Foreign In 2022, a number of electric vertical Takeoff and Landing or E-v tall startups listed their shares on U.S stock Exchanges by merging with specs, collectively raising billions of dollars. The consulting firm McKinsey and Company says the E-vital market could be worth tens of billions of dollars by 2030.. Morgan Scanli goes even further saying that E Vitals, or flying cars as we'll call them could create a 1.5 trillion dollar market by 2040.. Arc Invest says that advances in technology will cause E V Tall prices to drop, precipitously, making them commercially viable alternatives to ground-based taxis.

Currently, there are no commercial E-v tall services in the U.S Because no E-vital has yet received regulatory approval, but once they are approved, there will supposedly be thousands of EV talls flying around major cities flying hundreds of thousands of passengers. However, if we even applied the most basic amount of economic logic, we will see that Ee Vetalls have zero chance of being commercially viable. in our opinion. Even if any of these Ee Vetalls get regulatory approval, all they will accomplish is burning any money investors are willing to give them join us as we take a deep dive into the E-vital industry and show why this may be one of the dumbest ideas ever cooked up by.

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Brilliance annual premium subscription Foreign Tol is an electric aircraft which can take off and land vertically vertical takeoff and Landing is nothing new. That's exactly what a helicopter is. The first helicopter capable of carrying a human pilot was created by the French inventor Paul Cornu in 1907 more than a century ago. EV Talls have a few advantages over traditional petroleum-powered helicopters.

If you charge the battery with renewable electricity, it can have zero emissions because it doesn't have an internal combustion or jet engine, it may require less maintenance, although this is impossible to know for sure, as none of them are yet operating commercially. And finally, they can be much quieter. In many other aspects, E-vitols are inferior. Traditional helicopters can have a flight range of up to 1 200 miles, while E-vitals are expected to have ranges of about 150 miles.

At most, cargo helicopters can carry tens of thousands of pounds. This would be impossible for an E-v Tall due to the constraints of battery power. And finally, helicopters can be refueled quickly. While E Vital would take longer to recharge.

To estimate the size of the E-vital market, we first need to analyze the traditional helicopter industry. There are two types of helicopters. Turbine and Piston Turbine helicopters are powered by a jet engine. They generally cost more than a million dollars and have Superior power in range.

Piston helicopters are powered by internal combustion engines. They're much smaller and cheaper, only costing a few hundred thousand dollars. They usually only have one or two seats, so they can only be used for photography and by personal hobbyists. E-vitols are expected to cost three to five million dollars orders of magnitude more expensive than piston helicopters.

They are thus unlikely to take significant market share from the Piston helicopter. Market The turbine helicopter Market is relatively small according to the general aviation manufacturers. Association There were 1 300 new turbine helicopters shipped globally in 2019. about 600 of them were military helicopters.

E V Talls lacked the range or power for the vast majority of military applications. Of the 700 civilian helicopters sold, a substantial number of them were for search and rescue Medevac or police. E-vitals lacked the power or range to be viable alternatives for these use cases. Due to their low range, The only place E-v Talls can take market share is Urban Transportation which only represents a few hundred helicopters per year at most.

According to Vital.org there are over 350 EV call startups working on over 600 EV tall designs. They have collectively raised billions of dollars and each one plans to eventually make hundreds, if not thousands of aircraft per year. Currently, the current helicopter Market cannot soak up this amount of Supply so there need to be new use cases. The consensus among EV Tall Bulls is that they will not compete with traditional helicopters.

Instead, they'll compete with taxis. Eevee Talls will operate as flying taxis in densely populated cities foreign. The idea of flying taxis sounds appealing. Large cities suffer from congestion, making travel by car frustratingly slow.

Specifically, EV Tall companies plan to offer flights between airports and City centers. For example: Joby Aviation which is one of the largest publicly traded EV Tall Companies says that it will be able to take passengers from the JFK airport to Manhattan in less than 10 minutes a journey, which would take about 40 minutes by car in 2019. Uber launched the Uber Copter, a helicopter service which can take passengers from JFK to a heliport in lower Manhattan in just eight minutes, it cost 205 dollars, which is more expensive than an Uber car and Orders of magnitude more expensive than public transportation, but maybe some rich people could find Value in the time savings. CNN Sent a correspondent to see what's what.

