Estimated reading time 9 minutes, 48 seconds.
As everyone in the industry knows, well-respected eVTOL developer Kittyhawk recently shut its doors.
On Twitter, the Vertical Flight Society stated that while it had not been specifically briefed on this development, “it appears that the backers of Kittyhawk (i.e., Larry Page) are fully endorsing the four-seat @WiskAero Cora business model, rather than the more-limited [Kittyhawk] one-seat Heaviside product.”
Looking at the eVTOL industry as a whole, someone else posted on Twitter “another one bites the dust … won’t be the last.”
Is this true? Whether we will see more eVTOL firms fold is hard to foresee, but it is likely. Closures and consolidation in any new industry are expected and normal.
The bigger question is about money. Investment is obviously critical to getting eVTOLs to market, and we must ask, will Kittyhawk’s demise scare investors away from the eVTOL sector, or will Kittyhawk’s exit have no effect?
Let’s review Kittyhawk’s journey first, and why it may have closed shop. Founded in 2010, the firm was backed with heavy investments from Google co-founder Larry Page. Kittyhawk went wild with designs, building 111 aircraft and conducting more than 25,000 successful piloted and autonomous flights.
Along the way, there were some layoffs and the company narrowed down its focus to three models. There was the Cora autonomous two-person eVTOL air taxi, the one-seater Heaviside, and the one-seater ultralight Flyer. Kittyhawk was also doing work with the U.S. Air Force to explore medevac eVTOL applications.
That left Kittyhawk with only the Heaviside, with apparently a larger two-seat air taxi version in development. Then in 2021, reports of internal conflict surfaced, and the program lead and electrical engineer Damon Vander Lind was fired in May of that year.
This year, there were intriguing tidbits on the Kittyhawk website about air taxi development.
Then, Kittyhawk’s demise was announced on Sept. 21.
Wisk stays strong
Wisk made it clear after the news was announced that Kittyhawk’s demise has no impact on its mission to commercialize an autonomous eVTOL air taxi, unveiling its sixth-generation mock-up earlier this month — the final version for type certification.
“We remain in a strong financial position, with both Boeing and Kittyhawk as investors,” Wisk leaders stated. Earlier this year, Wisk received $450 million in funding from Boeing.
Sergio Cecutta at SMG Consulting said he and his colleagues were always “very convinced” that the one-seater or two-seater autonomous air taxi focus of Kittyhawk came with the understanding that it was a “moon shot” — it would either work or not work.
“It’s a unique offering, to provide a form of mobility that was first to last mile, from a person’s door to the final destination,” Cecutta said. “It was a concept ahead of its time, I think. First, we need the industry up and running before we can offer that type of personal transportation.”
In terms of industry viability and willingness to invest, Rani Plaut, CEO and co-founder of Israel-based Air, which is developing a two-seat personal eVTOL called Air One, does not see Kittyhawk’s demise as a concern.
Chris Brown, external communications lead at Wisk, has a similar view. “We are seeing strong interest in the industry and anticipate that trend to continue,” he said.
Plaut believes that “if anything, the massive investment Wisk received earlier this year from Boeing, one of the biggest names in aviation, proves that the eVTOL industry is on the precipice of providing tangible products. Concern about Kittyhawk is a storm in a teacup since Wisk is actually the derivative of their research.”
Plaut wasn’t surprised that Kittyhawk folded. He explained that in comparison to other eVTOL companies that have a very focused trajectory to bring one product to market, Kittyhawk had a research focus and mission to try many things.
“I don’t fault them for that,” he added. “But there must not have been a clear focus to bring something to market.”
Cecutta is also of the view that there will be no impact on eVTOL investment funding due to Kittyhawk’s exit, and he also sees Kittyhawk as a unique case.
“Kittyhawk’s business model is not directly comparable to those of other OEMs [original equipment manufacturers],” he said. “Kittyhawk had one investor, others have multiple investors or are publicly traded. I think a lot of people might be reading too much into this, seeing this as a sign of doom.”
Authors of an industry funding report from McKinsey & Company, released in July, agree.
They note that existing aerospace companies and more than 500 new industry participants are currently developing new future air mobility (FAM) offerings across sustainable aviation, supersonic aircraft, passenger eVTOL aircraft, and surveillance or cargo drones.
“The industry has seen a decline in funding in the first half of 2022 compared to 2021, and some may question whether FAM players will continue to attract capital. We believe that skepticism is misplaced. True, funding has slowed on an annual basis, but that is compared to a record $6.9 billion in disclosed funding in 2021. Over the long-term, capital flows are still ahead of the pace in prior years.”
They also noted in the report, that “as of the end June 2022, cumulative disclosed industry funding totaled $15 billion. That includes $2.2 billion that was invested from January through June 2022 — an influx that increased the cumulative total by 17 percent. The $2.2 billion might seem like a significant decrease from the same six-month period last year, when $4.3 billion flowed into the industry, but 2021 was a major outlier with record inflows of capital. Deal activity is also down in the first half of 2022, with the total number of transactions declining by about 25 percent compared to the first half of 2021. Average deal size also declined.”
According to the report, the 2022 funding dearth is being affected, among other factors, by the economic downturn in progress and the fact that leading players have recently raised big rounds and may be pausing before another big funding influx is needed.
A forward look
In Cecutta’s view, the number of eVTOL companies that will have the funding in place to see their projects come to market all depends on their individual “spending burn rate” — and their progress.
“Further investments will go to the companies with the most milestones, the ones making the most progress,” he said. “We know there are too many companies, and we know from history that not all will survive.”
Plaut added that looking at the history of the eVTOL funding landscape, it started from a very small pool but has expanded somewhat over time.
“It’s not like cybersecurity or something like that where there was a lot of investment from the very beginning,” he said. “Yes, it’s a long process to invent and certify an aircraft, but it happens all the time, and now there are more opportunities for investment in eVTOL than ever before. As an industry, we are moving to certification now and it’s getting real. Investors can see the models, the test flights.”
And the continued investment quest for Air’s business model? Going well, Plaut said.
“I have never failed on funding,” Plaut said. “I have invested my own time, money and future in Air, and I am completely sure that funding to get us to market will not be a problem. ‘Flying cars’ are going to be popular. Everyone dreams of flying, and many like to be in their own vehicle.”
More than 250 people have pre-ordered the Air One.