The emerging eVTOL air taxi market is drawing a lot of attention and an avalanche of funding money. Literally hundreds of companies are jostling for position as this nascent air mobility tech prepares for its prime time debut. But with renders, press releases and SPAC fundraising efforts flying as fast and frequently as these radically different new vehicles claim to, how do we know which ones are really taking off?
It’s time for an eVTOL reality check – and that’s exactly what consulting group SMG is trying to achieve with its Advanced Air Mobility Reality Index. SMG is not technology-focused; these guys don’t care if a company is building an autonomous cargo machine, a medium-range winged tilt-rotor or a simple manned multicopter. They’ll all find their place – what SMG tries to determine is simply this: how close is a given company to delivering their aircraft in volume?
To talk through the thinking behind the index, as well as SMG’s educated perspective on the top contenders, we caught up with SMG’s Sergio Cecutta, the man behind the index, for an extended and very informative chat. What follows is an edited transcript.
Loz: Maybe let’s let’s start with this: what is SMG and what are you guys trying to do here?
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Sergio Cecutta: Sure. We are a consulting firm that basically works on aerospace, defense, and automotive – especially what’s called today, auto tech; that would be autonomy and electrification in cars. We work on the growth side of the house. Companies that want to launch new products, new markets, understand new geographies, pricing, supply chain, funding, M&A (mergers & acquisitions), that is what we do.
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So, we are a group of of experienced executives. All of us are engineers, as well as people that have run large businesses in corporate America. Since 2017, with the launch of the first Uber Elevate summit and the white paper, we started to get interested in this market. That interest turned into getting to know more and more about this market. We work with airlines, OEMs, suppliers, as well as aftermarket companies.
And one of the things that we started thinking to ourselves was, well, this is an interesting market, there are a lot of entrants, how do we make heads and tails of all these entrants? That’s the reason the Advanced Air Mobility Reality Index was created. So we created these tools for ourselves, and then we figured that, really, the industry was asking for these tools. This is the reason we publish them and we share them with industry.
So obviously, as a journalist, I get stacks of press releases from companies that are getting into this space. There are so many companies that want to be making eVTOLs, how do you evaluate these things when you first run across them?
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We’ve decided to look at five different dimensions. One of our goals was to to keep it simple and to have something that was easy to compare. We wanted something that people can quickly understand, especially people from outside this space. It’s not like conventional aerospace where people are familiar with the brands. I mean, I don’t know anyone that doesn’t know a Boeing or an Airbus, they might not know which one they’re on, but they know that they’re out there. In the eVTOL space there is a lack of legacy players, but an abundance of startups. And so we looked at five dimensions.
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Number one is funding. So, how much funding does the company have? Do they have enough to complete specific milestones in their development? Do they have enough to build a prototype? Do they have enough to certify? Do they have enough to enter service?
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The second piece is their team. Not just the CEO, but is the leadership team an aerospaceleadership team? Are they familiar with the industry? Do they know what it means to certify an aircraft? Have they already run programs of this size, this complexity?
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The third piece is technology readiness. Now, we wanted to stay away from judging the design of an aircraft for two simple reasons: one, the aircraft are very different from each other, and two, really no one knows all the details, unless you’re inside the program. So we use what NASA uses – that is the technology readiness level (TRL) scale, it’s basically a scale from one to nine that looks at the maturity of the technology. Anything less than six is not ready for prime time. TRL 6 is the first time that a prototype has been flown in the relevant environment – a full-size aircraft that has covered the entire flight envelope. So, it has taken off vertically, it has transitioned, it has flown and it has landed. TRL 9 would be the final product.
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The next piece that comes along is certification. Do they understand the certification requirements? How far along are they? Certification is very important, for the simple reason that the rules for certifying these vehicles are brand new, and no one has done it before.
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Last but not least, we look at production, and the reason we look at production is because the manufacturers of these vehicles are talking about thousands of vehicles. In aerospace, we don’t make anything in the thousands. Take Airbus, they’re starting to think at a rate of about 60 A320-family aircraft a month. That’s what, about 700 aircraft a year, and that is a lot. But in the eVTOL market, people are talking about producing 900, 1,000, 1,500 a year. We’ve never heard of those kind of numbers. So, we wanted to see what’s their capability? Can they make one? Can they make ten? Can they make a hundred? Can they make thousands?
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We’ve applied weights for each of these dimensions. And, while I’m not going into the secret sauce of the calculations, basically all of these elements combine to create a number.
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Last but not least, the index does not try to say who’s going to be the winner. We don’t know. The index is a current snapshot of where we see the race being at right now. It’s a snapshot of how the different companies rank with respect to each other. Will it be different tomorrow? For sure. We published our latest update Monday, and I can tell you that I already have updates to that update! But again we’ll wait for a little more information to come along. It is a very dynamic space.
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So how often will you be updating this list?
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The goal is to be monthly, we want to avoid having two- to three-month gaps, because there’s always enough information. But at the same time, we don’t want to bombard people with releases.
Certification, as you say, is a massive, massive challenge for any company that’s trying to get into this space. The numbers that I’ve heard off the record for what a certification run is going to cost … I’ve heard half a billion dollars, I’ve heard up to a billion dollars – just to get a single airframe certified. Because it’s such a new space. The rules are not just new, as I understand they’re still being decided upon as this process proceeds. So, you’re looking for budgets around that level? What says to you that a company has enough money to do this?
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Unfortunately, the devil is in the detail. The certification budget depends on two things: their supply chain strategy, and the type of vehicle they’re trying to certify. So, you have heard correctly, for some of the most complex configurations, they’re talking about a billion US dollars to get to certification. For some of the simpler ones, they’re talking about a quarter to half a billion.
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Now, the truth is, we need to understand the complexity of the configuration. For example, multicopters are less expensive to certify than more complex configurations like lift plus thrust, or vectored thrust configurations.
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The other piece is the supply chain. So, if the company decides to go fully vertical, as in they will produce everything in-house, they need more money, because all the components need to conform and need to be certified, and all the burden will come back on that same company. If instead, they use a typical aerospace strategy for supply chain, as in to have risk-sharing partners, then each one of the partners will take a piece of the certification burden and the company will need less money.
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So, unfortunately there is not one number that fits them all in. That is very important to understand.
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Can you give me an example of a company that is sharing that risk in an appropriate way?
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Well, for example, Honeywell is working as a risk-sharing partner with Vertical Aerospace, based in England. They’re making a vectored thrust aircraft, and Honeywell is providing the avionics and the flight controls for this specific vehicle. In this case, when it comes to risk-sharing, for the certification of the avionics and flight controls, that onus will fall on Honeywell, and not the manufacturer. Therefore, the amount of funding needed to arrive to certification in this case might be lower than if someone was making the flight controls in-house.
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And it’s always good to have someone that can help. Any time you can retire risk, it’s a good thing. It makes it more likely that the program will follow the schedule that you have in mind.
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