On October 9th, the "Guangxi Low-Altitude Economy High-Quality Development Action Plan (2024-2026)" was officially issued, stating that Guangxi encourages the construction of over 300 low-altitude aircraft takeoff and landing points throughout the region. According to statistics from the Economic Observer, as of now, 45 cities across the country have introduced action plans for the development of the low-altitude economy, and it is expected that by 2027, more than 5,200 low-altitude aircraft takeoff and landing points will be built nationwide.

However, Xia Ling, a partner at Mingshi Capital, which has invested in the leading low-altitude economy company Shanghai Volant Aerotech Co., Ltd. (hereinafter referred to as "Volant"), predicts that it will not be until after 2030 that low-altitude aircraft can provide transportation services like taxis.

Among low-altitude aircraft, eVTOL (electric vertical takeoff and landing aircraft) is considered the most suitable aircraft for mass transportation. eVTOL can take off and land vertically like a helicopter without the need for a runway; its cruising speed is around 200 km/h, equivalent to the speed of the fastest lane on the highway. At the same time, eVTOL is driven by electricity, making it quieter during flight and more environmentally friendly.

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eVTOL can carry both passengers and cargo, with a cockpit that can accommodate 2-5 people, or it can carry hundreds of kilograms to a ton of cargo, making it suitable for compact urban spaces and living scenarios. After mass production, the cost of a single eVTOL is several million yuan, only one-tenth of that of a helicopter.

The higher cost-performance ratio and unique physical characteristics make eVTOL stand out among many aircraft, attracting the attention of both aviation and automotive factions, various capital, and local governments, and it will also trigger a wave of engineering construction in major cities.

However, under the enthusiasm, there is still a significant gap between eVTOL and becoming a "flying taxi." At present, many companies have built low-altitude aircraft, but they cannot operate commercially or fly regularly. Next, eVTOL will have to overcome the two major thresholds of airworthiness certification and airspace application.

Two factions compete for eVTOL

Aviation and automotive companies are pouring into the eVTOL track.

Volant is one of the representatives of the aviation faction. The founder of the company, Dong Ming, has worked in the civil aviation field for more than 20 years and has participated in aviation projects such as C919, CR929, and ARJ21. Dong Ming advocates designing eVTOL according to the production and verification process of civil aircraft to ensure that the aircraft meets the safety standards of civil aircraft.The founder of another company, Zero Gravity Aircraft Industry (Hefei) Co., Ltd. (hereinafter referred to as "Zero Gravity"), Li Yiheng, graduated from the helicopter major at Nanjing University of Aeronautics and Astronautics. This company has attempted a more cutting-edge tiltrotor aircraft configuration, a design that combines the flexibility of helicopters with the cruising efficiency of traditional airplanes. The path of the "car faction" is different. Guangdong Huitian Aerospace Technology Co., Ltd. (hereinafter referred to as "XPeng Huitian"), invested in and controlled by XPeng Motors, is adept at thinking about making airplanes with a car mindset. It has developed a detachable flying car that resembles a car with a large trunk carrying a small airplane.

In terms of battery technology and electric drive systems, eVTOLs share a high degree of similarity with new energy vehicles. More leading companies in the new energy vehicle field have also crossed over to participate. In August 2024, Contemporary Amperex Technology Co., Limited (CATL) invested hundreds of millions of dollars in an eVTOL company, Shanghai EHang Aerotech Co., Ltd. (hereinafter referred to as "EHang Aero"). On February 27, 2024, this company completed its first flight from Shenzhen to Zhuhai for the first time, breaking the record for eVTOL inter-city flights.

The focus of their cooperation is the development of eVTOL batteries. Although the technical principles are similar, the takeoff and landing process of the aircraft requires much higher power. Migrating car batteries to aircraft requires increasing the energy density of the batteries by several times.

GAC Group reached a cooperation with the eVTOL company EHang Intelligent (EH.US) in June 2024, which is the world's first eVTOL company to obtain a complete set of airworthiness certification from the Civil Aviation Administration of China. The focus of their cooperation is mass production, preparing to build an intelligent production line for unmanned passenger aircraft in Guangzhou. Compared with the manual assembly method of the traditional aviation industry, car manufacturers are more adept at extending the automation production line of cars to aircraft manufacturing.

