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Startups Will Beat Incumbents In The Race To Electrify The Aviation Sector

Chad Goldberg, Research Associate
November 23, 2020

As outlined in our global aviation emissions forecast, the global aviation sector contributes approximately 11% of the world's total transportation sector CO2 emissions. CO2 emissions will continue to rise in conjunction with increasing global air travel demand, necessitating interventions aimed at reducing the industry's impact on global emissions. Consequently, aviation industry stalwarts are rushing to determine the viability of emissions-reducing or eliminating systems, while electric aviation startups are looking to be first to market with effective electrified retrofits or novel aircraft. While our previous blog offers an overview of the electric aviation market, including remaining technical challenges, the impact of regulations on growth, and potential market outlooks, the key takeaway is that the most promising opportunity currently exists in the small fixed-wing segment. 

However, questions remain surrounding who will be successful in building these new aircraft. We looked to answer these questions by assessing the current capabilities and applications of existing general aviation companies and comparing them to the expected use cases of electric aviation startups.

Startups Will Beat Incumbents In The Race To Electrify The Aviation Sector

Of note is that the majority of aircraft currently offered by Bombardier, Gulfstream, Embraer, Cessna, and Beechcraft utilize jet engines that flaunt range and speed capabilities far exceeding those achievable using today's electric powertrains. Most of their customers derive value from these aircraft based on their speed and range capabilities, so it is unsurprising that these companies are not interested in pursuing costly electrification plans that will not immediately, or even in the medium term, positively affect their businesses. They are likely happy to allow technology to improve, and we expect that they will be in positions that favor M&A activity that will see mutual benefit from integrating new technologies and companies with their existing operational and manufacturing experience.

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For companies like Cessna and Beechcraft that may be more likely to benefit from electrification (based on the companies' limited fleets of piston and turboprop aircraft that fall within the appropriate range and speed capabilities of electric powertrains), it is important to highlight that most of these companies are not willing to develop powertrains themselves and solely rely on incumbent suppliers. We spoke with a contact at Gulfstream who confirmed that these players have no interest in developing novel powertrains themselves and will continue to rely on partnerships with suppliers rather than taking on the risk and capital-heavy task of developing technology themselves, especially considering that some of the biggest players are fumbling in their electrification and hybridization efforts. However, it should be noted that one of the world's largest engine suppliers, Rolls-Royce, appears to be stepping up its electrification efforts.

Still, most companies are happy to rely on development partnerships for now, as there are players out there working closely with aircraft OEMs to make sure they are creating capabilities such that when they are ready to put hybrid-electric on their aircraft, they'll be able to do so. In turn, they are helping to create certifiable pathways for hybrid-electric aircraft without having to completely redesign existing planes or build new ones from the ground up. Similarly, Ampaire is retrofitting its plug-in hybrid powertrain into Cessna's specifically, so there is no clear value for Cessna to independently pursue ground-up development at this time.

These factors lead us to conclude that aviation startups are the best-equipped to bring these electrified aircraft to market. Those interested should look for electric aviation-specific startups like electric powertrain manufacturer magniX to do the heavy lifting in getting electric aircraft operational, as incumbents are unlikely to be active in the space, unless they intend to target new markets and invest in capital- and resource-heavy development of these aircraft.

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