Advanced Air Mobility Market Intelligence

The Rise of China’s eVTOL Industry

by Global Sky Team

The Rise of China’s eVTOL Industry

With many Chinese eVTOL companies receiving financing in 2021 (a conservative estimate based on limited data suggests that more than USD$700 million has been raised in total), which in turn has driven rapid changes in China’s eVTOL policy support, supply chain support, infrastructure, application scenarios/demands, etc. This is both an opportunity and a challenge for companies from all backgrounds.

Policy Support

Following in the footsteps of the US Federal Aviation Administration (FAA) and the European Union Aviation Safety Agency (EASA) by supporting the development of similar highly innovative aircraft such as electric vertical take-off and landing (eVTOL) and electric conventional take-off and landing (eCTOL) by amending their airworthiness validation regulations policies in 2016 and 2019 respectively, the Civil Aviation Administration of China (CAAC) has in 2022 officially started a brand-new service exploration process. The latest version of the Airworthiness Standards: Normal Category Airplanes (CCAR-23-R4) came into effect on August 1st, 2022. This is mainly in response to the rapid application of turbofan engines, composite materials, and electric propulsion aircraft in CCAR-23, in the hope of improving safety while reducing the cost of aircraft certification. Amongst them, the new chapter H “Supplementary Requirements for Electric Aircraft Power Units” is closely related to the airworthiness approval of eVTOLs. Although there are still great challenges ahead in terms of the conformity assessment methods for Distributed Electric Propulsion (DEP), the core eVTOL technology, and integrated control technologies, the CAAC may also face the same dilemma as the FAA today. After all, the unknown brought on by innovation is something unpredictable, but the speed at which the CAAC’s certification criteria is being formed has undoubtedly benefited from all of the eVTOL programs that are booming in China, which can help China’s eVTOL industry attract more financial support. Or perhaps it is the CAAC’s earlier work on the revision of CCAR-23 that has brought a key boost to the promotion of China’s eVTOL boom in 2021.

In addition to promoting the development of the eVTOL industry through CCAR-23, the CAAC supported the certification of the EHang 216-S autonomous aerial vehicle as early as the beginning of 2022 through special terms, which is currently the only crewed eVTOL aircraft with airworthiness validation that is being processed by the CAAC in China. According to EHang’s Q2 2022 financial report, the project has already entered the compliance validation stage, and its valuable eVTOL airworthiness validation experience on a pilot trial may bring more substantial value to the OEMs that submit eVTOL aircraft validation in accordance with CCAR-23 after EHang recieves its first type certificate.

The CAAC intends to provide more relevant policy support for the long-term commercial implementation of eVTOLs. In August 2022, the CAAC released a draft for comments on the “Civilian Uncrewed Aviation Development Roadmap V1.0”, which clearly proposes the development path of carrying cargo before passengers, general use before transportation, and isolation before integration. In the specific setting of goals, it is proposed that by 2025, the urban short-range low-speed light and small-scale logistics and distribution uncrewed aircraft will gradually mature; by 2035, an uncrewed air transportation system will be established. On one hand, the benefits brought by this policy point out the direction for China’s eVTOL and related aircraft applications. However, due to the over-specific description of the support for specific application scenarios, it may also lead to the excessive concentration of industry resources in cargo applications, which may result in a lack of complementary technology development between cargo and passenger aircraft.

Although the CAAC has made more favourable policy plans at the top level, the specific promotion and support of implementing the eVTOL industry still needs to rely on strong support from local policies, among which the most representatives are the Civil Uncrewed Aerial Test Area (CUATA) led by CAAC and China’s low-altitude airspace reform promoted by the Central Air Traffic Control Office. The former is more conducive to promoting the application of UAVs, while the latter is more conducive to promoting the application of crewed / cargo aircraft. The above two policies need the support of more local government policies for further implementation. For the construction of CUATA, CAAC has just recently approved the second batch of seven civil CUATAs (Chongqing, Shenzhen, Shijiazhuang, Taiyuan, Chengdu, Qingdao and Wuzhong), whilst the first batch was issued to 13 cities in 2020. Achievements have been seen in CUATAs. In Beijing’s Yanqing District, 374 square kilometres of airspace at Badaling Airport has been open to local enterprises for free. In Shenzhen, Meituan UAV has seen more than 140,000 safe flights completed since January 2021 and has operated 11 regular trial routes, with services covering more than ten communities and business clusters. On September 1, 2020, National Air Traffic Control Office officially approved the “Hunan Province Low-altitude Airspace Management Reform Pilot Expansion Implementation Plan” submitted by Hunan Province. And, recently the “Hunan Province General Aviation Regulations” were introduced, which mainly focus on promoting the general aviation low-altitude industry.

Whether it is crewed or uncrewed aviation for low-altitude flights, these achievements will undoubtedly provide a strong guarantee for the commercial operation of eVTOLs in the future.

