What once existed only in the realm of science fiction is now a distinct commercial possibility, as technology pioneers and forward-looking investors combine their imagination and daring to realize the potential of electric vertical take-off and landing (eVTOL) aircraft.
In China, authorities are promoting the so-called low-altitude economy, which offers substantial investment opportunities across aircraft manufacturing, infrastructure development, and technological and service innovations. While challenges exist, the sector's rapid growth and the strong policy support it enjoys provide good investment opportunities, particularly in the burgeoning eVTOL industry.
Low-altitude economy (低空经济) refers to economic activities that rely on the low-altitude airspace, typically defined as the airspace within a vertical distance of 1,000 metres from the ground, extendable up to 3,000 metres, depending on regional characteristics and practical needs.
This economic model is driven by various manned and unmanned aerial vehicles' low-altitude flight activities, including products such as drones, eVTOL aircraft, helicopters, and traditional fixed-wing airplanes. It encompasses consumer and industrial application scenarios.
The development of China’s low-altitude economy hinges on four key elements: policies, applications, aircraft, and infrastructure. Since 2021, the concept has been included in national strategies. It received a significant boost in December last year when it was officially recognized as a strategic emerging industry. This year’s government work report further solidifies its strategic importance.
The outlook for the sector is brightening as more consumer applications emerge. Recently, China’s first “low altitude + rail” intermodal transport project was launched in Shenzhen. It connects the Greater Bay Area (GBA) with a low-altitude traffic network with the Shenzhen North Train Station as its focal point, enabling access to over 90% of the GBA region within an hour.
In fact, China’s low-altitude economy is experiencing rapid growth. According to a recent report by think tank CCID Consulting, the market size reached 505.95 billion yuan (US$70 billion) in 2023, with a growth rate of 33.8%.
As of February this year, the sector includes over 57,000 enterprises, with nearly 21,000 established in the past five years, predominantly located in Central South and East China, particularly in Guangdong, Jiangsu, Hunan, Zhejiang, and Shandong provinces. By 2026, the market is expected to reach 1.06 trillion yuan, double its size in 2023.
eVTOL commercialization
Core development will focus on the production of light fixed-wing aircraft, civilian helicopters, drones, and eVTOLs, opening trillion-yuan investment opportunities.
In particular, private equity and venture capital investors are interested in the eVTOL sector, whose market size expanded to 980 million yuan in 2023, up 77.3% from the previous year, and is expected to maintain rapid growth to reach 9.5 billion yuan by 2026, the report says.
For PE/VC investors, 2024 is a pivotal year for the commercialization of eVTOLs in China, with applications in sightseeing and tourism leading the market while multi-scenario applications are also being explored.
The most valuable part of the eVTOL industry is the original equipment manufacturer (OEM) segment, which is responsible for product design, development, certification, supply chain integration, manufacturing, sales, and branding. The industry also presents new opportunities for the battery sector.
Trillion-yuan investments are also anticipated in general airports, helicopter landing sites, and new types of low-altitude infrastructure. For example, there is a growing need to construct support facilities and integrate them into existing transportation networks.
There are also indirect investment opportunities relating to innovation in manufacturing and technology services, extending service models to boost air transportation development and transforming flight experiences.
