Klaus Roewe is CEO of Lilium.
When Lilium’s CEO Klaus Roewe last spoke to the AAM Report in April, Lilium’s share price was in a downward spiral among swirling doubts about its financial runway. Since then, the company has enjoyed a string of positive developments, including a fresh capital raise, wind tunnel test campaign and initiation of its G-1 Certification Basis with the FAA, helping to renew investor optimism and sparking the beginnings of a share price rebound.
The AAM Report sat down with Roewe on the sidelines of the Paris Air Show in June to discuss Lilium’s recent progress. Excerpts follow:
AAM Report: What explains Lilium’s recent share price decline and why should investors be confident its financial problems are in the rearview mirror?
Roewe: I think we had been talked into a bit of a depression. Our share price plummeted and people were questioning if we were even a viable company. But internally, it was a different story. We knew that our incumbent investor base was standing strongly behind us. We also knew that we have new [investors] coming in and are in very advanced talks. But we also considered that with the share price spiraling, we had to take definitive action to break this trend, which we did with the capital raise announcement, and I’m sure we’ll add to it in the near future and build the share price more.
If the share price were to reflect the value of our product and business, it would be much higher than it is today. You see Joby has a market cap that’s 10 times ours, for example, and when you look at the market caps of some of the other companies compared to ours, it’s completely unbalanced. I think it was basically a fear of us having enough runway to get to the first flight and type certificate, and if we are to complete this up to $250 million [capital raise], it will get us very close to the first flight. And I would assume that if this concern was completely washed away, our share price would be in a very different league compared to what it is today.
Lilium has raised over a billion dollars to date, more than any other air taxi startup besides Joby. Why has the company burnt through so much cash?
Our cash burn has actually come down a lot. We have spent less than $20 million a month since the beginning of the year. That’s because we took some corrective action. Have we been laser focused on cash this whole time? No. That’s because we’ve been laser focused on growth. We doubled our staff several years in sequence, and when we absorb so many people very quickly, there are costs that go along with that. But when you see our cash burn in the first half of the year, I think it’s actually been significantly lower than some of our competitors.
Now, as for the money that has been raised, a lot has gone into the development of our product and a lot has gone into R&D. We basically started off as an R&D company. Our battery technology is unique, and we invested a lot not only in our own capabilities, but also in our partners like CustomCells for the production and IonBlox for the battery chemistry. So we had to invest $200 million, let’s say, up front with very little to show for it publicly.
With all that done, you can more accurately compare our spend that really goes into our product, which is around $20 million per month. It may go a little bit up in the future around the time of the [critical design review], when we’ll have to pay supplier payments and invest in test facilities, because with the design frozen we will need to test components. And we’ll also have to continue investing in engineering efforts and upcoming industrialization. I’ll add that we have always honored each and every contract and have paid all our suppliers on time.
How would you describe the experience so far in the powered wind tunnel test campaign with the subscale aircraft?
The campaign will last a couple of months. It’s running in different campaigns and it’s a very large model. It’s 40% scale, and we have gone to the largest wind tunnel in Europe, which is 9.5-meters diameter. Aerodynamically, we’re using the latest and greatest configuration of our Pegasus aircraft with powered engines. As you can imagine, we want to examine the aerodynamics of the plane and we also want to see it under certain flight conditions, as well as the interaction between the engines and the aircraft, and that’s why we’ve elected to have engines which are not passive.
It’s really helping us a lot on the flight physics and a lot of work that goes into the flight laws, as well as confirmation of loads. We are also testing with ice shapes on the aircraft; the wind tunnel is not made for ice testing but we can use ice shapes to test the aerodynamic properties. So, it’s about basic flight physics, aerodynamic exploration, icing and loads.
When we’re done in the wind tunnel, we will carry on to winter doing tests mainly on the engine side, as well as a lot more icing tests. We’ll also build our own test laboratories before the end of the year, so we’ll have an engine test facility where we are going to start the first real tests with real components. And then we are going to start preparing for the flight test next year, and that’s where the biggest part of our focus will be.
The 2025 service entry timeline appears to be fairly aggressive. How confident are you?
I’m very confident. As part of our fundraising, we have been audited intensely, which has been rather painful and time-consuming. We’ve had a lot of external visitors, technical aerospace consultancies, and they all have agreed our plan is ambitious, sure, but it’s also feasible. We still believe we are on track to begin final assembly by the end of the year. Is there a risk to that timeline? Of course. There is always risk. For example, our second aircraft was damaged en route to Spain when the truck carrying it crashed into a bridge, and that caused a delay. So things can always go wrong.
But if you asked me if there is a risk to starting production? I would say not really, because we are closely tracking our suppliers and components and we can see that everything is on schedule. And we have enough room in the schedule to spend more than a year flight testing an aircraft that is already quite well understood. So, I would say the nominal case is absolutely doable.
Of course, there is always uncertainty, and even super-mature companies like Boeing or Airbus still struggle with certifying new aircraft like the 777X or the A321XLR. There is always a chance that EASA [the European Union Aviation Safety Agency] could go back and reconsider a request or document from years ago and decide it’s not valid anymore. That can happen. But we are collaborating so closely with them, and they are witnessing our tests and exchanging data every day with us, that I would say this risk is minimal. But there is residual risk.
Do you expect to see more delays announced across the industry as certification approaches?
I’m sure others will announce delays. But we’re not very worried. We’re 100% done with our certification [basis] requirements with EASA. We’re 80% done with Means of Compliance and we are on track to finish the remaining 20% in the next couple of months. When you look at the FAA-based companies, two of them have G-1s, which are heavily disputed by the whole industry, including EASA. None of them have Means of Compliance totally completed, and yet they claim to certify in 2024, but they don’t even know what they’ve designed for. It’s bizarre.
For us, the question is a technical challenge, but that’s under our control. There’s always a question of who will drop the pencil first. I can tell you that we don’t intend to drop the pencil and we don’t see why we should, because we feel good. We’re not bullshitting so much. And we have always said at Lilium that we have the most ambitious design and we approach it as a very serious company. In the long term, investors will appreciate that we do what we told them we will be doing. But we also know there is risk; if you want to say there is no risk, I would say that you’re not being realistic.
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