Deal focus: Aerofugia wins support for eVTOL tilt

The 2024 Paris Olympics could be the moment when electric vertical take-off and landing (eVTOL) vehicles achieve mass-market recognition. Group ADP, which manages the city’s airports, plans to open five vertiports and the vehicles – known as VoloCity air taxis – will use the existing helicopter route network. EVTOL start-ups around the world are racing to achieve certification as service providers.

Germany’s Volocopter and China’s AutoFlight have both reached agreements with Groupe ADP with a view to being ready for the Games. AutoFlight said last month that it would run services from Pontoise Vertiport, which opened last year at Pontoise-Cormeilles Aerodrome, located northwest of Paris.

“Transportation from airports to city centres will be one of the first commercial landing scenarios for eVTOL. Everyone is monitoring this market closely. The Olympics will be the technology’s first major showcase,” said Fei Peng, an investment director at TH Capital, which recently led a CNY 100m (USD 13.8m) Series A for Aerofugia, an eVTOL unit of Chinese automaker Geely.

With China’s unmanned aerial vehicle (UAV) space becoming crowded – and DJI enjoying a position of dominance – aerospace investments have gradually shifted towards eVTOL, which are often compared to electrified helicopters. Peng sees it as a natural evolution from pizza carriers to people carriers.

“In the field of electric aviation, it is widely recognized that development must proceed from small to large, from carrying cargo to carrying passengers. We’ve already invested in the UAVs, so we decided to explore larger vehicles,” he said. “Indeed, many companies have come to realise that the UAV market is now mature, and since 2015, they’ve been looking at advanced air mobility.”

The third way

There are three main branches of eVTOL technology. The most common one is an electric version of the traditional helicopter that relies on several distributed electric rotors rather than a single internal combustion rotor. It is regarded as a safety-first option: if one engine fails, others continue to function.

The second approach involves using two sets of rotors, one for lift-off and the other for propulsion. The advantages are greater speed and the ability to hover like a helicopter, but only a single set of rotors is used at any one time, which means the other becomes dead weight.

Finally, there is the tilt-rotor option, widely seen as the most energy-efficient solution. Multiple rotors are mounted on tilting nacelles (a form of aerodynamic housing), which can move from vertical to horizontal orientation after take-off. The same hovering capabilities are available.

Tilt-rotor technology is favoured by the military, favoured by TH Capital, and increasingly favoured by Chinese eVTOL start-ups. For example, United Aircraft, which has raised CNY 3.2bn (USD 444m) across two rounds in the past three months, has moved from UAVs to tilt-rotor vehicles.

Following extensive research, TH Capital identified three Chinese tilt-rotor start-ups it found attractive: Tcab, Zero Gravity, and Aerofugia. The latter claims the distinction of being the only Chinese company to complete a test flight of a tilt-rotor aircraft carrying more than 2 tons. It aspires to become the first domestic player to achieve a domestic tilt-rotor certification.

The company can also tap into Geely’s industrial supply chain across batteries and key electric components, ensuring high-quality, stable and cost-effective supply. Moreover, there is the possibility of collaboration with Caocao and StarRides – Geely-backed platforms in ride-hailing and premium chauffeur services – to create usage scenarios.

TH Capital reached out to Aerofugia last August through the founder of Tengdun, a UAV portfolio company. Aerofugia was hesitant about raising external capital, but eventually invited TH Capital to lead the round because of Sino Jet, another portfolio company. It is the largest business jet operator in Asia Pacific and is expected to give Aerofugia access to a first batch of business clients.

The new funding will go towards the development and commercialisation of the AE200, an in-house developed tilt-rotor vehicle that seats six and can travel up to 200 kilometres.

Complex back story

Aerofugia is not a straightforward story. Geely acquired Boston-founded Terrafugia in 2017 and supported the development of a flying car, which received pilot certification from US regulators in 2021. However, getting a license to operate on roads proved difficult. Geely pulled the plug later in 2021, bidding farewell to the flying car business model. Attention duly switched to eVTOL.

At around the same time, a group of engineers from Terrafugia’s China operation spun out and established eVTOL-focused Tcab Tech. The Terrafugia personnel that remained became what is now Aerofugia following a merger with Aossci, a local drone manufacturer acquired by Geely.

Peng noted that flying cars are conceptually challenging. Technical requirements for cars and planes can be very different, making it hard to design a vehicle that performs effectively across both functions. “For example, a car’s suspension system is designed to provide a soft ride for passengers. In contrast, an aeroplane’s suspension often generates a strong vibration during landing for safety reasons,” he observed.

Calls for a new regulatory framework covering air and road transportation will only become louder as the global “urban air traffic” industry grows. Morgan Stanley projected in a 2021 report that it will be worth USD 1.5trn globally by 2040, with China accounting for a 29% market share. Many investors have been drawn to the space by the idea that electrification of the skies will follow electrification of the roads.

“If electric cars are the first half of the electrification process, then we believe that electric aviation is the second half. With the popularisation of electric motors, batteries, distributed engines and other technologies, the achievability of electric aviation has increased significantly, therefore putting low altitude resources into practical usage,” said Yuanfeng Li, a partner at TH Capital

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• Topics
• Greater China
• Technology
• Industrials
• Early-stage
• Tsinghua Holdings Capital (TH Capital)
• Electric Vehicles
• Transportation
• Logistics