The Future of Advanced Air Mobility

Cash Reserve Reporting Reveals Haves and Have-nots among eVTOL Aircraft Developers

A spate of financial-results announcements over the past week paints a vivid picture of haves and have-nots in the advanced air mobility sector. At one end of the spectrum, Joby Aviation’s robust second-quarter balance sheet showed $1.2 billion in cash and short-term investments, while at the other end, rival eVTOL aircraft developer Vertical Aerospace reported it has just £89.7 million ($114.8 million) in its war chest.

On Wednesday, Vertical confirmed that its VX4 prototype aircraft was involved in an incident during flight testing being conducted at Cotswold Airport in the UK. According to the company, there were no injuries, but it has yet to confirm any details as to how much the remotely piloted aircraft may have been damaged.

According to a report in the UK publication Pilot, a source at Cotswold Airport said that the aircraft had crashed to the ground from a height of around 20 feet. A photo online shows what appears to be the VX4 with significant damage to structures including the wing.

"Our flight test program is designed to establish the limits of the aircraft's performance, and the incident occurred during an uncrewed test of the aircraft's maneuverability during a motor failure test scenario, which is a key requirement to progress to crewed operations," Vertical said in a form 6-K filing to the U.S. Securities and Exchange Commission. "We are working closely with the relevant authorities."

Front-runners in the race to bring eVTOL aircraft into service by 2025 face heavy expenditures over the next year or two as they scramble to complete demanding type certification processes and prepare for series production and the launch of commercial operations. In that regard, California-based Joby seems to have plenty of disposable income, while UK-based Vertical now expects to spend almost everything it has, around £80 million, over the 12 months starting August 1. As Vertical acknowledged in an August 3 letter to shareholders, its fundraising efforts over the remainder of 2023 will clearly be critical to paying for “future operations” and are “a going concern.”

Vertical’s net operating loss of £36 million for the first half of the current financial year was far lower than Joby’s second-quarter loss of $286 million, but that seems somewhat immaterial in the wider context of getting to the point when income starts flowing from aircraft deliveries and, in Joby’s case, selling air taxi rides. In fact, Joby's loss during this period was largely explained by a revaluation of liabilities.

Joby Aviation has attracted new investment for its eVTOL aircraft, including from South Korea's SK Telecom group.
Joby Aviation has attracted new investment for its eVTOL aircraft, including from South Korea's SK Telecom group, which agreed to inject further capital in February 2023. (Image: Joby)

The main differentiators between the current fortunes of Joby and Vertical relate to the former’s recent breakthrough in attracting $280 million in new investments from SK Telecom and Baillie Gifford. At the same time, Joby, which reported its second-quarter results late on August 2, is generating some early revenue through its contracts with the U.S. Department of Defense.

That’s not to say Vertical isn’t making progress in its efforts to achieve UK and EASA type certification by the end of 2026. At Cotswold Airport, not far from its Bristol headquarters, it recently started untethered flight testing of a full-scale prototype of its four-passenger VX4 aircraft. Over the same period, it was granted design organization approval by the UK Civil Aviation Authority and added to its provisional backlog of orders by signing up South Korea’s Kakao Mobility as a prospective customer.

Vertical’s founder and CEO, Stephen Fitzpatrick, told shareholders that the next 12 months' cash reserves will support the start of crewed flight testing and the construction of an upgraded second prototype. The task of marshaling the start-up’s balance sheet now falls to newly appointed CFO Stuart Simpson, who is the third person to hold that position in less than a year.

Archer Has More Cash than Eve, but Higher Costs, Too

Somewhere between the relative liquidity standings of Joby and Vertical is Eve Air Mobility, which on August 8 reported its second-quarter results. These showed reserves of $269 million, consisting of cash, cash equivalents, financial investments, and a “related-party loan” from Brazilian aircraft manufacturer Embraer, which is Eve’s largest shareholder. The company reported that further credit lines of $101.7 million that are to be disbursed during the remainder of this year and into 2024 take its total liquidity to $370.7 million.

As Eve steps up work on its four-passenger eVTOL aircraft, research and development costs have, predictably, been rising. The $43.3 million it spent during the first half of 2023 was more than twice the $19.5 million it spent in the same period last year. During the second quarter, total cash consumption was $27.8 million, but the company’s latest financial announcement did not include projections for future expenditure.

Eve Air Mobility is developing a four-passenger eVTOL aircraft.
Eve Air Mobility has not yet built a prototype of its planned four-passenger eVTOL aircraft. (Image: Eve)

One interesting aspect of Eve’s announcement this week is the revelation that the $107.2 million net loss it incurred in the second quarter of last year resulted partly from its initial public offering on the New York Stock Exchange in May 2022, which was based on combining its business with special purpose acquisition company Zanite. This transaction, which raised lower-than-anticipated proceeds of $377 million, incurred “non-recurring, warrant-related expenses” of $87.4 million. Like Vertical, Eve was late to the SPAC-backed Wall Street party and ended up raising less than quicker-off-the-mark rivals Joby and Archer in the dash for cash.

In any case, Eve’s net loss for the second quarter of 2023 stood at just $31.4 million, with the company reporting it has benefited from a 5 percent currency devaluation of the U.S. dollar against the Brazilian real since most of its costs are incurred in that country. Starting September 1, Eve will be led by newly appointed CEO Johann Bordais, who is being brought in from Embraer, where he has been head of the airframer’s Services & Support division. Among his most-pressing tasks will be to reach agreements with key program partners and complete the construction of the first full-scale prototype aircraft so that Eve can catch up with competitors as it works towards projected entry-in-service in 2026.

Archer Aviation is set to report its second-quarter financial results late on August 10. The California-based company, which has told investors it will "deploy" 6,000 of its Midnight eVTOL vehicle by 2030, reported $450 million in reserves as of March 31 in addition to a previously announced strategic investment of $150 million by automotive group Stellantis. Announcing first-quarter results on May 11, Archer reported operating expenses for that period of $112 million (or $80 million on a non-GAAP basis), predicting that these would likely run between $110 million and $120 million for the second quarter.

This story was updated on August 9 to include more reported details about the incident involving the Vertical VX4 eVTOL prototype aircraft during flight testing.