The European electric vertical takeoff and landing (eVTOL) industry is facing increasing financial pressure, with two major German startups, Lilium and Volocopter, encountering serious funding difficulties. Despite raising significant investment over the years, both firms are contending with insolvency threats, regulatory obstacles, and changing investor attitudes. The situation highlights broader concerns about the sustainability of high-tech mobility ventures in Europe. Investors and industry experts are closely watching developments, as the outcome could shape the future of eVTOL operations in the region.
Lilium and Volocopter have previously secured substantial investments, with Lilium alone having raised over $1.4 billion and securing numerous pre-orders for its aircraft. However, financial instability has plagued both companies. In late 2024, Volocopter filed for insolvency after failing to secure sufficient external funding. Meanwhile, Lilium sought financial backing from the German federal government for a €100 million convertible loan but was denied, further straining its financial position. The challenges they face are not isolated cases but reflect a broader issue within Europe’s eVTOL sector.
Who is backing Lilium’s restructuring?
In December 2024, Lilium attempted to stabilize its business by entering an asset purchase agreement with Mobile Uplift Corporation GmbH, a newly formed consortium involving European and North American investors. While the identities of all backers remain undisclosed, reports suggest that financial groups such as Earlybird Venture Capital and 468 Capital may be involved. The deal was expected to provide “well-over €200 million” to restart operations, but concerns have since emerged over delayed payments, unpaid staff, and frozen accounts.
As part of the restructuring, Lilium’s subsidiaries terminated employee contracts, with plans to rehire workers once the transaction closed. However, uncertainty continues to grow. Industry insiders indicate that a critical investment exceeding $200 million has been stalled, leading to hesitancy among smaller investors. If no resolution is found, Lilium may be compelled to file for insolvency despite its technological advancements in the eVTOL sector.
Could Lilium have survived in the US?
Some industry experts suggest that Lilium’s financial troubles might have been avoided if the company had been based in the United States. Unlike European startups, American eVTOL firms receive more robust financial backing and regulatory support. A source familiar with the industry commented,
“There’s much better access to capital. If Lilium had been based in the US, it likely would have been saved already.”
In contrast, US eVTOL company Archer Aviation recently secured $300 million in equity funding, bringing its total liquidity to $1 billion. Additionally, Archer Aviation has received Federal Aviation Administration (FAA) approval to commence commercial operations in 2026. The disparity in financial and regulatory support puts European eVTOL firms at a disadvantage as they struggle to maintain operations.
The ongoing funding crisis at Lilium and Volocopter underscores the challenges European eVTOL companies face in securing long-term investment. The difficulties extend beyond these two firms, as even major players like Airbus Helicopters have paused eVTOL projects. In contrast, Volocopter recently announced a collaboration with Jet Systems Hélicoptères Services to introduce eVTOL services in France, though the company remains in financial distress.
The viability of Europe’s eVTOL industry now depends on whether significant new investment can be secured. If Lilium and Volocopter fail to achieve commercial success, it raises questions about Europe’s ability to compete in a sector where American and Chinese firms are making steady progress. Stronger financial mechanisms and government support might be necessary to sustain innovation in urban air mobility.
