Financial Independence · investing

Deep Dive on Palantir’s investment in Lilium

Lilium is a EV airplane company of small sustainable EV planes that can lift off vertically. The company intends to create a transportation network connecting several major cities. People will be able to travel to their destination 65% faster compared to an Uber at a similar price in large cities.

Lilium started to build mini Airports on several locations in Florida and Germany and is set for commercial launch in 2024 if they manage to get regulatory approval by then.

Interested in more posts about Palantir, Lilium, Investing and starting your own journey to Financial Independence? Then subscribe and stay up to date of all updates!

Palantir has recently invested 43$ million in Lilium. Well I say invested but on the Lilium site its mentioned as a partnership. The software Palantir delivers probably plays a big role in this deal. This is also confirmed on the investors page of Lilium. Palantir is not really a major shareholder here. With a 43$ million investment at a 3.3 billion valuation Palantir would hold about 1.3% of the company. This is one of so far 6 SPAC investments that Palantir has made, most likely all are of similar size.

Where are we on battery technology now?

Electric eVTOL (Electric Vertical Take Off and Landing) are only made possible because of revolutions in Battery Technology. Battery Technology has evolved so much over the years that some things that recently were unthinkable are on the verge of becoming reality. I like to invest into ground breaking company’s with no competition, such as Palantir.

The main issue with battery technology was that the batteries were just to heavy to use for planes. The plane would burn trough the energy and could not do long distances. But battery tech has made some giant leaps forward. There is several different companies that have been trying to develop EV planes this year, and a few are having their IPO this year.

Have a look at a comment from Elon Musk on this topic in August 2020:

Tesla did had a design ready for EV planes, but according to Musk the battery technology was just not there yet.

Lilium does not seem to agree with Musk, according to their design they created an EV aircraft that can fly 155 miles or 241 kilometers. This is perfect for short term flights. Also notice what their Watt hour per kilogram is: 330. But okay, its only slightly lower then what Elon Musk suggested.

Additionally they do take into account that if battery advances could improve further they could almost double their range and as we know according to Elon Musk 400 Wh/kg could already become a reality in 2024.

Also notice this crucial point: fast charging! Lilium Jets can fast charge 80% in 15 minutes or 100% in 30 minutes. This is a crucial point. Unboarding and boarding of passengers takes about 20 minutes for such a small plane. So by the time its boarded its pretty much ready to go.

Liliums design

Lilium is competing for this future 1-3 trillion dollar market together with a dozen of other companies. I will come back to the competition later, but let’s just say that one of the points that makes Lilium unique and superior is its design.

Now of course the plane itself looks very futuristic. I really love the way it looks now. But what I like the most as an investor is their technology, and more exactly their propulsion system.

Lilium is using Ducted Electric Vectored Thrust. As you can see the rotors are hidden away. The big advantage of this design is that it makes less noise, and most of all it is scalable.

The less noise is important, because if you really plan to use EV taxis as taxis inside the cities then you want to avoid angry neighbors that don’t like helicopters landing in their backyard.

The low noise level would allow Lilium to be used as EV taxis inter cities, without the use of airports.

The Market

A study from Lufthansa indicates that the market potential could be huge. While in the next decade these Aircrafts would be mainly toys of the rich, replacing helicopters, they claim that in 20 years eVTOL airplanes could replace Mass Transit (in their most Bullish case).

While in certain countries and states they argue weather or not to build high speed trains, could it be that one day Electric Airplanes become so cheap that they can replace public transportation all together?

Who is the competition?

After doing research there is about a dozen company’s looking into this technology, including Tesla, so I did my research and checked how far ahead or behind these competitors are.

There is one thing that the competition all have in common with each other. The design is helicopter like. Its as far as I know not scalable and that means it will have its limitations.

Vertical Aerospace

Vertical Aerospace has great Ambitions, but is running behind on the timeline. Since they are UK based they do have an advantage as this is a big market to start from. On their website they have a movie of their first prototype that looks a bit like a giant drone. Their second model the VA-X4 is Unveiled and looks impressive, but its only a digital illustration, what makes me suspect there is no real aircraft yet.

On their website they say they are the only eVTOL company that can handle 5 passengers, but I guess their information is not up to date since Lilium can handle 6.

Volocopter

Volocopter is located in Signapore and is interesting because it has two types of Eplanes, one for short distances and cities and a second one for longer distances. Well long…while the design is impressive and looks like a plane, the long distance they talk about on their site is about 100km. That would limit their options greatly.

They do have a second, smaller and more mature design, that that they believe can start commercial flights in 2024 in Signapore and Paris.

Joby Aviation

Another interesting eVTOL company is Joby Aviation. Joby Aviation is actually a Woodstock, meaning it is part of Arks portfolio. It seems that Cathie is betting on Joby to play an important role in eVTOL. With a 6.6 billion valuation the expectations are the highest of all.

