Archer Aviation (ACHR) and Lilium (LILM) are two of the most popular electric vertical takeoff and landing (EVTOL) or flying car companies. Lilium, a German company, has a market cap of over $482 million while Archer has $1.1 billion. Joby Aviation is much bigger than them with a $3.8 billion valuation.
These companies are working to change the urban transport industry by creating battery-electric helicopters that can land anywhere. Over the years, they have burned billions of dollars building their vehicles and receiving approvals. This article looks at Archer Aviation and Lilium and highlights the better one to invest in.
Lilium | LILM
Lilium is a German flying car company that has been building its planes since 2015. In this period, it has raised funds from companies like Tencent, Atomico, and Bailie Gifford. It went public through a SPAC merger in 2021.
Lilium is building an EVTOL that will mostly be used in urban centers. Its initial jet will have several engines and a spacious cabin that will carry about four people. Its wingspan means that it can land in most of the existing helipads in most cities.
Lilium has worked hard to test its jet ahead of the planned 2026 deliveries. As part of this process, it has received several certifications from the European Safety Authority. It has also received large orders and is also working on the batteries that will power the jet.
According to the management, the company has received 56 firm orders from the likes of Lufthansa, UrbanLink, and eVolaire. Its total order pipeline is of over 780 jets.
Lilium, like other pre-revenue companies, has been burning cash, with its total net loss in the last five years being over $1.3 billion.
According to SeekingAlpha, its total cash and short-term investments stood at over $215 million in the last quarter. And in July, it sold over 97 million shares to boost its balance sheet.
Lilium is also being considered by the German and the Bavarian state government for funding guarantee. If the due diligence is positive, the company hopes to receive about 200 million euros.
Archer Aviation | ACHR
Archer Aviation is an American evTOL company that is also working on making flying vehicles a reality. It is currently doing testing on its Midnight plane, which has now passed 400 test flights this year ahead of schedule. It has also delivered its initial jet to the US Air Force.
Like Lilium, Archer Aviation has made a lot of progress in terms of certification and fundraising. In the second quarter, it acquired about $230 million of additional capital and announced huge purchase orders.
The most important development was that Stellantis expanded its relationship and funding. In addition to providing money, Stellantis will also help it in manufacturing. It will fund the jets manufacturing and then be reimbursed quarterly through equity. The total amount of this funding is approximated to be about $400 million.
Archer Aviation has also secured large orders from Southwest Airlines, which hopes to use these jets to transport clients from the airport to other areas. It has also identified takeoff and landing locations in San Francisco, Napa, and San Jose.
Archer has also announced a series of large orders. For example, Future Flight Global has signed an agreement to buy 116 jets worth about $580 million, meaning that its jet costs about $5 million.
Archer hopes to start ramping up manufacturing of its aircraft. It will manufacture 10 jets in 2025 followed by 48 in 2026, 252 in 2027, and 650 in the following year. It hopes to have a gross margin of 50% by 2027 and a positive operating margin.
Read more: Analysts are upbeat about Archer Aviation stock: should you?
Lilium vs Archer Aviation
The two companies have not done well this year, with Archer Aviation stock falling by 50% and Lilium retreating by 35%. ACHR is down by 57% from its highest point this year while Lilium has dropped by 43%.
Archer also has a higher short interest of 16% while Lilium’s stands at 4.4%. This is a sign that many investors expect that ACHR will continue underperforming in the near term.
The two companies have also been attacked by short sellers who have predicted that the stocks will continue falling. Archer was accused by Grizzly Research, who accused it of being a lame duck.
Grizzly has been right on several other companies in the past, including PDD Holdings, Giga Cloud, Nio, and Celsius Holdings.
Lilium, on the other hand, has been accused by Iceberg Research, which has also called out firms like BigBear AI and Hyzon Motors. It accused Lilium of having inferior technology and misrepresenting orders.
I believe that eVTOL companies faces major challenges ahead and that investors will continue being diluted. Nonetheless, if I was to choose between Lilium and Archer Aviation, I would go with Archer.
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