On The Radar
The funding flow for what McKinsey calls the future air mobility sector has been drying up so far in 2022, according to a report by the management consulting firm. The report addresses the question of whether this trend represents a short-term disruption or a longer-term inflection point.
The authors estimated that as of the end of June 2022, cumulative disclosed funding for the sector amounted to $15 billion, with $2.2 billion of that having been added since the end of 2021. According to Robin Riedel, who leads McKinsey’s disruptive aerospace division, this is markedly down from the capital committed in the same period last year, which he noted was especially buoyant due to several high-profile initial public offerings for eVTOL start-ups. The wave of business combinations with special purpose acquisition companies appears to have subsided with companies including Vertical Aerospace, Lilium, Joby, and Archer having lost an average of 50 percent of their equity values so far this year.
In the context of a shell-shocked post-Covid global economy and stock markets, the McKinsey report said, there are now higher rates of investment in wider sustainable aviation technology. It also covers developments such as new supersonic and hypersonic aircraft, as well as hydrogen propulsion systems.
Calling the slowdown in funding “stark,” the analysts pointed to what they say are significant unresolved challenges for new eVTOL operations such as public acceptance, regulation, and infrastructure. “Even if many eVTOL players ultimately receive the funding they need, we have to get all these factors right for the industry to reach its potential,” they concluded.