Are air taxis set for take-off or are there still many headwinds?

Are Air Taxis Set for Take-Off or Are There Still Many Headwinds?

Industry Setbacks and Shifting Priorities

Tufan Erginbilgic, chief executive of Rolls-Royce, recently expressed pronounced skepticism about the future of electric flying taxis, casting doubt on the viability of the emerging eVTOL (electric vertical take-off and landing) market. Speaking at The Wall Street Journal CEO Council Summit, Erginbilgic outlined why Rolls-Royce decided to abandon its electrified aviation programme, which had consumed up to £100 million in investment. The company has instead redirected its focus toward small modular nuclear reactors, a sector it views as more urgent and commercially promising.

Erginbilgic highlighted persistent delays, escalating costs, and uncertain market demand as critical barriers to the widespread adoption of eVTOL aircraft, which are envisioned as the successors to helicopters in urban environments such as London. He noted that the timeline for market entry has been repeatedly pushed back, with costs ballooning from an initial estimate of £1 million per aircraft to approximately £3 million. Such pricing, he argued, precludes the possibility of a mass market.

This strategic withdrawal marks a significant reversal from Rolls-Royce’s position three years ago, when under former CEO Warren East, the company set a battery electric air speed record with its Spirit of Innovation aircraft. The exit has had a profound impact on Vertical Aerospace, a Bristol-based eVTOL start-up backed by Ovo Energy founder Stephen Fitzpatrick. As a key technology partner and co-investor, Rolls-Royce’s departure left Vertical Aerospace struggling to maintain momentum. Although the company managed to recapitalize—resulting in Fitzpatrick relinquishing control—its market valuation has plummeted from a peak of $2 billion to approximately $442 million on Nasdaq.

Broader Industry Challenges and Emerging Leaders

Vertical Aerospace’s difficulties are emblematic of wider troubles within the air taxi sector. German competitors Lilium and Volocopter have both entered insolvency proceedings, while Airbus has indefinitely paused its City Airbus Nextgen eVTOL project, citing the technology’s immaturity. Volocopter’s insolvency filing in December further underscores the volatility and uncertainty that continue to plague the industry.

The challenges extend beyond financial instability. The development of eVTOL aircraft faces significant technical and regulatory obstacles, including rigorous aircraft testing, pilot training, coordination with aviation authorities, and the establishment of necessary infrastructure. Despite these headwinds, some companies remain committed to advancing the technology. U.S.-based Archer Aviation plans to initiate trial operations in the third quarter of 2025, and Joby Aviation is similarly progressing. These firms are increasingly positioned to dominate the European Advanced Air Mobility market, particularly as European start-ups falter.

Global Competition and Future Prospects

The global race to commercialize air taxis is intensifying, with cities such as Abu Dhabi competing to become the first in their regions to launch commercial eVTOL services, rivaling efforts in Dubai and Singapore. Meanwhile, the collapse of several European ventures has shifted attention toward more conventional electric regional aviation designs.

Nonetheless, there are encouraging developments. In Brazil, Revo has signed an agreement to operate air taxi services in São Paulo using aircraft from Eve Air Mobility, signaling sustained interest and investment in the sector.

The underlying premise of eVTOL technology remains compelling: the potential to revolutionize urban mobility by providing rapid transit across congested cities, connecting airports, and offering new transportation options for underserved regions or emergency medical evacuations. However, until costs decrease, technology matures, and regulatory frameworks are firmly established, the vision of air taxis routinely traversing city skylines remains an aspiration rather than an imminent reality.