A strong point about Joby Aviation is that they are partnered with Uber. This could give them direct access to Uber customers who can then use Uber to combine taxis and eVTOL together. Of course nothing will stop Uber customers to taking a taxi to any of the other eVTOL aircrafts, but it might give Uber customers more certainty that a plane will be waiting when they arrive.

Its most likely the main reason for its lofty valuation.

Another impressive feature is its speed, with 321km / hours it makes it the fastest eVTOL company.

EVE (Halo)

Eve has a partnership with Halo to manufactor 200 eVTOL airplanes for the UK and US market. Its impressive to have an order of 200 airplanes, but according to the website commercial launch is not planned until 2026. There is very little information availible on their website about the technical aspects and there is no photo available of an actual real airplane (except an extremely basic prototype).


Archer

Archer is another company that is going to do a reverse merger with a SPAC. They are one of the most famous ones and going trough their investors relationship documentation they seem to be able to present a few strong numbers.

Their design does look a bit like the other companies mentioned, but they have one very strong point and that is that they have a partnership with United Airlines that made an order with them over 1 billion $ plus an additional option for 500 million.

Wisk

Whisk is based in New Zeeland, what I like about them is that they are building the aircraft to be autonomous from day one. They are expected to launch trials this year in New Zeeland. They also have an impressive partner, namely Nasa in their portfolio.

Ehang

There is a few more smaller competitors but I think we will close the pack with Ehang for now.

Ehang might be the most hyped eVTOL company, even though readers of my blog might not have heard of it. Its located in China, and that’s where the hype is also located.

In terms of technology the design looks a bit like the early prototypes of some of the other companies I saw. And looking at the tech a speed of 130km/h and distance of 35km is the least impressive of all the companies so far. A distance of 35km is hardly worth the effort of not taking your car out, and it looks more of an expensive toy or touristic ride then a transport vehicle to me.

While the technology is not impressive, and the revenue of the company with 54M in the last quarter (and negative growth) isn’t either for some reason the stock price has been doing rather well since IPO last year.

On the company’s website there is information about the stockprice, but not much investor information an investor could use to take an investment decision for the future. One thing is for sure, based on numbers and technology this stock is overvalued big time.

Competition is not a bad thing

As some of you might have seen I spend a ton of time on the Palantir forums on reddit, I love the /r palantir and /r PLTR forum (so go check them out!). A reddit user mentioned he didn’t like QELL (Lilium) because of all this competition.

To start with I believe Lilium is superior to this competition (and I’ll come to that in a minute), but secondly competition is actually a good thing. The fact that there is a dozen companies working on this technology shows that they are expecting a giant market there! If Lilium would be the only company working on this technology I would be worried.

Back to Lilium

How do its numbers compare to its competitors?

When we add the numbers together in one sheet we can see that Lilium has the lead in passengers, distance, comes a close second in speed, but more importantly also has the most competitive valuation.

Infact if you invest in QELL right now you are looking at a 2026 Price over revenue of a little under 0.7. This compares to the SP500 that right now trades near 3 price over revenue. However growth stocks are usually allowed a loftier price over revenue. For Tesla for example this is 17, for Palantir its 40 and for Snowflake its almost 100. It is very much related to the growth. Palantir has a 45% growth and Snowflake has a 100% YOY growth.

The expected growth rate for Lilium between 2025 and 2026 is over 400%. Of course this will not last long, but it does make clear that a 10 price over revenue is actually quite fair for a company like this. Meaning that if it can make true on its promises it could be a x15 stock.

Of course at this point everything depends on whether or not Lilium will get the commercial license for take off. I think 2024 seems very early, but they seem confident they will be able to do it, and if there is something German companies are famous for its punctuality. But until it has that license this will remain a high risk stock.

Liliums technology

There is a very important point that makes Lilium the superior technology. Namely its scalability. As far as I can tell none of the competitors have developed scalable technology.

Have a look at the investor presentation of Lilium. They state their technology would allow them to scale this to bigger aircraft like the 16 seater (15 passenger) aircraft they suggest.

This could be a game charger, because this opens the market for Lilium far beyond simple helicopter flights for the rich to actually mass transit and a ecological replacement of the classical aircraft. Aviation so far has been allowed to continue to pollute due to a lack of alternatives, but if Lilium manages to create such an alternative and battery technology continues to evolve they could replace traditional (polluting) aircrafts one day.

Did Palantir made a good investment?

After looking into Liliums numbers, plans, tech, potential, market and competition there is no doubt that Palantir did not only bought themselves a ticket to a revolution in aviation, it seems to me they also picked out the very best to invest in.

