The next investment opportunity flies overhead
Perhaps the biggest upcoming transformation in this decade is mobility.
What would consumers say if they could get from Zurich Airport to the city center in 5 minutes during rush hour without emissions, or from JFK Airport in New York to Manhattan in 22 minutes? For the same price as a cab? They would probably say what we often hear: Keep on dreaming.
Our job is not to dream, but to analyze and invest. For us, disrupting innovative products means replacing existing products because they are cheaper and more efficient. If the estimated cost and time to get from JFK to Manhattan are right, we call that a disruptive opportunity. The big question is: Can it come true?
American Archer Aviation makes electric helicopters called eVTOL that can take off and land vertically. The company said at its 2021 "analyst day" that it would be able to travel the distance from JFK to Manhattan sometime between 2024 and 2026. An Uber X would cost $76 and take up to 70 minutes, while an Archer would cost $50 and take about 22 minutes. Today, a helicopter ride costs about 1775 USD and also takes 22 minutes. We find the same kind of numbers with most companies (Joby Aviation, Lilium, Vertical).
At Joby Aviation's 2021 analyst day, the company presented that the average flight in 2026 would be 38 km (24 miles) at a speed of 265 km/h (165 mph) at a price of $72. What makes the price so low is the rotational speed of the helicopters. In his business model, Joby assumes that each aircraft can make an average of 40 flights per day with 2.3 passengers on board (load factor) at a cost of $3 per mile. This means that each aircraft generates revenue of about $2.2 million per year and a gross profit of $1 million. In other words, the aircraft payback period is only 1.3 years. This means a fast return on investment.
Is that realistic?
The initial situation is simple. Air transport does not need roads, there are rarely queues and even small planes can fly 200 km. The price is cheaper and more efficient. A disruption in air transport?
A number of large and small companies in the U.S. (Joby, Archer, Vertical, Boing / Wisk), China (EHang), Europe (Lilium, Volocopter, Airbus), Japan (Honda) and South Korea (Hyundai) are currently working with eVTOL. Most eVTOL designs and prototypes accommodate a pilot and 4-6 passengers. The eVTOL offers three advantages: