Qell Acquisition Corp., the special-purpose acquisition company started by former General Motors North America President Barry Engle, is taking German electric-aircraft startup Lilium public through a reverse merger.
The deal will list Lilium on the Nasdaq and values the combined company at approximately $3.3 billion, according to a statement Tuesday. Lilium will bring in proceeds of $830 million, including about $380 million in cash currently held in trust and $450 million from private investments in public equity.
Qell is making a high-stakes bet that Lilium will succeed in the nascent business of small electric aircraft. The startup intends to get its planned seven-seat vertical takeoff and landing craft completed and ready to launch commercial passenger service in 2024. Later, with additional funding, the Munich-based company plans to build a 16-seat model to move passengers across congested cities at rates competitive with high-speed rail. Bloomberg News reported the companies were in talks earlier this month.
“We looked at well over 100 companies,” Engle said in an interview. “We see this as a once-in-a-lifetime opportunity that will be at the forefront of a whole new industry.”
The plan is for pilots to operate the small aircraft in congested cities, giving passengers the ability to take short trips quickly, and to develop routes for a fraction of the cost of alternatives such as underground rail networks, Lilium CEO Daniel Wiegand said.
“Our goal is to create a sustainable high-speed network,” Wiegand said. “We can do that at 100 times lower cost than underground transportation.”
Lilium had previously worked on a five-seat version it had hoped to have in the skies by 2025. The seven-passenger model has been in development for five years, has a projected cruise speed of 175 miles an hour (282 kilometers) and a range of more than 155 miles, according to the statement.
Lilium plans to offer the service at $2.20 a mile, Engle said. In the U.S., the startup plans a network in Florida with as many as 14 “vertiport” development sites confirmed, to be built and operated by Lilium’s infrastructure partners, according to the statement. The concept is much like train stations, in that the passengers are taken from city center to city center.
In an investor slide presentation, the company said in the future it could deliver passengers to Philadelphia from New York in 30 minutes at a cost of $170. On the West Coast, Lilium said it could ferry California passengers to Palo Alto from San Francisco in 45 minutes for $90. Engle said those routes could happen once the company establishes its first market in Florida and routes between multiple German cities and locations in Austria and Switzerland.
Lilium, co-founded in 2015 by engineers Wiegand, Sebastian Born, Matthias Meiner and Patrick Nathen, became a so-called unicorn last year after raising $35 million from Baillie Gifford & Co. The company has 700 employees, including 400 engineers.
As envisioned, the aircraft would come off the production line in 2022, followed by a few months of ground testing and then take flight in 2023 before type certification in mid-2024. The latest funding “covers everything we do until market entry with a little bit of buffer,” Wiegand said.
The challenge for Lilium will be keeping investors happy until 2024, which is the earliest it will generate revenue. According to the statement, the PIPE investors include Baillie Gifford, funds and accounts managed by BlackRock Inc., Tencent Holdings Ltd., Ferrovial SA, LGT and its direct-impact investing arm Lightrock, Palantir Technologies Inc., and the FII Institute, as well as private funds affiliated with Pacific Investment Management Co.
Engle said the investors understand the time it takes to ramp up the business. He said he and his partners in Qell, the special-purpose acquisition company, don’t get their shares until Lilium hits key milestones, which include the first flight, certification of the aircraft and revenue generation.