The total trip length on the Uber copter was 55 minutes. So how did an 8-minute flight end up taking 55 minutes? That's because they only have one specific drop-off point in lower Manhattan So unless your final destination happens to be within walking distance to the heliport, you have to get a ground-based taxi for the first and last legs of the journey. It would have been faster and cheaper to just get a ground-based Uber or public transportation. The Uber Copter failed to provide a compelling value proposition, so very few people used it.

There's another company called Blade Air Mobility which also provides helicopter rides between JFK and Manhattan for a price of 195 dollars per passenger. Blade went public via US back in 2020. While they claimed to make a positive contribution profit, they still have a negative adjusted ebitda. they are burning cash and the share prices declined by almost two-thirds Since its IPO Joby Aviation claims that their EV tolls will be much more successful than helicopter flights.

they plan to set the price similar to an Uber black car ride. An Uber black ride between JFK and Times Square costs about 100. As we will show, there's no way an E-v Tall operator could turn a profit at 100 per trip. Most of the E-v tall companies have set the prices of their aircraft between three and five million, which is more expensive than comparable turbine-powered helicopters.

but they claim they'll be cheaper to operate because electricity is cheaper than Aviation kerosene and the lack of a jet engine should make maintenance easier. Blade has partnered with multiple E-vital manufacturers and plans to transition some of its helicopter Fleet to Eev talls if and when they get FAA approval. Blade says that the fixed costs associated with operating an E-v tall is 939 thousand dollars per year, slightly more expensive than a traditional helicopter. Current: FAA Regulations prevent helicopter pilots from flying more than 1 000 hours per year.

This is a safety consideration so the pilots don't get tired tired. Given that EV talls are a new technology, it is extremely unlikely that the FAA would decrease the standards. so one thousand hours per year is probably the best we can expect. This translates to 939 dollars per hour of fixed costs.

The direct operating cost of a traditional helicopter is 600 per hour, which consists of Maintenance and fuel. They say the E-vitol will only cost between 300 and 500 per hour to operate whether they use a traditional helicopter or an E-v tall, they still have to pay a 200 Landing fee to the heliport for each ride. Based on these calculations, they say the E-vitol will cost 430 dollars per flight, which is 14 cheaper than the traditional helicopter. However, this assumes that the FAA will allow the E-v Tall to fly more than one thousand hours per year, which seems unlikely.

If we take down the flight hours to 1000, the E-v Tall would cost 460 dollars per flight, only eight percent cheaper than the turbine Helicopter blade is already losing money offering its flights for 195 dollars. An eight percent reduction in cost isn't going to get them anywhere close to one hundred dollars per flight. The only real advantage that E-v Talls have is the fuel cost, but this only represents a small percentage of the total operating costs. Most of the expenses are landing fees and fixed costs, which will be the same if not higher.

We also don't know how long the batteries will last as they'll be drained and charged at frequent intervals. And finally, super fast charging infrastructure does not yet exist at the heliport. This won't be cheap to build. E-vitals are an unproven technology that, at best will be marginally cheaper than helicopters for urban transport, which is a tiny and unprofitable market.

So why are investors willing to give these companies billions of dollars? Thank you! Let's look at the other side of the debate unsurprisingly. Kathy Woods Arkhan Vest is one of the biggest EV tall. Bulls Arc Also, did an analysis of the cause of the EV tall flight from JFK to Manhattan Blade says the Ev12 flight will cost 430 dollars. Ark says that eventually the cost will decrease to just 180 dollars.

If there are at least three passengers flying in the aircraft, you could charge a rate as low as 70 dollars per person, which would be slightly cheaper than a ground-based taxi. So how do they expect to achieve such a massive reduction in cost? Arc makes three key assumptions. Firstly, they assume the EV tall can operate 2 000 hours per year double what a traditional helicopter can operate. Secondly, the cost of electricity and maintenance will be much lower.

