Opinion: Will eVTOLs Disrupt Traditional Aircraft Values?

Wall Street has been betting heavily on the electric vertical-takeoff-and-landing (eVTOL) market, with forecaster SNS Insider projecting the market, valued at $870 million in 2020, to grow to $22.71 billion by 2030.

As this disruptive industry takes off, will owners of traditional turbine-powered aircraft face a decline in values because of it?

Power Is Value

Assuming eVTOLS overcome the challenges they face regarding commercial viability and certification, the most significant threat to traditional aircraft value would be electrification’s ability to reduce the overall cost of buying and operating aircraft.

Aircraft are built to last, and a large portion of aircraft value, particularly with age, is the value of the engines. Business jets and helicopters can reach a usable life of 30 years or more. Plenty of late 1980s Gulfstream IVs are available for charter, for example. Rolls Royce RB211-535E4’s commercial engine has proudly tracked more than 40,000 hrs. on wing.

“The design life of some engines can be up to 50 years," says David Crick, managing director at DavAir Group, an aircraft appraisal service. “Today, we’re seeing drone batteries that can only last five years, doing a few hundred hours a year before they need to be replaced.”

For eVTOLs to create any competitive threat to gas turbines, batteries must be inexpensive to replace. For investors in turbine aircraft, understanding when a competitive threat could impact their 30-year asset value is worth watching.

Battery Lifespan

Like gas turbines, cycles are a critical component of battery lifespan. Batteries are highly sensitive to cycles, calendar degradation, temperature, charge and discharge speed—and more.

Joby Aviation’s CEO has said that its Joby S4 will be able to achieve at least 10,000 flight cycles and that the cost of replacing batteries will be “essentially insignificant.” A professor of mechanical engineering at Carnegie Mellon University found the claim of 10,000 flight cycles credible.

While the number of cycles could be achievable in perfect conditions, many more issues could degrade that goal. Joby claims the batteries will be rapidly recharged during passenger deplaning, using similar technology developed by the automotive industry.

David Mindell, a professor of Aerospace Engineering at MIT, writes: “For batteries, depth of discharge is inversely related to battery life. That is, a battery that is regularly discharged to 10% will not last as long as one that is discharged to 20%.”

A battery rapidly charged often and rapidly discharged with vertical-takeoff power needs could mean a much lower lifespan, leading to more battery swaps over time than expected. Vertical takeoff, landing and rapid charging are the worst combinations for long battery life—not to mention variances in piloting techniques.

"Uncrewed flight is required for eVTOLs to achieve the necessary operating costs for widespread adoption,” says Kevin Antcliff, head of product at Xwing and a former researcher at NASA. “These technologies are also crucial in maintaining optimal discharge rates, maximizing battery life and minimizing the need for frequent, costly battery swaps.”

An aircraft engine today can theoretically run for 50,000 cycles or more. These batteries will need to be inexpensive enough over that useable lifespan to be “insignificant” compared to the cost of the turbine engine and its overhaul costs.

What Price Will Batteries Need To Be?

Cost comparisons are … messy.

Today, the average battery cost per kilowatt hour is $132 in the auto industry, but aviation batteries must undergo more costly certification processes. Some analysts claim these batteries could cost up to five times more than auto batteries. Joby’s anticipated battery capacity is 125 kWh, which could cost $16,500 if using the auto industry’s average cost or up to $82,500 when using a five-times-cost assumption.

Safran’s Arrius 2R engine—which powers the five-seater Bell 505—may be around $750,000 new, based on similar variants for sale. With a lifetime of engine overhauls, capital investment in a helicopter of comparable size to an eVTOL could reach $1.5 million, equivalent in value to 18 to 90 battery exchanges. The capital cost is much more than a turbine engine if an operator needs a new battery yearly at $82,500 each.

Operating costs get even more complicated. Jet-A has 40 times the energy density of lithium-ion batteries, but much of that energy is expended as heat. Still, fuel is 6 to 8 times denser than advanced batteries. While supercharging an electric battery today might cost $0.25 per kWh (per auto averages), per-mile transport costs might not be as inexpensive as they appear at first blush.

*Based on Bell 505 flight testing and Joby flight testing data.

There’s “no Moore’s law for batteries,” according to physicist Dr. Fred Schlachter. The rapid advancement of chip manufacturing that led to substantial technological disruptions is a matter of physics—chips involve electrons, and batteries involve ions, which are at least 100 million times larger. Without a significant breakthrough in battery science, batteries will improve steadily, but not precipitously.

Despite market enthusiasm for the electrification of aircraft, aircraft owners will likely have a decade or more before needing to worry about the depreciation of gas-turbine-powered aircraft because of them.

When asked if he had any concerns about eVTOLs impacting aircraft valuations anytime soon, Crick gave a resounding “No.”

Jessie Naor is the author of the Sky Strategy column in BCA and is CEO of FlyVizor, an aviation M&A advisory and business consulting firm. She is a former founder and president of GrandView Aviation.