Podcast: Ranking the AAM Leaders – An Inside View

Ranking the leading players in the emerging advanced air mobility (AAM) market is a full-time task as companies almost daily announce product or investment milestones. As Aviation Week launches a new publication dedicated to the AAM ecosystem, technology editor Graham Warwick and senior editor Guy Norris are joined by SMG Consulting’s Sergio Cecutta to discuss the thinking behind the latest update of his AAM Reality Index.

Here is a rush transcript of the Check 6 podcast.

Graham Warwick:       Hello and welcome to this very special, first of its kind, Aviation Week podcast. This podcast is being arranged in conjunction with a launch of a new Aviation Week product, which is looking at the emerging advanced air mobility sector. The new product and website will be looking across the AAM ecosystem from vehicle developers to operators, and it's intended for an audience beyond just aerospace, but from regulators to city planners, to investors, everybody that's involved in this new market of AAM.

                                   And as part of this, a key part of our launch, we're going to be featuring the latest update of the AAM Reality Index produced by Sergio Cecutta and SMG Consulting. This was a sorely needed product in this majorly hyped sector and it's interesting to see this Reality Index evolve as Sergio updates it on a very regular basis and also does deep dives behind the scenes to justify the rankings of these companies. So we're going to talk here about the latest version, which will be in our first issue of the new product, which comes out at the beginning of June. So we're going to just have a chat through that.

                                   We're joined by Guy Norris, who is my colleague over in the Western U.S. and who shares the burden with me of covering this emerging market. So welcome, Sergio. Welcome, Guy. Let's begin.

So Sergio, your ranking has, and has had for some that time now, Joby Aviation as number one - and it really is hard to dispute Joby's ranking. It's really been a leader since the beginning. It's now backed by a lot of money raised by going public through a merger with a SPAC. They have a vehicle flying. They have put a very strong team together. But they have a very aggressive timeline.

                                    So one of the things that interested me when they put out their investor deck early this year when they announced the SPAC deal, was really to see how much they still had in front of them. When they put that deck out in February, they still hadn't got to a preliminary design review on their conforming vehicle. And they're looking to get FAA certification by the end of 2023. Seems like a lot to do in a short period of time. So Sergio, let's start with Joby. Well, why do you keep them up there at the top?

Sergio Cecutta:           Thank you for having me, hello. So Joby, the reason that Joby is up there. So let's start with the funding. A lot of these companies are startups. And so if we had the classic legacy players, we would have no doubt that they have the money to do whatever they want. But with the startup, it's very important to understand the funding.

                                    And Joby walks in with about $800 million pre-SPAC. And if we remember that about $700  million to $1 billion is the ballpark for certifying and vehicle, they're the one that has the cash to get to that point. Now we don't take into consideration SPACs for the simple reason that most SPACs have not yet closed. So the first day of trading is when we will consider the SPAC, but Joby will have a cash reserve of $1.6 billion at that point.

                                   Now, because money is not everything, let's look at the certification as you were talking. They are one of the most advanced companies along the certification path. And I've put them there with probably Volocopter, as far as their advance along the certification path. They do have significant amount of tasks that they have to complete, but at the same time they tend to be very oriented towards action instead of talking. So there could be a lot of work that has been done behind the scenes. And they do have a lot of people that know exactly how to certify the aircraft.

                                   And again they have been flying. They've covered the entire envelope. And so between the expertise, the funding, the technology, we see them probably being one of the most likely to certify in that timeframe. But once again, as we've said many times, all of the companies advise and then the FAA decides. So they are the ultimate decision maker, but I think a 2023, 2024 date for Joby is not out of place. However, we think that by the end of next year is when the rubber meets the road. By the end of next year, we will know yay or nay who's going to meet their dates.

Graham Warwick:       Good point. So one thing that impresses me about Joby is that they do already act like a big company. I mean, they are taking a very rigorous engineering-driven approach to developing this vehicle. When you start to see into what they're doing, they're really taking a very thorough approach. And Guy, you're one of the few people that's had an inside look. How do you feel about Joby?

Guy Norris:                 Yeah, that's a good point, Graham. And yeah, hi to Sergio and to you. Yeah, I think that is the point. When you go and actually see the company in operation, see it's so vertically integrated, the discipline with which they've approached the engineering and the design of the vehicle, as well as the flight testing. And I think one of the important points here is, although it's done the bulk of its testing autonomously so far, it's full scale and they are poised to begin the manned, as it were crewed, flight testing. That phase is critical as they approach the start of certification flying beginning in early next year.

