With the launch of the Lilium Pioneer Edition Jet earlier this month, the German eVTOL company is counting on deposits for the premium aircraft, among other revenue sources, to help fund its eVTOL program.

During a third-quarter earnings call on Dec. 6, Lilium executives told shareholders that turning memorandums of understanding (MOUs) into firm purchase agreements, such as the binding agreement it secured with eVolare, is a key focus for the company in 2023.

When it comes to the Pioneer Edition, such agreements will see private buyers provide Lilium with a 50% deposit before delivery — the deposits related to the 10 confirmed aircraft orders in the eVolare deal are expected to come in early 2023, executives said.

The company plans to only develop 50 of its premium aircraft model, and ambitiously set the end of 2023 as its goal for selling all of them. This would give Lilium new funds to support its eVTOL program.

“Lilium views pre-delivery payments as an integral component of our future capital structure,” said Sebastien Borel, senior vice president of commercial at Lilium.

In addition to the premium segment, Lilium plans to focus on the general aviation market in 2023, turning MOUs with partners, such as Saudi Arabia’s national carrier Saudia, into binding agreements with pre-delivery payments. Its partnership with Saudia could see up to 100 Lilium Jets deployed in the Middle East.

“These two agreements [eVolare and Saudia] bring the total order pipeline to 603 aircraft,” Borel said.

Executives also told shareholders that they are in “active discussions to secure additional non-dilutive funding sources to finance our operations until type certification of the Lilium Jet,” said Geoffrey Richardson, Lilium’s chief financial officer. “These include grants and subsidies from governmental authorities, as well as pre-delivery payments.”

If the company can secure such funding, it will add to Lilium’s recent $119-million raised from existing shareholders, new investors and strategic partners, which includes Honeywell and Aciturri. Lilium’s new CEO, Klaus Roewe, as well as three board members, Barry Engle, David Wallerstein and Niklas Zennstrom, have also contributed to the new funding.

Spending in 2023

Richardson said the company is currently finalizing its budget for 2023, but “expects it to be consistent with our 2022 budget.”

Its biggest cash spend will be to ramp up its supplier base as the company works toward assembling its type conforming aircraft and preparing for first flight in 2024.

Roewe said its partnerships with Tier 1 suppliers are “fundamental to our path toward certification and industrialization.”

The company has already secured agreements for its aerostructures, avionics, battery cells, energy management system, e-motors, propulsion system, aircraft interior and landing gears, among other components.  

“At present, we are in the process of onboarding additional suppliers for the engine fans and the inceptors — the sidesticks used for maneuvering the Lilium Jet,” Roewe said. “In total, we have now selected or contracted about 75% of the total expected aircraft bill of material costs.”

The company had previously said that it planned to use Zenlabs’ battery cell technology for its aircraft, which will be manufactured by Customcells. In addition to Lilium’s in-house battery testing, the company has turned to two external testing labs in the U.S., along with Zenlabs, to confirm its battery’s energy density and power density. 

“We are in the process of fine-tuning our battery recipe,” Roewe said. “We have confirmed internally, but also externally, that we have the energy density, which is essential for getting the range of the aircraft, and the power density that we need to lift off and land the aircraft. We also have confirmation that we have enough battery cycle life. We are doing these tests in repeated ways.”

Flight testing and certification

Going into 2023, Lilium is counting on its second demonstrator aircraft, dubbed Phoenix 3 — an identical replica of the Phoenix 2, to join its flight test program in early 2023.

“Having two demonstrator aircraft at our disposal will give us additional support for testing and learnings before the first flight of our type conforming production aircraft,” Roewe said.

Executives said the company remains focused on high-speed maneuvers, ground effects and downwash measurements in its flight test campaign. And since both demonstrator aircraft are not equipped with the same batteries Lilium is currently testing for its production aircraft, it rules out plans for long-distance flight testing anytime soon.

Roewe said the company may begin long-distance flight testing at some point with the second demonstrator on hand, but feels “from a technical learning perspective, it gives us nothing,” and what they’re focusing on now is “much more fruitful.”

With an aim to achieve type certification with the European Union Aviation Safety Agency (EASA) in 2025, Lilium said it has submitted about 80% of its certification plan to the aviation authority.

The company told shareholders its third design organization approval (DOA) audit is set for this month, “and the fourth and final audit is targeted for the first half of 2023,” Roewe said.

About 72% of Lilium’s means of compliance (MOC) have been approved upon with EASA, and the company expects the regulatory authority will accept the remaining MOC in the first half of 2023, with FAA validation to follow.

Financial update

Lilium reported a total cash spend of €69 million (US$72.6 million) in the third-quarter of 2022 — a slight increase from its cash spend of €63 million (US$66.3 million) in Q2. The company attributes this to the ramp-up in one-time supplier payments, which included the e-motor development and battery industrialization.

Before its recent investment round, Lilium’s cash, cash equivalents and other financial assets stood at €160 million (US$168.3 million) — a drop from Q2 when its liquidity sat at €229 million (US$240.9 million).

“Additionally, we terminated the equity line of credit (ELOC) facility in November,” Richardson said. The ELOC was established with Tumim Stone Capital in June to help raise funds, allowing Lilium to sell an aggregate amount of up to $75 million in new Lilium Class A Ordinary shares to Tumim. “Overall, Lilium received proceeds of approximately $12.6 million from the ELOC.”