And finally, The Landing fee will be much lower because the fixed costs will be amortized across a larger number of flights. There are some 8760 hours in a year, so 1 000 hours of flight time means the helicopter is Idle almost 90 percent of the time. This could theoretically be improved, but the reason they can only fly 1 1000 hours per year has nothing to do with the helicopter itself. These are FAA safety regulations to prevent the pilot from becoming tired.

Why would they relax these requirements for Ev tolls? It is true that the electricity costs are much lower than fuel costs, but we don't know how long the batteries will last. Joby Aviation Claims that their batteries will last. for 10 000 flights, but that's based on tests they did in a lab, not from Real World flight data. The speed of battery degradation depends on temperature, humidity, vibration, and a whole host of other environmental factors.

It's very difficult to simulate this realistically in a lab, even for electric cars which have much simpler and less powerful batteries than E-v talls. There is substantial uncertainty about battery degradation, even for cars of the same model and being operated by a same Fleet The rates of battery degradation can vary drastically and researchers still don't fully understand why. The most important cost saving assumption is the landing fees. Blade currently pays a 200 Landing fee per helicopter to the Downtown Manhattan heliport according to Arc and vest the entire trip.

Everything included will only cost 180 dollars less than the current Landing fee alone Arc assumes The Landing Fees can decrease by 75 percent to just fifty dollars for their evidence Arc points to a 2010 report by the Eastern Region Helicopter Council a trade Association for helicopter operators in the New York area. The report discloses that the Downtown Manhattan Heliport, which has 14 pads and flies 40 000 passengers per year, pays 1.3 million dollars of lease payments to the city government. Arc Did not disclose how they came up with their Landing fee calculations, but appears that they extrapolated this 1.3 million dollar lease payment and massively increased the number of flights per year to decrease the cost. This 1.3 million dollar lease is more than a decade out of date and it doesn't include other operating costs such as employees, taxes, insurance, and maintenance.

The heliport is operated by a private company that does not disclose their financial statements publicly, so we really have no idea how much it actually cost. Either way: Arkansas Best assumptions would require building a new heliport and increasing the utilization by orders of magnitude. You can't just buy a piece of land in Manhattan and start flying EV Dolls You need to get approval from the city, and there's substantial reason to doubt that the city will allow for a new privately owned heliport to operate massive volumes of flights. The more congested a heliport is, the more likely it is for incidents to occur.

Not only is this Common Sense, we also have real world evidence. In December of 2021, an NYPD helicopter crash at the downtown Manhattan Heliport. Luckily, nobody was seriously injured, but the helicopter suffered significant damage. According to the pilot, the helipad was congested with several other aircraft on the ground and two preparing to land.

Due to the congestion, the pilot attempted a complex maneuver which ultimately caused the crash. Arc Invest appears to assume that the existing heliports are mostly idle, and just by reducing the price, you can get a huge amount of volume, but this assumption does not match up with reality. The heliport is already operating at a very high level, to the extent that at least sometimes it experiences dangerous levels of congestion. Because no E V.

Tall is yet operating commercially. Investors like Kathy Wood are relying on various assumptions to justify a bull case, but these assumptions are extremely optimistic and a lot of them make no sense. E-vitols are cool and people want to believe that they will revolutionize the transportation industry. A strong desire to believe in something can cause people to irrationally disregard practical realities.

For example, Joby Aviation claims that they will eventually expand access of E-vitol right, Hailing to underserved rural communities. this is technologically impossible because the E-vitols don't have the required range to travel between rural communities in major population centers, and even if it was possible which it's not, it would be completely unaffordable. Regarding Evitol Socks, they may be remembered as one of the more questionable outcomes of this back boom with billions of dollars of investor. Capital At Risk it's important to cut through the noise of the Wall Street hype machine and analyze a situation from a standpoint of economic reality.

All right guys, that wraps it up for this video. What do you think about EV Talls let us know in the comments section below. As always, thank you so much for watching and we'll see you in the next one. Wall Street Millennial Signing out.