Lilium faces insolvency as air taxi firm struggles to raise cash

German aerospace startup Lilium faces insolvency if it doesn’t raise emergency funding from the state government for the southeastern state of Bavaria.

Insolvency would mark a dramatic fall for a startup once touted as Europe’s best chance at building the 21st-century equivalent of “cars” that can fly.

Lilium is one of a series of firms trying to build “eVTOLs,” or electric vertical take-off and landing, vehicles.

Popularly known as flying cars or air taxis, these vehicles are being developed by startups in the United States, Europe and Asia.

Today, however, Lilium is in trouble. The company is desperately trying to raise taxpayer funds in Germany. And so far, it’s been unsuccessful.

In response to Germany’s decision to deny Lilium state aid, Hubert Aiwanger, Bavaria’s economy minister, criticized the move, saying it was “regrettable” that the federal government opted not to support the firm.

Danijel Višević, co-founder of Berlin-based climate technology investors World Fund, said that though it was “understandable” lawmakers denied Lilium support over concerns around the government supporting one single company over another, there was a misguided notion among politicians that air taxis are a “toy for millionaires.” This idea, he said, was “too short-sighted.”

Višević suggested it was unfair that U.S. electric car manufacturer Tesla — which burned through billions of dollars before making a profit — was once able to receive a U.S. government loan, but Lilium was not.

“Flying cars” perhaps isn’t the right term. But what Lilium was ultimately trying to bring to the world was a vertical take-off and landing aircraft that could fly people from one city to another to ease congestion on the roads.

The company initially wanted to roll out its own digital “hailing” service that would have seen users order rides on its jets from designated areas where it would be possible for the vehicle to take off and land.

Lilium subsequently decided to change its business model.

Rather than develop the whole service on its own, the company opted to partner up with airlines and airport operators, which would build out the service product and infrastructure needed to power its ambitions.

Lilium’s jets can cost as much as $9 million. The company also had a six-seater version in development, which would have set a buyer back about $7 million.

Lilium struck major deals with the likes of Lufthansa in Germany and Saudia in Saudi Arabia. It also agreed a tie-up with Groupe ADP, an international airport operator based in Paris.

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