                                    And although the test pilots have flown the vehicle, it's been in a tethered or low altitude hovering mode. So I think just even those sort of things are an example of why it should be taken the most seriously of all of them so far. It just feels like a big company that's ready to stand up and be ready to face the real challenge of certification in a sort of grown-up way.

Graham Warwick:       I think that's a big thing. Particularly when companies go public, they have requirements put on them to behave like large companies, even though they are still really startups culturally.

Guy Norris:                 Right.

Graham Warwick:       So moving on Sergio, I noticed that you've got Beta as number two, Beta Technologies with ALIA. I think they've moved up your ranking since you started doing this. I've always regarded them as a bit of a dark horse. They're almost like the opposite of Joby. They're secretive, but they seem a very seat-of-the-pants type operation. But when you look at them, in the last few months they've been flying their vehicle. They've been doing it fixed-wing, but they're about to go back into VTOL flying. And they've announced these customer deals; UPS Flight Forward, Blade Urban Air Mobility. And they already had orders in place with United Therapeutics. So that's passenger air taxi, freight feeder and organ transport.

                                   And of course, like Joby, they have the U.S. Air Force Agility Prime contracts as well. And of course the big announcement with Beta really is that they've just raised $368 million. Now that's private funding, because I think – and you may correct me here - but I get the impression that Kyle Clark, who's the CEO, has said that he doesn't want to get involved in this whole going public. He thinks it would be distracting. So they are charging ahead. They're aiming for 2024 as well. They have an interesting vehicle. It's very, very simple in design. It doesn't have complex fly-by-wire or anything like that. So what's your take on Beta, Sergio?

Sergio Cecutta:           Kyle and his team, I always refer to the word pragmatic when I talk about them. They are a company that lets the facts talk as opposed to marketing. One thing that I would bring up to you is you have never seen, until the orders, an artist’s impression of their vehicle. It was only real pictures. And that tells you a little bit about their mentality. And I think also the interesting part there is the approach that Beta has followed with the vehicle. You talk about simple.

                                    And we know that when it comes to certification, you can only have that many variables change with the past, because the certification authorities basically certify based on historical data. And in this case, the choice of a vehicle that is relatively simple, is not as complex, there's not that many parts to move, was a choice on their part to say: "This should be easier to certify."

                                   Same thing we haven't heard them talk about is SVO [simplified vehicle operations]. So we can assume that might be more conventional when it comes to controls. And I think the other big part of Beta that they have received a lot of validation for is two things. Number one is all these orders that we have seen. As well as the oversubscribed funding offering. That is always a good thing when you have to turn away investors because there's only that much space.

                                   But I think the other important part is also, as we said, the fact that right now they have a good amount of cash available to them. By my counting it should be over half a billion dollars. The fact that they're private is a big deal because public companies are subjected, not only to a much higher scrutiny because there's investors, but also toa much higher level of regulations. I mean let's not talk about Sarbanes Oxley and all of these other financial parts of the house.

                                    But we think that their approach is really interesting. And the other point that's important - military airworthiness. Both Joby and Beta received military airworthiness approval, however they were a little bit like vanilla and chocolate - just because they're the same ice cream doesn't mean that they're same flavor. Joby received full envelope approval, so vertical and horizontal flight. Beta received only horizontal flight approal. So they can only fly as a conventional aircraft. But that is very important because the U.S. Air force wants to operate these vehicle initially that way.

                                    And so the approach from the Air Force, and what we heard from Col. [Nathan] Diller [at AFWerx], is the fact that they are eager to put their own pilots on this vehicle and start to understand how do you operate this new generation of electric vehicles? Distributed propulsion, what does it mean to their operations?

Graham Warwick:       Yeah. Good point. Guy, you got any thoughts? I mean, you saw what Joby was doing in terms of the pilot vehicle interface [PVI]. They're really going hard on very advanced flight controls, very advanced PVI. Beta's going, as Sergio says, for a much more traditional, conventional way to get to certification quicker.

