Amid the booming low altitude economy, Lilium, a well-known eVTOL company in Germany, has suffered a heavy blow. Recently, it announced that two of its subsidiaries had to file for bankruptcy due to insufficient funding, which has attracted great attention in the industry.
Lilium is a star enterprise in the field of low altitude economy, which has not only attracted investment from many big names such as Skype and Twitter co founders, but also many well-known institutions such as Tencent have repeatedly invested heavily. This year, Lilium also established its Asia Pacific headquarters in Bao'an, Shenzhen through its Chinese subsidiary, Liling (Shenzhen) Airlines Co., Ltd. The reporter noticed that Lilium (Shenzhen) Airlines Co., Ltd. was established in April 2024 and is 100% owned by Lilium GmbH, which announced plans for bankruptcy.
Industry insiders have analyzed to reporters that the mismatch between technical solutions and application scenarios may be one of the key factors leading to Lilium's current predicament. Some investment insiders have also expressed that this serves as a warning for domestic eVTOL manufacturers: commercialization is the top priority, and companies need to form a self-sustaining business model. Otherwise, once financing is blocked, the company's normal operation will face severe challenges.
Tencent made a heavy bet on landing its Asia Pacific headquarters in Shenzhen
According to foreign media reports, Lilium recently submitted a document to US regulators stating that due to the inability to raise sufficient funds to maintain the normal operation of its two main subsidiaries, Lilium GmbH and Lilium eAircraft GmbH, the management of the subsidiaries has notified the parent company that they plan to file for bankruptcy under German law and apply for self-management procedures. Self management program is a legal procedure that allows a company to retain control of the company during bankruptcy, typically taken when the company is facing financial difficulties but still capable of managing daily operations. Prior to this, Lilium had attempted to seek financial assistance from the German federal government, but it ended in failure.
After the news was released, Lilium's stock price plummeted by over 50%, with a closing price of only $0.2 on October 24th and a market value of only $130 million. It is worth noting that the planned bankruptcy filing of the subsidiary may result in Lilium's eventual delisting from NASDAQ or the suspension of its stock trading.
Lilium is a star company in the eVTOL field, attracting investment from many big names such as Skype and Twitter co founders, as well as well-known institutions such as Tencent and Baillie Gifford. In 2020, Lilium became one of the "unicorns". In 2021, Lilium was listed on NASDAQ through SPAC.
It is worth noting that Lilium also has a presence in the domestic market. In June of this year, Bao'an District of Shenzhen announced that Lilium had established its Asia Pacific headquarters in Bao'an through its Chinese subsidiary, Lilium (Shenzhen) Airlines Co., Ltd., which was founded in April of this year. Lilium (Shenzhen) Airlines Co., Ltd. is 100% owned by Lilium GmbH.
The reporter noticed that since 2020, overseas media have continuously published articles questioning Lilium's technological roadmap and commercial prospects. According to Bu Rixin, founder of Chuangdao (Beijing) Consulting Co., Ltd., "In addition to internal reasons, Lilium's predicament may be mainly related to its business strategy. Its main research product is a tilted culvert configuration, which is relatively advanced and difficult to develop. It is difficult to commercialize in the short term, which has affected the company's cash flow Bu Rixin believes that this serves as a wake-up call for domestic eVTOL manufacturers: commercialization is the top priority, and a self-sustaining business model must be formed. It cannot rely solely on external funding. Once financing through the capital market is not smooth, the company's normal operations will be affected.
Both domestically and internationally, the industry is still in its infancy
Compared to Lilium's difficult situation, eVTOL companies in China are a hot commodity in the investment market, and their popularity has continued to rise since the beginning of this year.
Entering 2024, multiple cities such as Suzhou, Guangzhou, and Chongqing will provide policy and financial support to support the development of low altitude economic enterprises with real money and silver. According to incomplete statistics, there have been over 50 financing events in the low altitude economy sector in China in the first half of 2024 alone, and some leading eVTOL companies have set a historical record of five rounds of financing in the second half of the year. The popularity of the company is no less than that of tourist attractions, with guests from all walks of life visiting every day. Many local governments hope that we can establish production lines, and even invite the company to relocate its headquarters and research and development center. The conditions offered are very favorable, "a practitioner told reporters in a previous interview.
There is a certain degree of overlap between eVTOL and the new energy vehicle industry chain. When discussing the future prospects, many practitioners frequently compare the two, hoping that this field can reproduce the high-speed growth of new energy vehicles. In the view of Bu Rixin, the business model of eVTOL in the first phase is completely different from that of new energy vehicles. Firstly, eVTOL is a business of TOB, with a strong regional attribute and a fixed route operation model. These factors limit its market size, and in the short term, it will not be as huge as new energy vehicles. He suggests that everyone should look at the low altitude economy industry with reasonable expectations, neither blindly believing it to be unfeasible nor overly optimistic, and use the logic of new energy vehicles to deduce the low altitude industry.
From the current orders of top eVTOL companies in China, the main buyers come from local governments, tourist attractions, etc. The ToB, operational attributes, and regional attributes of eVTOL determine that the government's leading role is crucial in the early stages of the industry. This model has a huge driving force on the industry, which has been fully demonstrated in the development of new energy vehicles and photovoltaic industries. Bu Rixin stated that for a considerable period of time in the future, the development of the domestic low altitude economy industry will still be dominated by the government. Currently, this industry is still in its infancy and requires a long time to cultivate and develop, and has not yet reached the stage where it can rely solely on market forces to promote stable industry development.