Chinese startup’s US$140,000 car can fly over traffic jams

The crowd cheered in Mandarin as the two-seat gull-winged aircraft soared and hovered for about 30 metres (100 feet) above their heads then soaring back to the earth. "Make the Chinese happy in Dubai!" several of the most enthusiastic were shouting in unison.

In the last couple of months China's Xpeng Aeroht has staged two inaugural public flights for its aircraft. The 90-second test close to Dubai's iconic Palm Jumeirah island in October was followed by another one in Guangzhou, China - landmarks for the company that is supported by electric vehicle producer Xpeng Inc. The billionaire entrepreneur behind the company He Xiaopeng, along with other investors are betting big that they will beat regulatory hurdles to capture some of the called a $1 trillion (RM4.43 trillion) market that could change the way we travel.

The flyer is advancing towards the real world and we believe that it's the best moment to get involved," Brian Gu, the president of Xpeng on the fringes at the Dubai event, dubbed GITEX. "The sector has brought about many technological breakthroughs including weight reduction, the ability to avoid obstacles along with electrification.

Some might say it's too soon for this kind of charm. Some people believe it. Aeroht was established in 2013 by a 45-year-old high school ex-student Zhao Deli, was the most prominent exhibitor at GITEX which is one of Dubai's most important annual trade shows. The president of the United Arab Emirates stopped by the stand. People gathered to take photos with the prototype on its booth, which was the most crowded of the floor.

The hype masks the reality of the competition that startups struggled with for decades. Businesses like Lilium NV, Joby Aviation Inc and Archer Aviation Inc wowed investors with multibillion-dollar listings , but are now trading at historical lows. Google founder Larry Page's KittyHawk was shut down in September,said by online betting.

Many investors are expecting the closure of companies and industry consolidation over the next years, even as the number of orders are increasing, according to the study conducted by Horizon Aircraft Inc. in Canada. Horizon Aircraft Inc published this month. Investors are looking for "the Tesla of the flying automobile business," said Zhang Junyi of consultancy Oliver Wyman who helped establish investment company Nio Capital. However, it could take 10-15 years before the market begins to take off. Investing in the industry of flying cars isn't easy.

The model that was flown in Guangzhou is what makes Aeroht stick out. While many eVTOLs , also known as electric vertical takeoffs and landing planes - do not have wheels and cannot operate on ground but Aeroht's Chinese company's sixth generation model is a real-life vehicle that is also able to be driven in the roadway. It appears to be a luxurious vehicle, not a tiny plane that has wheels. That's the case with some competitors' strategy.

The car is intended to be driven for over 90 percent of the time, and only fly when there are roadblocks or traffic delays. The company's founder Zhao spoke to the media in an interview the car, which has eight electric motors and four propellers - could go into production by 2025.

He envisions a price tag of about 1 million yuan (US$140,000/RM620,130), a fraction of Joby's vehicle (US$1.3mil/RM5.76mil). This is due to the fact that Aeroht has access to Xpeng's huge supplier network across China according to him. The eVTOL movement dates to at least a decade before, when a few entrepreneurs dreamed of making it easier to access the skies. (Or more precisely the idea of flying above the Elon Musk calls "soul-destroying" traffic.)

As time went on, the field became increasingly crowded, as investors envisioned bringing an idea that had only existed in sci-fi and comic books into the real world. Morgan Stanley analysts say the eVTOL or urban air mobility market could reach a value of $1 trillion in 2040.

Chinese companies such as Aeroht, Ehang Holdings Ltd. and TCab Tech joined the race within the last half-decade and drew inspiration from American names like Joby as well as Archer. They supported a new generation of entrepreneurs and investors looking to duplicate the success China achieved with EVs. They have several of the benefits: an extensive supply chain, a vast labor pool and a massive domestic market crucially, official support.

Many believe in President Xi Jinping's plan to dispense with American technology in areas ranging from sensors to climate technologies, to increase funding and help with policy. There are a handful of instances in which American firms have told us what industry is promising and could generate profits, while their Chinese counterparts went ahead and took over the market at cheaper costs, said Warren Zhou An investor with Decent Capital and backer of TCab Tech. He pointed to hoverboards, drones as well as robot vacuums. It will be similar as the eVTOL and flying cars.

A few of the most prominent names in startup investing have agreed that Aeroht is a good investment, with IDG Capital, Sequoia China, GGV Capital and Hillhouse Capital who are all investors in Aeroht. Aeroht was part of a round of funding with a total of 500 million dollars (RM2.2bil) for 2021, with an estimated value in the region of US$1.5bil (RM6.64bil).

Zhao first had a meeting with He who was one of the founders of Xpeng in the year 2020, after having struggled for 10 years to prevent his business from being a failure. Zhao says he convinced the entrepreneur's attention through a demonstration. "Talk before flying or talk first?" Zhao said he asked He. "Fly first!"

After the gathering at Dongguan, Guangdong province, He and Xpeng invested in Zhao's company and changed its name to Xpeng Aeroht. It is headquartered at Guangzhou along with R&D centres at Shenzhen and Shanghai The unicorn has grown from 12 employees in 2020 to nearly 700 people as of July.

It is among other startups with a strong backing, including Shanghai-based AutoFlight that received $100mil (RM442.95mil) from an European investor in November last year to create air taxis. Volant Aerotech, founded in June 2021, received more than $14 million (RM62mil) at the beginning of this year.

For sure, the technology isn't completely made. Much depends on the development of batteries that have greater energy density, which is the amount of power per the weight. Because flying cars require greater oomph and are susceptible to load which are lighter and have more power, lighter batteries than those in EVs are vital. The batteries Aeroht currently uses in its prototypes are laboratory products made by local suppliers.

But investors and entrepreneurs are saying that technology isn't their primary worry - it's about commercial viability as well as regulatory approval.

A few eVTOL firms, like Ehang, which is listed in New York, Ehang are targeting companies and have begun to earn revenue. In the year that was in effect, Ehang received pre-orders for 160 of its autonomous aerial vehicles in Malaysia as well as Indonesia. AutoFlight's eVTOL entry, Prosperity, won 260 orders in August from two firms that offer logistics and sightseeing services. In the UK, Vertical Aerospace Limited. has collected nearly 1,400 reservations for its aircraft and Volkswagen AG in China unveiled in July the first passenger drone that is eVTOL.

However, it will need more than 100 orders to propel the market. Aeroht is betting that true that the scale will be in consumer products , but there are some regulatory hurdles are.

The United States has not seriously considered opening its airspace at low altitude in the near future, especially for pilots with no instruction. China however has recently announced some provinces, including Hunan, Jiangxi, and Anhui to study the idea. This provides hope to startups like Aeroht that is currently working with regulatory bodies across the country to locate places to conduct trials. Which nation has an advantage depends on the policy support as well as the government's decision to electrification reforms, said Siyi Mi who is one of the EV Analyst at BloombergNEF.