eVTOLs: Understand Eve’s Cashburn, Backlog and Funding
We discussed with Andre Stein, CEO of Eve, of the way Embraer creates the Evtol industry.
In this second part of the conversation, Andre talks about the day before cashburn, delays and finance.
When he merged with Spac, he raised $ 370 million, and United then invested a little more. How are you in terms of capital to finance this development period? We are satisfied with the next years of development. It was the underlying idea: to lift capital so as not to have to return to the market all the time.
But you will need new funding when you have to build a factory and give the company an industrial scale.
Yes yes. But we have a few years by then. We have a very competitive cash consumption. We have the advantage of being in Embraer. If I were a startup from zero, I would think of the infrastructure, the hiring of more engineers, because I would not have optimization with other software. With Embraer, we were able to obtain competitive costs and work by emphasizing development without having to go to the market each year. Our attention should not be distracted between the two.
And the best time to collect funds is when you don’t have to. The market is not the best now, it will be the worst time. But when the time comes, we can go back. Having this breath to obtain a few years of additional development allows us to go back in time and with different mechanisms. Everything should not go through fairness.
Do you still Earn Income? Eve has several orders, but nothing has yet been fixed, isn't it?
These are letters of intention, and they have an initial deposit, but they are reimbursable. It is no different from what we practice in other aviations. Other commercial aviation programs have also started with letters of intent. So it helps. We also have income from things we have done to open the way – like the advice – but the highest level of income comes later, with the entry into the service.
When do you think the orders will start to arrive? When will they have the life-size prototype?
Nothing to do. You have a typical delay between the company’s orders and the commissioning. What do companies want with such fixed requests? Secure your site in the delivery queue. Consequently, generally about two years before commissioning, company orders begin.
What is your appreciation of this market? How far do you think the market will evolve?
We did a study with KPMG last year to have an outside opinion. And they spoke about about three -quarters of dollars by 2040. It is 100,000 units. And they planned that there would be 50,000 by 2035. Thus, in the next 15 years, 50,000 Evtol should already be delivered to the world, in flight.
This study relates only to the urban air mobility market. This does not imply other potential applications of the Evtol.
If you stop to think about it, it makes sense, because there is a huge repressed request. And you don’t take everyone off. It’s a small part. It’s just a lot of people. It is a very large size.
This volume is more important than what we are used to in aviation, but if you compare it to the automotive industry, it is nothing.
How much do you consider you to gain market share on this market?
We believe that we have everything to be one of the leaders in this sector. We position ourselves as one of the potential leaders, either because of the infrastructure we have, or because of the vehicle we build, which is optimized for a lower operating cost.
But are there a number you look at?
I’ve had. It is a figure that is not very different from the part that Embraer holds today in the sectors in which it operates.
What is the price of Evtol more or less?
The average transaction we conclude is around 3 million US dollars. But the whole issue is the price to the end consumer, who will be comparable to land transport, perhaps a little more. But if you take New York, let’s say, from the airport to Manhattan, land transportation is easily $ 100. So getting there is quite possible and feasible.
The emphasis is placed on the fact that it is something comparable, because this is what will generate demand on this market. To do this, we linger on the main costs of today’s helicopter, which are fuel, maintenance and crew itself. The helicopter is the top of the chain.
A helicopter pilot costs much more than a plane driver, as the machine is much more complex. And there is the whole question of the size, which is part of the history of the hen and the egg. You can increase the volume of the operation with lower costs and thus you can damage the price of the car more.
Today, the market being so focused on helicopters, the infrastructure is very expensive for lack of scale. Today’s heliport is expensive because you want to avoid landing in helicopter, because it is a headache. Not here, you are talking about places that have an incentives to have a “vertical point”, like a shopping center, an airport, because you take people there.