Aviation has come along away since the Wright brothers invented the first successful airplane around the turn of the twentieth century. Today, aerospace giants like Boeing Co. (BA), Airbus SE, and JetBlue Airways Corp. (JBLU) are investing in startups and projects to develop autonomous-flying electric aircrafts with vertical takeoff and landing capabilities. Even Uber Technologies Inc. (UBER) has plans to expand its transportation services to the airways, according to a recent story by The Wall Street Journal.   

California-based startup Ampaire recently test flew a five-passenger aircraft with a retrofitted electric motor powering a propeller in the back of the plane. While the plane still used a normal combustion engine for the propeller at the nose of the plane, the successful flight of this hybrid aircraft offers a glimpse into the not-too-distant future of aviation. 

“It’s kind of like a plug-in hybrid car,” Kevin Noertker, co-founder and chief executive of Ampaire, said. “We are really riding the coattails of ground electric vehicles here.”

What It Means for Investors

At a time when climate change is becoming an imminent threat to the planet and the aviation industry contributes 2% to 3% of global greenhouse gas emissions, electrifying commercial aircraft will become the new goal for innovative startups and industry leaders alike. Electric motors also produce less heat than turbine engines, which makes them cheaper to maintain. Both the fuel efficiencies and cheaper maintenance will provide significant cost savings.

Ampaire’s retrofit, originally a Cessna Skymaster, can travel up to 200 miles on a single charge, uses 55% less fuel than an unmodified plane, and costs up to 50% less to maintain. Another California-based startup, Wright Electric, is planning to retrofit a nine-passenger plane with a hybrid engine, which is expected to offer fuel savings of up to 20%.

One major decision companies are currently facing is whether to design completely new aircraft or simply to retrofit existing models with electric motors. Retrofitting may allow companies to release their models for commercial production soon, since those models are likely to face less regulatory hurdles. However, new designs are likely to win in the long term. 

The Federal Aviation Administration (FFA) said that approvals for design changes can take many years. But, at least with retrofits, “you already know the airframe works,” Dean Donovan, managing director at aviation-and-travel investment firm DiamondStream Partners, told the Journal. “All you’re really doing is replacing the propulsion system.”

Yet, “[a]n aircraft designed around conventional propulsion typically struggles to realize the benefits of electric or hybrid-electric power,” said Eric Bartsch, CEO of Florida-based electric-aviation startup VerdeGo Aero. “It was a relatively easy decision to focus on newly designed aircraft.”

At the Paris Air Show in June, Israeli startup Eviation Aircraft drew particular attention, taking “double digit” orders for its $4 million electric plane named Alice. The plane can fly 650 miles at about 500 miles per hour with an electric motor on its tail and each of its wingtips. Cape Air, a regional airline in Massachusetts, put in orders for the aircraft, making it the first ever order for commercial electric airplanes, according to Quartz.  

Since 2017, around $250 million has been invested in electric-aviation startups. Both Boeing and JetBlue have invested in Zunum Aero, which is expected to come out with a hybrid aircraft later this. Ampaire has raised money from a variety of venture-capital sources, government grants and from the aviation industry, including engine manufacturer Contintental Aerospace.

Airbus is making plans to test-fly a short-haul jetliner with one of its four turbofans replaced by an electric motor by 2021. While this model is meant to demonstrate new technology and won’t be produced commercially, the company does plan to have a commercially viable electric aircraft by 2022. Uber has plans to use electric, vertical-takeoff airplanes to expand its ground taxi service to the sky by 2023. 

Looking Ahead

The successful test flights demonstrate that electric airplanes aren’t just a pipe dream, but a viable, cheaper, and cleaner way to fly. The improved fuel efficiencies also put electric airplanes in good favor with governments looking to reduce their carbon footprints. That favour should help electric planes takeoff sooner rather than later.