Guy Norris:                 Yeah. Three things that strike me about the Beta approach. One is that the ALIA-250 has quite a big range compared to a lot of the other vehicles in Sergio's initial top 10 list. But I think within that, they're extending range with a very simple concept, and that's point number two, it's a simple concept as a configuration. They're aiming at a pretty good range performance. And that would mean within that, if you've extended to that hard stop, as it were, for 250 miles, it's going to make it easier within that to operate efficiently with that powertrain.

                                    I'm not sort of explaining myself very well, but if you've set yourself a high bar and a high target, then working within that is going to be easier as you operate different missions. So it's got the high performance. Secondly, it's simple in the configuration. And I think, thirdly, the other thing that Sergio has pointed out to me in the past is that Beta is also investing strongly in the ground infrastructure. I think that is a key element and, particularly, probably why there's been so much early interest in it, because people recognize you need that, like a Tesla you need to start supporting the ground side of it.

Graham Warwick:       Yes. It's very like a Tesla approach. Get the chargers out there and the customers will follow type thing, you know?

Guy Norris:                 Right.

Graham Warwick:       Okay. Sergio, you said the regulators don't want to see too much change all at the same time but your third ranked company is Wisk. Now, Wisk's trying to change the whole game out of the box. They want to fly these without pilots. Now, I notice we don't know when they're going to enter service. They can't say when they're going to enter service. I'm still interested that you rank them so highly. Is that just because of the Boeing backing and the Kitty Hawk funding that's there. Is that what really gives them that justification?

Sergio Cecutta:           So I think what you're saying is true. I mean, not only that they have Boeing behind them, and if you look at the latest from Boeing, the fact that Boeing NeXt has gone, the fact that all of the Aurora [Flight Sciences] personnel has basically been transferred to help Wisk. It seems that Boeing has put their, allow me the euphemism, their eggs in the Wisk basket when it comes to advanced air mobility. And we know that Boeing has other issues to deal with at this time. So, that's number one.

                                   Number two, and again you mentioned also private backing. Having one of the richest people in the world behind you, it's never a bad thing, especially a visionary. But the other part is, let's not forget, you hear this company talk a lot about generations: “We've flown this vehicle and then this other vehicle, and then this other vehicle.” So Wisk is going to be at the sixth generation coming up.

Yes, it's autonomous. And I think that the choice of autonomy we're reflecting the index in that I see them not climb as fast as the others. So right now, we rank them at the top, but maybe once the others start certify Wisk will be left a little bit behind just catch up at a later time, once autonomy comes in.

                                    But we cannot discount that, number one, they're one of the few companies to have explored the entire envelope. And so as far as I'm concerned, they're TRL 6 because they've expanded the envelope. They've looked at all the different corners. They've transitioned. And then the other part is this commitment to continue to innovate. And I think we're all very interested in what Gary [Gysin, Wisk CEO] will have to say when the sixth generation comes out. And we've been promised sometime this year. The vehicle is going to be a little bit bigger, we've been told. Maybe not more seats, but there needs to be more systems on the plane. But I think that they have a level of maturity that is very high.

Graham Warwick:       I'm not going to go down the list one by one. So I'm going to take the next two together because I think they're really interesting, particularly when you compare them with Wisk. And that's EHang, who you've got at four, and Volocopter, who has moved up to five, but for very good reason, I think. And I think the interesting thing there is that what really strikes me about Ehang is a couple of things. One is they've now sort of said, "We are going to be an operator as well as a manufacturer," which is really the model for a lot of these companies, except for Beta. The other thing is that they have only just started the formal certification progress. They've been flying for ages, they've flown passengers, but they've only just started the certification process.

                                   So in many ways, they're no further forward, I think, than some of the others. They are about at the same point as Volocopter. They've still got certification ahead of them to get through. They've also just announced the companion vehicle, the VT30, which is going to be a longer range vehicle. So they're beginning to build a family of vehicles, which I think is an interesting thing.

                                    And then you put that alongside Volocopter, who is really one of the fast movers in this market. And there's always been this thing around Volocopter: It's a multicopter, it can't do very much. But Volocopter has really stuck to that design. They'll probably be one of the first to certify if things go the way they want, at the end of 2022. And they've just announced the companion vehicle, the VoloConnect, which is a thrust lift-plus-push winged multicopter type vehicle. And they're aiming for about 2026 with that.

                                    So they've got this family, they've got this early lead. Now, the big question mark there is they haven't got the funding behind them that some of the others do. So when you look at those – and you have to kind of talk about them together here, I'm sorry about that - but when you look at EHang and Volocopter, how do you kind of look at those two?

