German Air Taxi Startup Lilium Fights for Survival, Seeks €100M State Lifeline

Lilium, the ambitious German Air Taxi startup, is facing a critical juncture in its quest for financial stability. The company, known for its innovative electric vertical takeoff and landing (EVTOL) aircraft, has been in talks with the German government for over a year, seeking state support to keep its high-flying dreams from crashing down to earth.

The Stakes Are High

Lilium’s situation is dire. Without a quick cash injection, the company could be staring down the barrel of insolvency. They’ve been pushing for €100 million ($107 million) in loan guarantees, split evenly between the federal government and the state of Bavaria.

“We want to receive a fixed-rate loan of €100m as a signal to our investors that Germany supports the entry into electric aviation,” Lilium CEO Klaus Roewe stated in a recent LinkedIn post.

Bavaria’s already on board with their €50 million, but here’s the kicker: it’s contingent on the feds matching that amount. And right now, it’s not looking good. Der Spiegel reports that resistance within the German Bundestag’s budget committee might ground this lifeline before it can take off.

A Rallying Cry from the Tech Community

The tech community isn’t taking this lying down. Over 650 founders and investors have signed onto an initiative called “Enable loans for Lilium, strengthen Germany as a deep tech location.” It’s a who’s who of German tech, including big names like Daniel Metzler of Isar Aerospace, Bastian Nominacher of Celonis, and Miriam Wohlfarth of Banxware.

The German Startup Association didn’t mince words: “We want to make our country a globally leading deep-tech location by 2030. This area is capital and research intensive, but it is here that the future of Germany as a location for innovation will be decided.”

Christoph Stresing, managing director of the startup association, emphasized the potential consequences of inaction:

“If the federal government does not grant the €50m guarantee in question, this would probably not only result in the literal collapse of the company itself. Rather, there would be a risk of lasting damage to the reputation of Germany as a deep-tech location, the long-term costs of which are difficult to quantify.”

Lilium’s Last-Ditch Effort

Lilium’s been scraping together funds wherever it can. The company’s managed to secure about €32 million from existing investors, but some of that cash is tied to whether the government steps up. It’s a precarious position for a company that was once flying high after going public via a SPAC merger in 2021.

CEO Klaus Roewe took to LinkedIn to clarify the nature of their request:

“It is not about rescuing a crisis-ridden company with lost subsidies. The loan is fully repayable, the conditions are very advantageous for KfW [the German state-owned investment bank], and thus for Germany, and it is highly likely that this will mobilize further private investor money from home and abroad.”

The Bigger Picture: Germany’s Tech Future

This isn’t just about Lilium. It’s about Germany’s position in the global tech race. The German Startup Association argues that if Germany wants to compete globally, it needs to back startups working on innovative deeptech technologies.

“Political decisions should not only take into account the consequences of action, but also the consequences of inaction,” Stresing said.

The association believes that the decision to support Lilium hinges on whether Germany is prepared to offer new technologies real growth prospects, even under challenging circumstances.

Lilium’s Journey So Far

Lilium’s journey has been anything but smooth. The company, founded in 2015, has attracted high-profile backers like Atomico, Earlybird Venture Capital, and Tencent. Their vision of creating a revolutionary eVTOL aircraft capable of whisking passengers between cities has captured imaginations and investor dollars alike.

However, the path from concept to commercialization in the aviation industry is notoriously long and expensive. Lilium has faced technical challenges, regulatory hurdles, and now, a severe cash crunch. The company’s latest setback underscores the immense difficulties in bringing a new aircraft to market, especially one as technologically advanced as an eVTOL.

DroneXL’s Take

This situation with Lilium highlights the ongoing challenges and potential of the eVTOL industry. While the technology is promising, the path to profitability and regulatory approval remains turbulent. We’ve seen similar struggles across the eVTOL sector, with companies facing technical hurdles, certification delays, and funding crunches.

The German government’s decision could have far-reaching implications beyond Lilium. It’s a test case for how nations will support ambitious, high-risk drone and aviation tech in an increasingly competitive global market. As we’ve reported on emerging eVTOL technologies, it’s clear that government backing can be crucial in bringing these futuristic aircraft from concept to reality.

Moreover, this situation raises important questions about the role of government in supporting emerging technologies. Should taxpayers’ money be used to prop up private companies, even if they’re working on potentially transformative tech? Or should these ventures live or die solely by the whims of the market?

The outcome of Lilium’s plea for support could set a precedent for how Germany, and potentially other Countries, approach the nurturing of their deep tech ecosystems. It’s a delicate balance between fostering innovation and responsible use of public funds.

As the drone and eVTOL industries continue to evolve, we’ll be keeping a close eye on how governments around the world choose to engage with and support these cutting-edge technologies. The Lilium case might just be the canary in the coal mine for the future of state support in the aerial mobility sector.

What’s your take on Lilium’s situation? Should governments step in to support eVTOL startups, or should they sink or swim on their own? Share your thoughts in the comments below – we’re eager to hear your perspective on this crucial issue facing the drone and eVTOL industry.

Photos courtesy of Lilium.