Geely Holding Group entered the aviation field as early as September 2020 by integrating its Aosight Technology and Terrafugia projects to establish Wofei Changkong Technology Co., Ltd. Shanghai Shi De Technology Co., Ltd. is also related to Geely Holding Group, and the three founders of the company were once the general manager, chief engineer, and R&D director of Geely Terrafugia in China.

Among A-share listed companies, automotive metal material manufacturers Wanfeng Auto Wheel (002085.SZ), automotive battery manufacturers Wolong Electric Drive (600580.SH), and automotive motor controller manufacturers Blue Ocean Huateng (300484.SZ) are all negotiating or undertaking orders for electric flying vehicles.

Hot Money Inflow

According to statistics from the Ground-shaking Industry Research Institute, there were 54 financing events in the low-altitude economy field in the first half of 2024, which is a significant increase compared to 22 in the first half of 2023 and 34 in the second half of 2023. Among them, eVTOL has the highest proportion of financing quantity and amount. The main investors include market-oriented funds, local state-owned funds, and industry funds. Looking at the fields where the investors are located, the funds come from local governments and industries such as aviation, transportation, and整车 manufacturing, as well as some overseas investment institutions.

Xia Ling invested in Volant in 2022, and the company has raised funds for five rounds in the past six months, with each round raising nearly 100 million yuan. After several rounds of financing, its valuation has risen from less than 1 billion yuan to 2 billion to 3 billion yuan. The company has also settled its production facilities in Zigong City, Sichuan, and the process of negotiation, cooperation, and fund arrival took only 40 days.In Xia Ling's view, unlike the niche tourism, emergency rescue, and private flights that helicopters used to represent, eVTOLs have for the first time opened up the imaginative space of aircraft to provide transportation services for people, just like high-speed trains and airplanes. Eventually, the price of eVTOLs will be similar to that of private car services, but their speed will be 3-5 times faster.

Volant's partner and Senior Vice President, Huang Xiaofei, told the Economic Observer that the short-term goal of eVTOLs is to achieve the cost level of ground transportation, supplementing future subways, intercity railways, and taxis. Volant's aircraft, from the very beginning of their design, targeted the rapid passenger transportation needs within and between cities. For example, in Shanghai, a journey that takes 1 hour by road traffic can be completed in about 15 minutes by eVTOL.

The imaginative space of eVTOLs goes beyond this. EHang's Vice President, He Tianxing, said that eVTOLs represent a type of low-altitude flight activity, linking the comprehensive economic form of research and development, manufacturing, testing, application, and service.

On March 27, 2024, the Ministry of Industry and Information Technology, the Ministry of Science and Technology, the Ministry of Finance, and the Civil Aviation Administration of China jointly issued the "General Aviation Equipment Innovation Application Implementation Plan (2024-2030)", proposing the goal of promoting the low-altitude economy to form a trillion-level market scale by 2030.

He Tianxing stated that when people talk about the low-altitude economy, they should not simply understand it as a simple economic model of flying. The low-altitude economy can act as a traction to promote the transformation of the entire industrial form, and it can also promote large-scale urban renovation and upgrading.

According to statistics from the Economic Observer, as of now, 45 cities across the country have introduced action plans for the development of the low-altitude economy. According to these plans, by 2027, more than 5,200 low-altitude aircraft take-off and landing points will be built nationwide.

These take-off and landing points are suitable for various types of aircraft, including eVTOLs, helicopters, and drones. They are densely distributed in the urban areas of the Yangtze River Delta and the Greater Bay Area, with Shenzhen alone planning more than 1,000 take-off and landing points.

Li Xi, Deputy General Manager of Shenzhen Urban Transportation Planning and Design Research Center Co., Ltd. (hereinafter referred to as "Shencheng Jiao"), told the Economic Observer that the construction of take-off and landing points is a systematic project involving planning site selection, land use attributes, surrounding building conditions, etc. These take-off and landing points will bring great growth opportunities for local infrastructure projects. With the integration of air traffic, most cities may need to re-plan their layout.

