany’s struggles with supporting startups like Lilium and Volocopter should serve as a wake-up call for policymakers.
My Final Thoughts
The insolvencies of Lilium and Volocopter are cautionary tales but not death knells for the eVTOL industry. They reveal an industry grappling with growing pains—caught between groundbreaking technological potential and harsh economic realities.
As we move into 2025, it’s clear that only those companies that can navigate these challenges—through strategic partnerships, focused business models, and robust financial planning—will survive long enough to bring their visions of urban air mobility to life.
For now, though, it’s safe to say that while the dream of flying taxis isn’t dead, it’s certainly experiencing some turbulence.
