The Rise and Fall of Lilium: Germany’s Flying Taxi Pioneer Hits Turbulence as Critical Deals Hang in the Balance

Lilium, the German startup that once led the world in electric vertical takeoff and landing (eVTOL) technology, is facing a financial crisis that could jeopardize its hard-won agreements with major players like Germany’s Lufthansa and a substantial order from Saudi Arabia. With financial pressures mounting and the German government withholding a €50 million loan guarantee, the company's future is in question. Stakeholders now hope for a last-minute solution to rescue these significant deals and save the German flying taxi pioneer from collapse.

Aiming High: Lilium’s Dream of Urban Air Mobility

Founded in 2015, Lilium captured global attention with its bold vision for a fleet of electric air taxis. Its flagship model, the “Lilium Jet,” is a five-seater aircraft designed to take off vertically, flying silently above congested urban areas with zero emissions. Lilium’s promise of a quieter, cleaner, and faster form of urban transit attracted notable investments from global funds and high-profile investors, driving the company’s growth and R&D. By 2020, Lilium was considered a leader in the electric aviation sector, valued at over $3 billion.

The Lufthansa Partnership and Saudi Order

Lilium’s market credibility soared further in 2021 when it secured a partnership with Lufthansa to explore new air travel concepts and customer experiences, envisioning a future where air taxis operate as a regular means of travel between airports and city centers. The partnership positioned Lilium as a leader in Germany’s push toward sustainable aviation and signaled widespread industry confidence in the startup’s vision.

Additionally, Lilium signed a landmark agreement to supply Saudi Arabia with up to 100 Lilium Jets as part of the Kingdom’s Vision 2030 plan to invest in sustainable and innovative transport technologies. This significant order underscored the global demand for Lilium’s technology, with Saudi Arabia aiming to lead in green aviation in the Middle East. Both the Lufthansa collaboration and the Saudi order were critical to Lilium’s long-term strategy and potential profitability, signaling the startup’s shift from a prototype-driven company to one with real, tangible market applications.

A Financial Crisis and the German Government’s Withholding of Funds

Despite these deals, the capital-intensive nature of Lilium’s technology development led to substantial cash burn, pushing the company to the brink of insolvency. The German government recently declined to support a €50 million loan guarantee, which had been a crucial part of Lilium’s financial stability plan. Without this lifeline, Lilium now faces a liquidity crisis, leaving its agreements with Lufthansa and Saudi Arabia hanging in the balance.

This decision has shocked stakeholders who viewed Lilium as a national champion of green aviation. The German government’s reluctance may stem from the risks associated with the eVTOL sector, which has yet to reach commercialization and has experienced numerous delays. With limited public funds available, German officials appear cautious about committing further capital to an industry with uncertain profitability, despite its alignment with Germany’s long-term green energy goals.

The Potential Impact on Lilium’s Deals

If Lilium cannot secure funding soon, its groundbreaking deals with Lufthansa and Saudi Arabia could be in jeopardy. Both partnerships not only symbolize Lilium’s market potential but also reflect Europe’s and the Middle East’s interest in becoming leaders in sustainable aviation. The Saudi order, in particular, represents a pivotal moment for Lilium’s future revenue stream and the Kingdom’s commitment to green innovation. Without these deals, the company’s value and viability could be significantly impacted, and confidence among investors could further diminish.

Seeking a Lifeline: Industry and Investor Interests

Given Lilium’s existing contracts and technological advancements, industry experts and stakeholders have expressed that the company’s assets could attract new investors or buyers. Saving Lilium could mean preserving crucial technology and upholding Germany’s reputation in the eVTOL market, which continues to see competition from international players like Joby Aviation, Vertical Aerospace, and Uber Elevate. Experts suggest that Lilium’s intellectual property, partnerships, and production capabilities could still make it an attractive acquisition target, potentially from aerospace giants or new investors in the aviation sector.

Lufthansa, as a strategic partner, could play a role in securing Lilium’s future by encouraging industry partners or German private investors to step in. The airline has a vested interest in keeping Lilium afloat, as the partnership aligns with Lufthansa’s own sustainability goals and its long-term strategy for efficient inter-airport transportation. Additionally, Saudi Arabia’s interest and its ambitious Vision 2030 could inspire the Kingdom’s sovereign wealth funds to step in and protect their investment in the 100-aircraft order.

The Broader Context of eVTOL Challenges

Lilium’s predicament is indicative of the high-stakes world of eVTOL startups. The sector has encountered numerous hurdles related to regulatory compliance, infrastructure, and technological demands. The initial excitement around air taxis has given way to cautious optimism as investors evaluate the high costs, development timelines, and uncertain market readiness. Major players around the world, including Archer Aviation and Volocopter, are likewise contending with stringent testing requirements, infrastructure planning, and high R&D costs.

What Lies Ahead for Lilium?

As Lilium’s future hangs in the balance, the need for decisive action is urgent. An investor bailout or acquisition could preserve its groundbreaking technologies and safeguard its high-value partnerships with Lufthansa and Saudi Arabia. However, without immediate funding, the prospect of a full-scale commercial launch for Lilium Jets is diminishing, and the company may become a cautionary tale for the eVTOL sector.

This uncertainty underscores the volatile nature of tech-driven aviation projects and the need for deep, sustained funding. Whether through government backing or private intervention, Lilium’s supporters are hoping for a last-minute solution to keep the company airborne and, in turn, preserve Germany’s stake in the future of urban air mobility.

Peter Auwerx, Tech Correspondent