However, most cities have not yet started large-scale construction. Li Xi said that the actual advancement of take-off and landing point construction is relatively complex because it involves hundreds of construction, investment, and operation entities at the municipal and district levels, including local construction companies, urban investment companies, and aviation operation companies. Currently, some cities, such as Shenzhen, have established specialized companies under the leadership of the government to coordinate planning, and most cities are still exploring the establishment of related systems.In order to advance subsequent construction, more cities are accelerating the investment attraction for eVTOL companies. In March of this year, EHang Intelligent signed a cooperation agreement with the Wuxi Municipal Transportation Bureau. According to the Economic Observer, leaders from relevant departments in Wuxi specifically named this company during the meeting. eVTOL companies have long been in urgent need of profits and orders, while the government offers financial support and aircraft procurement as exchange conditions to attract them to settle locally.

A person from the Wuxi Investment Promotion Bureau said that supporting facilities need to be built around scenarios, but the government does not understand what flight scenarios can be developed locally. It is necessary to introduce eVTOL and other low-altitude companies to learn and understand which hubs are suitable for laying out flight points and how to construct specific scenarios on these points.

Li Xi stated that as a public service, low-altitude takeoff and landing facilities require substantial financial investment in the early stages of construction and operation. However, the business model loop in the low-altitude flight sector is gradually taking shape and is expected to enter a stage of scaled development.

Two major thresholds still need to be broken through. At present, the vast majority of companies' aircraft have not obtained all the airworthiness certificates from the Civil Aviation Administration, nor can they apply for stable air routes. This is also the current situation for eVTOLs: they cannot fly regularly nor operate commercially, with the two major thresholds coming from airworthiness certification and the opening of airspace.

Just as cars need to pass factory inspections, quality certification, and licensing, aircraft must first pass a series of safety and reliability tests by the Civil Aviation Administration of China, namely airworthiness certification, before being introduced to the market.

Airworthiness certification requires eVTOLs to meet the same safety standards as large passenger aircraft, meaning the flight accident rate must not exceed 10 to the power of negative 9. In the future, the companies that can truly pass airworthiness certification will be extremely few.

In the view of He Tianxing, for many years, the airworthiness certification of eVTOLs by civil aviation authorities worldwide has been an uncharted field, with no clear certification process. The first certificate issued by the Civil Aviation Administration of China signifies that the Chinese civil aviation regulatory agency has a complete system for standard recognition and safety assessment of this emerging entity.

Another more robust barrier lies in the opening of airspace. Just as cars need roads, the flight of eVTOLs requires airspace. The low-altitude economy typically refers to the airspace below 3000 meters. The use of airspace has always been strictly controlled, which directly affects whether aircraft can take off and operate.

If an eVTOL wants to fly in a certain area, the aircraft operator needs to submit a detailed flight plan application to the Civil Aviation Administration of China or a designated agency in advance, including information such as flight route, altitude, and time, and wait for approval.Huang Xiaofei stated that currently, local airspaces are gradually being liberalized. Early on, eVTOLs (electric Vertical Takeoff and Landing) were typically operated by companies through one-time airspace applications, approved for multiple fixed point-to-point flights, such as from Shanghai to Suzhou, or Shanghai to Hangzhou.

The aforementioned individual from Wuxi's Investment Promotion Bureau mentioned that the degree of airspace openness varies across different regions. First-tier cities suffer from severe traffic congestion, making the demand for airspace openness more urgent. However, due to the abundance of high-rise buildings and airports in these areas, airspace control is stricter. In contrast, the central and western regions, with their sparse population and fewer buildings, find it relatively easier to open up airspace. But in these areas, ground traffic is not congested, and the demand for air traffic is naturally less urgent. This phenomenon creates a paradox.

The individual also mentioned that the development of low-altitude economy will also touch upon these interest relationships. The liberalization of airspace is not just a technical issue; it is a complex issue involving social management and policy coordination.