Embraer is spinning off its urban mobility subsidiary, Eve, through a special purpose acquisitions company (SPAC), Zanite, which will list on the New York Stock Exchange. The deal, which values the company at $2.4 billion, comes as the startup announces orders for more than 1,000 of its electric vertical take off and landing (eVTOL) aircraft.
Eve is the first company to go public from EmbraerX, the Brazilian airframer’s business incubator, and the spin-off occurs when the nascent eVTOLmarket is attracting attention — and billions of dollars — from airlines, urban-mobility companies, and defense departments. By the terms of the deal, Eve will have access to Embraer’s engineering and skilled aerospace workforce, as well as its experience in working with regulators to certify aircraft — no small consideration when trying to certify an entirely new technology — while Embraer will benefit from Eve’s intellectual property and technology.
“We are providing Eve with the best of both worlds: The focus and agility of a technology disruptor, with the experience, scale, and resources of a global aviation leader,” Luis Carlos Affonso, Embraer senior vice president for engineering and strategy, said in a call with investors Tuesday. Eve will have access to 5,000 Embraer employees as well as its intellectual property and research and development on urban air mobility, he added.
“As an independent company, Eve is free to swiftly pursue new business models, partnerships, and investors that wold not be possible as a business unit of Embraer,” Affonso said. After the IPO, Embraer will retain an 82 percent stake in Eve.
The eVTOL sector is becoming crowded, with Archer Aviation, Wisk Aero, Lilium, Joby Aviation, and Vertical Aerospace among the companies vying to define the market and to have gone public or announced intentions to go public through SPACs. Each also has notched significant orders from airlines and other mobility companies. But the imprimatur of the world’s third-largest airframer lends Eve a credibility some of those other companies don’t enjoy. Airbus has also entered the market and similarly has lent it credibility but is keeping its eVTOL development in house, through its Airbus Helicopters unit.
Both the Airbus and Eve eVTOLs also benefit from Airbus’ and Embraer’s longstanding and widespread global aftermarket support network, which other eVTOL startups do not have.
Certifying any new aircraft program is a yearslong process, even for traditional fixed-wing and gas turbine-powered jets. Certifying an entirely new propulsion system and airframe is a different proposition altogether. This is where Eve believes Embraer’s partnership can be most useful.
“Certification is difficult,” Eve Co-CEO Andrew Stein said. “Some of the largest companies in the world have struggled with certification. Just imagine how tough this would be for a new startup.
“Embraer has proven its ability to certify its aircraft on time, on spec, and on budget,” he added. “Eve will benefit from this track record.”
The company plans to have its eVTOL certified by 2025, with a target entry-into-service date of 2026. The final design is expected to be frozen by 2024.
Eve will use a “lift-and-cruise” propulsion system for its eVTOL. The aircraft will have eight rotors for vertical lift, used in take off and landing, and two fans for cruise. It is capable of carrying four passengers 100 km (60 miles), or six passengers in planned, eventual fully autonomous flight. Eve chose the lift-and-cruise propulsion system over tilt rotors or directional ducted fans for its mechanical simplicity, potentially easier certification, and longer range, the company told investors in a presentation.
Two U.S. regional airlines have signed on. Republic Airways announced a letter of intent for 200 Eve aircraft, while SkyWest intends to buy 100. “The strategic relationship with Eve builds upon decades of a successful relationship with Embraer that has expanded access to regional airports across the country,” Republic CEO Bryan Bedford said.
“We believe Eve’s 100 percent electric eVTOL aircraft will provide the benefits of zero carbon emissions, enhanced urban quality of life, and increased connectivity,” added SkyWest CEO Chip Childs.
Both airlines see eVTOLs as critical for connecting passengers’ last mile, from regional airports to smaller rural population centers, or to provide quick connections to a congested urban center. Eve estimates that its eVTOL will cost passengers $100 per each 30 km trip, compared with $300 for a traditional helicopter and $78 in a a taxi or rideshare.
In addition to SkyWest and Republic, lessor Azzora has signed a letter of intent for 200 Eve aircraft. Eve said it had letters of intent for 200 aircraft from lessor Falko as well as agreements with helicopter operators for as many as 200 additional aircraft. Eve added that several defense departments and defense contractors have expressed interest in the company’s platform.
“[Urban air mobility] is expected to be transformational with a total addressable market that is huge and global,” Eve Co-CEO Gerard DeMuro said. “It provides a solution to urban congestion and the daunting economics of upgrading ground transportation systems.”