Lilium is facing insolvency as the air taxi company struggles to raise cash

a German aerospace startup Lily face insolvency if it does not raise emergency funds from the state government for the southeastern state of Bavaria.

The insolvency would mark a dramatic downfall for the start-up which is said to be Europe’s best chance to build the 21st century equivalent of a “car” that can fly.

Lilium is one of a series of companies trying to build an “eVTOL,” or electric vertical landing vehicle.

Commonly known as flying cars or air taxis, these vehicles are being developed by startups in the United States, Europe and Asia.

Today, however, Lilium is in trouble. The company is desperately trying to raise taxpayer funds in Germany. And so far, no success.

Lilium has negotiated an emergency capital injection with the German federal government and the Bavarian state government.

The company is seeking a 50 million euro ($54 million) loan from the federal government. However, the request was rejected by German parliamentarians.

In a regulatory filing released last week, Lilium said it “received indications that the budget committee of the parliament of the Federal Republic of Germany will not approve a €50 million guarantee for a €100 million convertible loan.”

The proposed state aid will be issued by KfW, Germany’s state development bank.

Lilium “continues discussions with the Free State of Bavaria regarding a guarantee of at least €50 million,” Lilium added in the filing.

A spokesperson for Lilium told CNBC that the company does not plan to comment further beyond its statement in the 6K filing.

In response to Germany’s decision to deny Lilium state aid, Hubert Aiwanger, Bavaria’s economy minister, criticized the move, saying it was “regrettable” that the federal government had chosen not to support the company.

Danijel Višević, co-founder of the Berlin-based climate technology investor World Fund, said that the parliamentarians “understandably” refused to support Lilium due to concerns about the government supporting each other’s company, there is a false opinion among politicians that air taxis. as a “millionaire’s toy.” The idea, he said, was “very close.”

Višević suggested it was unfair that US electric car manufacturer Tesla – which burned billions of dollars before turning a profit – was once able to receive a US government loan, but Lilium was not.

“Flying car” is perhaps not the right term. But what Lilium finally tried to bring to the world was a vertical take-off and landing plane that could fly people from city to city to ease traffic congestion.

The company initially wants to launch its own digital “hailing” service that will see users order jets from designated areas where the vehicles can take off and land.

Lilium then decided to change its business model.

Instead of developing all its own services, the company has chosen to partner with airlines and airport operators, which will create the service products and infrastructure needed to strengthen its ambitions.

A Lilium jet can cost up to $9 million. The company also has a six-seat version under development, which will cost the buyer about $7 million.

Lilium gets a major deal with those who like it Lufthansa in Germany and Saudia in Saudi Arabia. It also agreed with Groupe ADP, an international airport operator based in Paris.

Founded by four students in 2015, Lilium quickly gained a reputation as one of the best-funded air taxi companies in Europe.

The company has raised hundreds of millions of dollars from investors including Tencent, Atomico and China’s Earlybird.

In September 2021, Lilium went public on the Nasdaq through a merger with a special purpose acquisition company called SPAC Qell.

At its height, Lilium was worth up to $3.3 billion. Its shares have fallen to less than 50 cents – more than a 95% plunge from its stock market debut.

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