Are flying cars the future of transportation or an inflated expectation?

It seems like flying-car startups are finally taking over the "140-character" kinds of tech companies we are used to. With EU-based startup Lilium working on an all-electric autonomous flying taxi, garnering a $90 million Series B led by Tencent and supported by a number of well-known VCs (including Atomico), it's clear that flying cars are transitioning from a fascinating concept to a quite-mature technology and promising investment thesis.

But will we see flying cars out in the world? And how will the market environment evolve?

The first thing I'd like to do to answer these questions is provide a snapshot of the current flying car ecosystem:

Company

Country

Founded

Raised (in millions)

Selected Investors

Lilium Aviation

Germany

2014

$101.4

Tencent, Atomico, e42 Ventures, Obvious Ventures

Volocopter

Germany

2012

$29.5

Daimler

Ehang

China

2014

$52

GGV Capital, GP Capital, ZhenFund, LeBox Capital

Joby Aviation

U.S.

2009

$15.5

8VC, Capricorn Venture Partners

AeroMobil

Hungary

2010

$3.2

LRJ Capital, InfraPartners Management

Moller

U.S.

1983

N/A

N/A

Zee.Aero

U.S.

2010

$100

Larry Page

Kitty Hawk

U.S.

2015

N/A

Larry Page

Terrafugia

U.S.

2006

$6.56

Haiyin Capital, Transcendent Holdings

PAL-V

Netherlands

2001

N/A

N/A

Cartivator

Japan

N/A

N/A

Toyota Motors

Neva Aerospace

U.K.

2013

$2.53

Schübeler Technologies GmBH

Hoversurf

Russia

2014

N/A

N/A

Malloy

U.K.

N/A

N/A

N/A

Aerofex

U.S.

N/A

N/A

N/A

Source: Crunchbase, PitchBook, Bloomberg and companies' press releases

Here are a few observations:

The ecosystem is maturing. There are already 15 startups working on different concepts of flying cars (including hoverbikes), and more may be in stealth mode or early stage. In addition to this, several heavyweight corporations, such as Airbus and Toyota, are also developing this technology.

Speaking of geography, more than half of the companies are U.S.-based. However, there is a strong presence of EU-based companies, as well, including two cash-loaded startups, Lilium and Volocopter, which have been the biggest newsmakers in flying cars recently.

Detailing funding statistics, flying-car startups have raised $310.7 million to date from all branches of the venture capital ecosystem: typical VCs (e.g. Atomico), corporates (Daimler, Toyota, Tencent) and notable angels (Larry Page). It is worth mentioning that we've seen the largest amount of funding in this area in 2017, mainly driven by the massive Lilium ($90 million) and Volocopter ($29.5 million) rounds.

Summing up this data, there are quite a few flying-car startups, and there is notable interest in this area from investors — and it has increased significantly this year.

What are the dynamics behind this and why did it happen now? I'd outline two main factors driving this area forward: significant marketing momentum and maturation of required technology.

Detailing the first point, the flying-car concept has recently met the eye of large industry players, such as Uber (with its Elevate project) and UAE government (first public flying taxi tests), which is creating interest from not-so-aerospace-focused investors, such as Atomico and Tencent.

Another aspect is the rapid development of drone-related technology, which has proven its value for businesses' bottom line and turned from consumer-focused toys to a helpful tool utilized in a variety of industries, such as construction and agriculture. A similar process is happening now with flying cars, as well, which now are analyzed in terms of delivery, emergency operations applications and disrupting nothing less than the entire mobility industry.

Indeed, the technology required for flying cars is finally here. The biggest challenge — creating safe and effective vertical take-off and landing (VTOL) vehicles (say, combining helicopter and plane) — is being solved with innovation in aircraft design (see the distributed propulsion concept for more details), and recent progress in autonomous flight and electric motors and batteries enables a visionary future with solar-powered self-flying cars crossing the skies in both large cities and rural areas.

However, despite that the technology is ready and there is a significant interest from both industry and investors, still there are some barriers — the largest and most challenging is integration of flying cars (and drones) into public airspace. This is a very complex problem in terms of regulation (should flying cars be remotely controlled by human operators or allowed to operate autonomously?), required infrastructure (how to track and control myriad unmanned flying vehicles and how to protect these cyber-physical assets?) and technology (how to coordinate thousands of flight paths in real time and provide collision management).

Both government agencies and large businesses are working on these challenges (e.g. in the U.S. it's driven by NASA, with support from Google, Intel and Verizon, to name a few partners); such systems are far from country-wide implementation anywhere in the world.

Flying cars are definitely on the radar. Here are some prospects on how the market environment could evolve:

We'll see flying cars in the mass market in around 10-15 years — this time is likely required to solve the problem of integration into public airspace and, in some sense, convince customers that the idea is not that much more crazy than, for example, ICOs or VR games.

Flying cars represent an interesting investment opportunity, and we'll see more and more strategic investors and VCs funding this area. Moreover, we'll very likely see some mergers and acquisitions in this sector, taking into account a significant number of corporates interested in flying cars, as illustrated by the recent Boeing acquisition of Aurora, a startup working on technology enabling autonomous flight.

Source: Are flying cars the future of transportation or an inflated expectation?