Aircraft Manufacturing

After the gradual implementation of policy support, the manufacturing and mass production capability of eVTOLs is definitely a key challenge, and the construction of the manufacturing capability of the complete aircraft usually requires a longer period of research and development. The OEM will consider production only after the completion of the full-scale demonstrator, following the pattern set by worldwide industry leaders such as Joby Aviation. For China’s eVTOL manufacturers, as most are still in the early stages of aircraft technology validation, they do not need to build complete manufacturing capacity yet. For scaled-down or full-scale demonstrators, they only need to rely on the original UAV industry manufacturing capacity to carry out rapid validation of the prototype. However, if China’s eVTOL manufacturing enters formal pre-production or even mass production, the limited experience in the country’s manufacturing of traditional commercial small civil aircraft will create challenges. The available resources are mainly from Commercial Aircraft Corporation of China (COMAC), Aviation Industry Corporation of China (AVIC), and private enterprises such as Guanyi Aviation and Hunan Sunward Tech. Amongst these, it is the latter, private enterprise, that has the talent and experience in terms of reusable skills. Perhaps this is also an important reason why Volkswagen China chose Huan Sunward Tech as the engineering service partner in developing its eVTOL demonstrator.

Supply Chain Support

The basic elements of the upstream industry chain of eVTOL aircraft is comprised of design and development tools, electric motor drive systems, battery systems, propellers, flight control systems, high-voltage electrical management systems, airframe structure, and other aspects including avionics, landing gear, cabin interior and peripheral materials.

At this stage in the development of China’s eVTOL supply chain the most critical thing is to develop the 2-ton level high-voltage motor and electric drive products. This has given rise to a multipolar competition situation where traditional motors and electric drives for UAVs are considered separate poles. For example, most of the OEMs will choose high-quality and low-cost UAV-supporting products for the scaled-down validation stage. The products available from Chinese motor companies T-Motor and Intelligence Gull can usually provide a thrust of around 100kg per propeller, which is good enough for a demonstrator that is several hundred kilograms in weight. The products of traditional foreign manufacturers are also considered a pole due to their experience in high voltage motors and electric drive products (Megawatt level) that has been accumulated to a certain extent. For example, Safran motors is already in cooperation with Shanghai TCab Tech. Also, Rolls-Royce and Collins Aerospace have already shown interest in market development in China. However, the use of foreign products also brings certain risks to the cost and efficiency of Chinese eVTOL manufacturers. The last pole comes from non-traditional aviation companies. These come from regions such as Guangzhou, Tianjin, Beijing and Nanjing that are developing corresponding products for eVTOLs, but have backgrounds in electric vehicle (EV) development, which is consistent with the pattern in the US where we have seen eVTOL companies poaching talent from Tesla and other electric vehicle companies. Some EV companies are already cooperating with China eVTOL OEMs to develop the required components. It is widely hoped that after a few years of development, these companies can launch China’s own competitive high-voltage electric drive products.

In addition to the electric propulsion system, the flight control system is another key component in the supply chain. However, in the validation stage, an OEM can also use existing UAV products. Before entering the airworthiness validation stage, the pre-preparation work of the telecontrol systems for airworthiness is needed. In addition to the 618 Research Institute of AVIC – also known as FACRI, there are already two Chinese start-up avionics companies dedicated to providing similar flight control system services, including Shenzhen-based Boundary.AI, which recently launched its R3 flight control system for airworthiness and has cooperated on projects with Volant in Shanghai.

There are more challenges in supporting the eVTOL industry in other areas. For example:

  • Extremely expensive wind tunnel testing by state-owned companies. Most OEMs can rarely afford it. It is reported that Henan Toledo UAV Technology Co, backed by Beihang University, is ready to provide commercial wind tunnel test services.
  • Lack of detailed engineering design and development services. Companies from Beijing and Nanjing have started to provide design and development services for rotor systems.
  • Lack of high-performance propeller custom development capabilities. In addition to the traditional JXF propeller, a team from the Chinese Academy of Sciences is focusing on the development of eVTOL high-performance propellers.
  • Lack of special design software for eVTOL. It is believed that based on China’s national rotorcraft models and project development needs of the future eVTOL aircraft, China can release its own commercial software.
  • There are more challenges that are being faced in other areas but, different teams and companies are rising to them on the path to commercialization. Also, China’s cost advantage will still exist for a certain time in comparison with the supply chains of developed countries like those in Europe and North America.

Infrastructure

Infrastructure is an indispensable part of the eVTOL ecosystem and will have to include facilities such as micro-climate sensing systems, redundant Command and Control (C2) links airborne communication, broadband services, advanced air traffic management systems, easily accessible charging facilities, maintenance services and small city Vertiport platforms that are becoming increasingly important.