Sergio Cecutta:           So it's really interesting that you actually coupled them together, because I was having conversations today and I was looking at the similarities between the two. However, I think that the similarity is also going to big differences. So let's start by taking a step back. You talked about multiple vehicles. Every time we see a company develop multiple vehicles, we see a pro and with that a con. The con is now you have to have more investment because you're working on multiple vehicles, or maybe there is a distraction coming in, you get distracted by one vehicle or another.

                                   However, at the same time, we think that there is not one size fits all in this market. Every time in aerospace that we're trying to create the platform that does it all, it is not making anyone happy. And so if you look at the multicopter, the epitaph to the multicopter has been written so many times. But at the same time, we have to remember that the majority of the cities in the world are very small compared to U.S. cities. And a multicopter is plenty good. It's just that in cities like Sao Paolo, one and a half hour in a commute means five miles. In a city like Los Angeles where there's still traffic, one and a half hours mean 45 miles. So maybe there is space for different vehicles.

                                    Now, in this case, I think for Volocopter it's been a specific choice to say we have one market segment that we've covered - that, let's call it, the inner city center. And now we want to cover...they call it the suburb, I will call it “Let's reach out to other market like the U.S. that might need something bigger.” I mean all of our cities, unless you live in New York, they need something bigger.

                                   For EHang, there is a question there. So they're going now to a family of vehicles. And the question is, is the family of vehicles a response to a different market segment, or is it an admission that maybe the first vehicle did not satisfy the market? And then we also see an EH216M, a manned version. They have talked about it as a way for people to experience flying this vehicle, but maybe another way to see it would be maybe you need a pilot to get regulators to certify it.

                                   Again, on the EHang side, we still remain bullish for the fact that the Chinese market lives by a different set of rules. On the Volocopter side, they just closed the Series C not even a few months ago. They have a good amount of cash, almost $400 million. And I think that they have a very strong team, and let's not forget that they are the only company to have a DOA [design organization approval] with the EASA. And we know companies usually need to have a DOA with the certification authorities to make the certification quicker. Again, they are the only one that is at that point.

Graham Warwick:       Very interesting. So Guy, you got any thoughts? I was then just going to wrap up by... I was going to just quickly pick out two of the others, but not really go into any depths. Have you got any thoughts?

Guy Norris:                 Well, yeah, I was just thinking that Sergio mentioned the point that not all of these requirements are set by the size of U.S. cities, which are giant. So if you look at the [AAM Reality index] top 10, at least the last version I looked at it, five were vectored thrust, three were lift-plus-cruise, and just two were multicopters. But it kind of really does explain how not everything is going to suit the market as such. You're going to have a variety.

                                   And then the other thing I was just going to mention is with EHang, obviously, they're just beginning the formal CAAC certification process with China, but they have got this deal to go and do the demo in Helsinki for EMS in 2023. So others are already beginning to see a valuable use for the demo version at least. And then the last thing I wanted to say was obviously, Morgan Stanley for example, has said that this market as a whole will be worth over a trillion dollars by 2040 of which, I think, they said it might be a quarter would be in China alone.

Graham Warwick:       A third, I think.

Guy Norris:                 A third.

Graham Warwick:       A third in China. Yeah.

Guy Norris:                 Okay. So a third. So, with or without, I think the Chinese are just going to make this work and with that sort of market size, no matter what is going to happen, you're going to see that go through okay eventually.

Graham Warwick:       So I suspect we'll have to have another podcast talk about the other half of the list here. And I suspect we're going to see some movement. As Sergio's already said, it's been a really busy first three months of the year. And as we see the rest of the year play out, we're probably going to see some more of these things. One or two of the things I would like to pick out that I think is really interesting to see, and I agree completely with Sergio, is that Bell has gone right to the bottom because Textron has kind of said, "We're not in any hurry. We don't really worry about it."

                                   Airbus is still pretty low because we're getting mixed messages out of there, but they've got other priorities. And they're taking a wait and see, whatever type attitude. I think it's really interesting when you look at Sergio's list - and I encourage you to go look at the AAM Reality Index. The two that really interest me is that, so far, Embraer, aka Eve, is the one really staying the course among the established aircraft manufacturers.

