On The Radar
Not for the first time, a prominent eVTOL aircraft developer has become the target of a short-selling report aimed at undermining its credibility with investors. Back in February 2021, Wolfpack Research triggered an acrimonious dispute (and apparently unresolved lawsuit) when it challenged China’s EHang. Just over 12 months later, on March 14, Iceberg Research published a report arguing that Germany’s Lilium is “the losing horse in the eVTOL race.”
Iceberg released the report on the day that a large portion of Lilium’s shares were “unlocked” following its September 2021 Wall Street initial public offering based on the company’s combination with special purpose acquisition company Qell. The report concludes that Lilium’s cash reserves will support its development work for only another 18 months.
The main thrust of Iceberg’s beef concerns Lilium's expectation that its seven-passenger Lilium Jet, with its fixed-wing and ducted fan propulsion system, will be able to fly routes of up to 155 miles. That expectation reflects unrealistic assessments of available batteries, according to Iceberg, which also maintains that Lilium is falling far behind on a timeline for achieving type certification and that claimed commercial support from Brazilian airline Azul does not amount to an assured revenue stream.
Iceberg’s researchers, largely basing their claims on input from unidentified aerospace “experts” and a former Lilium employee, pour scorn on the company’s contention that its propulsion system will be able to incorporate energy density of between 320 and 330 Wh/kg. They also dispute the company’s contention that power consumption will be minimal during short hover phases of flight.
Lilium has so far not publicly responded to Iceberg’s contentions. The investor relations section of its website does provide extensive background on the main premises behind the technology being used for the Lilium Jet. The company says it is working with its partner CustomCells to develop batteries that will deliver the required energy density, and also a power density of around 2.5kW/kg required to support anticipated hover needs.
The information provided rebuts what Lilium says are “misconceptions we see in third-party reports [relating] to battery-pack design. The company also suggests that critics may have misunderstood the projected performance of its distributed ducted fans (recently reduced in number from 36 to 30 in Lilium’s design) and so have underestimated the power efficiency that will be available during hover flight.
Iceberg's report fairly points out that rival eVTOL manufacturer Joby is far further along with flight testing than Lilium, which has yet to unveil and fly a full-scale production prototype and is about to resume flight tests with a smaller technology demonstrator in Spain. However, it incorrectly maintains that both Joby and Lilium are aiming to be cleared to start commercial services in 2023. In fact, both companies, along with most of their direct competitors, are now projecting that this will not happen before 2024.
According to Iceberg, Lilium has misrepresented an August 2021 agreement with Azul as covering firm orders for 220 Lilium Jets. Its report says the deal is no more than a "marketing agreement" and, without offering evidence, says that Lilium gave Azur "cheap shares" in exchange for its public support.
In fact, Lilium’s statement at the time did not use the term “orders”; rather, it described the agreement as covering a partnership under which it “plans to sell” this number of the new eVTOL model to the operator, whose chairman David Neeleman has joined the company’s board of directors. While several eVTOL start-ups have sought public validation by announcing “orders” for their aircraft, it has always been clear to discerning observers that, almost by definition, these commitments for uncertified new designs can be no more than provisional sales.
Earlier this month, private aviation group NetJets announced that it has secured "purchase rights" to add up to 150 Lilium Jets to its fractional ownership fleet. This deal, which also would see NetJets serve as an operating partner for Lilium, is expected to be firmed up before the end of this year.
On March 17, Iceberg published its own rebuttal to Lilium’s investor relations statement on battery technology. However, the further statement added no more substance to its claims or attribution for the supposed expertise on which its main arguments against Lilium are founded.