For the early commercial verification of eVTOLs, in addition to utilizing and improving traditional urban heliports and helipads, it is also necessary to make full use of the existing navigable airports to carry out passenger services from urban to rural areas where a general aviation airport is located. General aviation airports will form a key part of China’s initial strategy for the required eVTOL infrastructure. According to AOPA-China’s statistics for 2021, there are only 370 general aviation airports in China. Fortunately, Hunan Province, at the forefront of low-altitude airspace reform, was given approval in 2022 to build 55 additional airports, which will bring the number of general aviation airports in China to more than 400. However, considering that the construction of general aviation airports can be more suitable for the need of eVTOLs in the future and show the importance of the infrastructure functions in the ecosystem, it is necessary to consider more about the coordinated development of airport facilities and other industries. Taking the redundant C2 links infrastructure requirements as a reference, the industry generally believes that low earth orbit (LEO) satellite constellation will play an important role in future eVTOL operations, both in terms of cost and coverage capacity, to better meet the commercial demands of urban air mobility or advanced air mobility. Therefore, in the short term, the ecosystem construction of domestic eVTOL infrastructure will still focus on pilot projects. In the future, the speed of long-term infrastructure construction will depend more on the development process of China’s LEO satellite constellation or other key technologies.

Although the detailed eVTOL infrastructure construction plan has not yet come out, it is estimated that in the near future, eVTOL vertiports or take-off and landing facilities will still be led by local airports and supplemented by aircraft operators, such as Hunan Airport Group and the possible operation of Eastern General Aviation Corporation. Other aspects will be gradually guided and implemented mainly through the construction of the layout of new infrastructure promoted by the CAAC. The participants may include: the three major communications operators to lay out the ground-to-air service network, GalaxySpace, to lay out satellite internet services for eVTOLs, and the original USS (UAS Service Supplier) service providers to participate in the construction of the large UOM (Unmanned Operations Management) platform system. In the construction of infrastructure by foreign enterprises, the degree of participation may be strictly monitored and controlled due to the national sovereign security issues involved.

Use Case Scenario / Requirement Analysis

In terms of use case scenarios and requirements, eVTOLs will mainly operate cargo and passenger missions. The simplest approach being considered is to replace the corresponding usage of helicopters. Although eVTOLs have the advantage of lower operating costs in the long run, in the short term the price will probably be equal to the operating costs of a Bell 407 or similar models. This is because eVTOLs do not yet have the advantage of mass production but do have the disadvantage of early-stage R&D costs and the time investment associated with new technologies. Hence, the early expansion of eVTOL usage will be seen mainly in high value-added business cases. One scenario will be to choose high-income areas for service provision, and another will be to choose low-frequency services within the air business. For example, in the US in terms of commuting, Joby has chosen to expand its business network in California, a notable high-income region. TCab Tech in China expects to provide similar commuting services in Shanghai or the Greater Bay Area in the future. EHang on the other hand, has chosen the air tourism business as it is expected that passengers will be willing to pay higher costs. Similarly, Volocoper is also promoting air tourism in Singapore. Other high-value services include eVTOL emergency rescue service provided by EHang, and Zhoushan seafood transportation by Shanghai Safran.

In addition to the selection of application scenarios for demand through payment capacity or added value, the operational risks faced by each application scenario or demand also need to be taken into account. Due to the huge differences in infrastructure and public awareness levels in each country or region, the same business will also have different operational risks. Ultimately, the scenarios with high added value and low operational risk will be the first business targets for eVTOL OEMs or operating companies to try.

In addition, military business is also a direction being targeted by some Chinese eVTOL companies due to its inherent higher risk tolerance for new technologies. However, whether it is personnel transportation or material distribution services for military logistics, the trial and error of military service scenarios will also follow the basic principle of high added value + low risk.

Operators

At present, companies expecting to operate eVTOLs in China mainly fall into three categories: OEMs, existing aviation operators and new businesses Some OEMs, will provide commuting services similar to urban air mobility by self-operation, for example, both EHang and TCab Tech have self-operation business plans. The second category is the operation by traditional general aviation enterprises that hope to adopt eVTOLs to replace helicopters in their original business, including Eastern General Aviation Corporation and China Southern Airlines General Aviation. The last one is businesses willing to invest and experiment, where they have specific industry resources in related areas. For example, Tianxingjian Cultural Tourism Investment and Development, a partner of EHang, plans to operate scenic flights around the Aizhai Wonder Tourist Area, and Uber, which once promoted the development of eVTOLs, has resources in traditional connected ground travel services in the U.S. market. Of course, eVTOLs will not only change traditional helicopter services, but will overcome the once insurmountable difficulties of expensive helicopter passenger commuting. Its great significance is that it will give more people the opportunity to make eVTOL flights by being applied in more potential use case scenarios.

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