I think there's some local reports from Brazil, that they may fly their full-scale vehicle this year, which will be a major milestone. And the other one of course that's staying with the path at the moment is Hyundai. Hyundai's just announced they're going to set up a UAM subsidiary here where I am, in Washington DC, to spearhead their UAM activities. And so far they have stayed absolutely on that path.

                                   Not only that, but Sergio has brought some new names into his list at the bottom. South Korea is going gangbusters on UAM. So we are seeing Hanwha Systems come in through Overair. We're seeing Korean Air looking at it, Korea Aerospace looking at it. Those guys are going to make some big changes in this market ranking, I think. So Sergio, I'm actually going to hand to you to just wrap up. What's your feeling? I mean, you must feel like you got a tiger by the tail trying to keep hold of all this.

Sergio Cecutta:           Well, it's fun because there's always something that happens. I mean, sometimes I wish that there was one day with no news, so that I can actually relax, but that never happens. I wake up in the morning and there's already like 20 things that I need to look at that I haven't looked at yet. But when it comes to some of the companies that you've mentioned, I think with Hyundai there is something to be said. This are the only car company that has come into the market themselves, not through investments, and they have expertise.

                                    And if you look at the automotive side, they are investing a significant amount of money on their electric platforms and the cars they’re coming out with are extremely advanced. Just to give you an idea, their new E-GMP platform on the car side is an 800-volt platform. And the only other platform in the market at 800 volts is an $100,000-plus dollar car. But these cars are $40,000. So that's a big deal.

                                   And the other part is, I think if you look at LinkedIn and the positions they've opened, there is a reason to think that their technical side is going to be in Irvine, [California], near where I'm based. Irvine is the base for Hyundai Kia North America. So it would make a lot of sense. And there was a position for a chief engineer based in Irvine. So that gave me a little bit of a thinking that they might be based here. And again, they have done a very pragmatic roadmap, cargo followed by passenger, followed by something bigger, maybe hydrogen. And last but not least, let's also remember that Jaiwon [Shin] is in charge of that company. I mean, he's the man behind the revitalization of the first A in NASA. So that was no small feat.

                                   And last but not least, you were talking about Eve. The thing about Eve, we've seen full-scale prototypes as far as components for the transmission, for the motors, for the propellers. We've seen subscale flight. The only question about Eve is that it's a spinoff and they want investors. So one of the question marks there is, how is it going to get funded? Because it's really not corporate backed. It's a little bit corporate backed, but it's a little bit like a separate company. So the money question there remains. And, as you've mentioned, the big legacy guys, they're just waiting. And to me, at certain point, I wouldn't be surprised to see the major three or four helicopter manufacturer names be on this list, but until now, we only have two.

Graham Warwick:       Yeah. Yeah. And Guy, you and I, we both know Jaiwon Shin very well. He was the aeronautics administrator at NASA, and he's now heading up Hyundai's UAM business. So he does know his stuff when it comes to this, doesn’t he?

Guy Norris:                 Yeah. That's right. And in fact, I was just going to say, to add on to what Sergio was saying, the thing about the Hyundai project, which is a bit like the Joby element with Toyota, they have involved somebody who knows about mass production on a large scale. In aerospace, we just haven't seen that since wartime. So I think that's a critical factor. And the last point I was going to say is, you say that the South Koreans are going gangbusters, but I presume you meant going Gangnam style with this. Sorry, I just had to say that.

Graham Warwick:       We didn't get to talk about Archer and various other people like that, but we'll do that in another podcast. I'm sure they have milestones coming up that will make us sit up and pay attention. But it's such a long list and it's such a dynamic list and I want to take my hat off to Sergio for putting the effort into trying to make this as rigorous and as thorough and as quantitative as possible. It is something that the industry really needs. We appreciate working with you on it. And thank you very much for your insights. Thank you, Guy, for that closing comment, if nothing else. And thank you to Donna Thomas, our producer, and that's it for this first of a kind Aviation Week AAM podcast.

 

Graham Warwick

Graham leads Aviation Week's coverage of technology, focusing on engineering and technology across the aerospace industry, with a special focus on identifying technologies of strategic importance to aviation, aerospace and defense.

Guy Norris

Guy is a Senior Editor for Aviation Week, based in Colorado Springs. Before joining Aviation Week in 2007, Guy was with Flight International, first as technical editor based in the U.K. and most recently as U.S. West Coast editor. Before joining Flight, he was London correspondent for Interavia, part of Jane's Information Group.