I looked into all SPACs Palantir invested in, I would say all of them are revolutionary, and this is no less so. Another shot in the rose for Palantir’s brilliant team!

As you could see in my last portfolio update I purchased 125 QELL shares (Lilium will do a reverse merger with this SPAC), and I will consider to purchase additional shares the next month.

As always keep in mind investing is risky, so please do your own due dilligence.

Interested to go on a Roadtrip to Financial Independence? Then subscribe and support my blog by doing so!

6 thoughts on “Deep Dive on Palantir’s investment in Lilium

  1. Good question, well EV planes will be cheaper and less noisy then Helicopters, so at what point will they be then cheap enough?
    I can see them replace helicopters and short flights by 2030, trains and busses by 2040 , and eventually cars by 2050 in the most bullish scenario.

    Like

  2. Great analysis of both businesses. I have briefly researched PLTR in the past, but will have to give them another look. How many years do you think eVTOL vehicles will be as widely used as electric cars are today?

    Liked by 1 person

  3. Battery powered aircraft start with a 40 to 1 weight disadvantage -vertical take off requires over 2400 HP for this design losing all the motor weight ‘saving’ many times over -more important is the lack of fail safety and catastrophic outcome . remember what the Hindenburg did for airship travel and hydrogen .
    Sensible approaches to air mobility will not use huge power and ‘climate friendly’ is anathema to such excessive consumption -noise is directly related to power and urban air mobility is again better served by non VTOL and non battery approaches (also non airport dependent and best if roadable as Lilium was initially intended to be ) Bad design will cripple the chances of establishing an airborne commuting system for all .At least a ‘flockstrike’ test must be conducted as for bird ingestion in jet engines -before any ill conceived investment in vertiports or mass production . Losing all control when the battery goes flat is suicidal as is a tornado strength downwash (F4 on Fujita scale by their own figures – wild weather will ground these things long before normal limits and preclude reliable use.

    Liked by 1 person

    1. Yeah hovering is very expensive, however Lilium is not building its aircrafts to hover, its building them to fly. The hovering time will be very very limited and should take up only 5% of the power.

      For safety Lilium has a a few dozen of engines, so if one drops out then the others are still there. Of course safety is a concern and this is why they need to go trough the same requirements as any other airplane needs to go trough.

      Non EVTOL aircrafts, such as a helicopter produces 10x more noise and this is exactly the reason why they are not being used in cities. Lilium is not only much more silent then helicopters, it also is more silent then its competition.

      Weather is a concern yes, but isn’t this the case for all aircrafts?

      Like

  4. OK Any eVTOL MUST hover at each end of every flight – this requires any horizontal speed (eg 300 km/hr) to be ‘killed’ before touch down (using airbrakes perhaps to prevent zooming ) and also ANY vertical speed -ie arrest any sink rate as well as create lift equal to weight . A fixed wing aircraft need only create one ‘L/Dth” (weight divided by glide ratio) -maybe one tenth or one twentieth for a reasonable design (even 1/60th for a sailplane) and need not dissipate all it’s speed (that is it retains aerodynamic control at all times unlike a hovering aircraft using only power variation for control . A normal aircraft takes off or lands. with a margin over minimum speed – typical eVTOLS are like a hovercraft at the critical time when thrust is equal to weight or almost (easily blown around by gusts – they have no momentum vector and are not held down until well above min control speed like CTOL-.which positively rotate to fly or are held level like a glider until at safe speed . Relying on motor speed variation for control is unwise since power loss/’fuel’starvation etc results in complete control loss simultaneously . The ‘pinwheel’ effect of losing one or more outboard thrusters at max thrust (REALLY BAD FOR WINGTIP PROPS BOTH UNCONNECTED-EG JOBY ) requires instantly killing the other side and also some of the front props to maintain pitch balance Bell stated that installing 220% of needed hover plus climb power was required to survive one prop loss out of six (more than twice the calculated power required at optimum speed – I lived next to a helicopter landing area (Police Dauphine, Bell 206 etc and the whole house shook — there are no “!00 metre radius” open spaces in urban areas for even ’60db’ noise which will disturb sleep anyway so that the noise problem is NOT solved by ANY eVTOL unless banned to outside habitation or strict daytime only curfew . Ask any airport pressure group … Being blown over or off an elevated pad when in ‘weightless’ condition is extremely dangerous -helicopters ‘rev up’ in zero pitch (or negative) until well above the minimum lift off RPM then pull full pitch and rapidly accelerate with blade aerodynamic (cyclic/variable) control unlike fixed rotor or fans . Approaching the UBER vertiports means being in a turbulent wake even in smooth wind -touching down in mechanical turbulence guarantees accidents with such slow acting hovering aircraft . There are solutions to all these issues but not by copying disproved past concepts and adding ‘e’

    Like

Leave a Reply to Liquid Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s