This week, German eVTOL company Lilium announced that two of its subsidiaries have decided to file for insolvency following unsuccessful talks with state and federal governments to solve its financial crisis. The company previously raised €1.4 billion in funding.
Subsidiaries Lilium GmbH and Lilium eAircraft GmbH told the parent company they are over-indebted and will be unable to pay its debts in the coming days.
Lilium shares plunged 61 per cent following the news.
Lilium is now "reviewing whether there are grounds for its own insolvency as well," it said in a regulatory filing-
The filing for insolvency and application for self-administration in Germany could result in the Company's ordinary shares being delisted from the Nasdaq or suspended from trading on Nasdaq.
German government says no to loan
The news follows the company's failed efforts to receive a €100 million loan from the German government.
Lilium had asked the German federal government to guarantee 50 million euros €50 million guarantee of a contemplated €100 million convertible loan. The company had already secured a matching €50 million commitment from the State of Bavaria – but only on the condition that federal backing was secured.
Company CEO, Klaus Roewe, told LinkedIn at the time:
"Our private investors — mostly from the USA and China — have already financed Lilium with $1.5 billion. They would like to continue investing. But they also want a signal that investing in a German company is not a disadvantage."
He also stressed that the USA, China, Great Britain and France have long since significantly promoted Lilium's competitors and continue to support them.
"If the funding situation in Germany deviates too much from it, Germany is not competitive as an investment location. The USA has so far supported the competitor Joby alone with more than $600 million.
Lilium already has over 1,100 employees and approx. 2,000 jobs at suppliers.
Lilium alone pays €50 million in taxes and social security contributions in Germany every year.A federal guarantee declaration of €50 million is therefore a very moderate investment.
Bavaria has already submitted its guarantee declaration for the KfW loan in the same amount."
Divided support in the startup ecosystem for Lilium bailout
Over 650 startup founders and enthusiasts signed a letter urging the government to support Lilium's government fundraising with many claiming it would do "great damage to the deep tech ecosystem" if the government did not approve the loan.
However the news was also criticised by many founders and early-stage investors who questioned why earlier stage startups were left on their own once they faced financial difficulties — stay tuned for an upcoming article on the issue of bail outs.
The world's first 5-seater eVTOL
Lilium was founded in 2015 in Munich, creating the Lilium jet. the world's first five-seater, all-electric, vertical takeoff and landing jet.
The human-crewed emissions-free aircraft can complete journeys of up to 300 km in one hour on a single charge (far above its competitors), and has been flown at speeds exceeding 100 km/h, in increasingly complex manoeuvres.
In April last year its Phoenix demonstrator achieved its target maximum speed of 136 knots (155 miles per hour) in a flight test over rural Spain. However, this test was conducted remotely without any passengers or pilots on board.
Whether you believe eVTOLS are a pipedream to finance travel for rich people or the future of the next generations of aviation, today many highly skilled aerospace professionals are now out of work.
This also impacts surrounding industries such as battery manufacturing, vertiports, and recharging, overall leaving a huge blow for German's mobility and aerospace industries.
I'd also be remiss not to mention that this week the US Federal Aviation Administration (FAA) released the final regulations for tiltrotors and VTOL aircraft, including electric variants, the first new class of aircraft approved in 40 years. Once, again, those wanting a new class of transportation will be looking forward the US, not Europe, at least for now.
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