Some of you may have heard that UBER is working on future on-demand urban air transportation service called “Elevate”. Recently the company released a white paper in which it explains that project Elevate will be feasible, if the all the key-players align themselves and cooperate effectively towards the common goal of these new flying cars.
According to the study, “on-demand aviation, has the potential to radically improve urban mobility, giving people back time lost in their daily commutes”.
The idea is simple: “Just as skyscrapers allowed cities to use limited land more
efficiently, urban air transportation will use three-dimensional airspace to alleviate transportation congestion on the ground. A network of small, electric aircraft that take off and land vertically (called VTOL aircraft for Vertical Take-off and Landing, and pronounced vee-tol), will enable rapid, reliable transportation between suburbs and cities and, ultimately, within cities”.
UBER believes that technology advances have made it practical to build this new class of VTOL aircraft. “Over a dozen companies, with as many different design approaches, are passionately working to make VTOLs a reality. The closest equivalent technology in use today is the helicopter, but helicopters are too noisy, inefficient, polluting, and expensive for mass-scale use. VTOL aircraft will make use of electric propulsion so they have zero operational emissions and will likely be quiet enough to operate in cities” the study claims.
Demand will bring the virtuous circle. “VTOLs will be an affordable form of daily transportation for the masses, even less expensive than owning a car”, says UBER.
According to the study, “once the ridesharing service commences, a positive feedback loop should ensue that ultimately reduces costs and thus prices for all users”. This will continue “with the pooling of trips to achieve higher load factors, and the lower price feeds back to drive more demand”. In parallel, this will increase “the volume of aircraft required, which in turn drives manufacturing costs down”.
According to the white paper, the vision for flying cars “is achievable in the coming decade if all the key actors in the VTOL ecosystem—regulators, vehicle designers, communities, cities, and network operators—collaborate effectively”
The economic model of flying taxi cars
After having reported on transportation for the past years, I found the chapter on economics the most interesting part of this white paper.
And here it begins:
- “Models such as ridesharing cars or commercial aviation achieve extremely high use of 3,000 to 5,000 hours/year. Maintaining high rates of vehicle utilization is a key assumption in our operating and economic models”.
- “The assumption of 2,080 operating hours per year is based on the vehicle being flight ready for 50% of the time between 6am and 10pm each weekday (8 hours/day) for 260 days/year”.
- “It is critical to be able amortize the capital cost (of VTOLs) over as many operational hours as possible during the year. Because of high vehicle utilization assumptions, in our model the vehicle depreciation/financing cost is only ~10% of the baseline direct operating cost”.
- “Achieving high operating efficiency for the vehicle is critical for both low energy costs and because this determines the size of the battery, which has a significant impact on the resulting vehicle weight and mission range capability. The mission profile is assumed to be a series of two 50-mile trips with VTOL takeoff and landing at each location, along with a wait time of 10 minutes per stop with rapid charging during wait times.
- “The battery is assumed to be 140 kWh capacity to permit both trips prior to recharging, while also providing sufficient energy for IFR reserves of 30 minutes at minimum cruise power and a short detour to an alternate landing location. The bottom 20% of the battery would only be used in the case of needing to use reserves to achieve a long battery life of 2,000 cycles. After the two trips, the VTOL would recharge a minimum of 30 minutes before conducting additional trips”.
- “Electricity pricing, unlike other energy pricing structures, depends not just on energy but also strongly on monthly peak power demand. If charging centers have a rather low energy delivery, but high peak power demands, then one could expect a much higher per kWh rate… An electricity cost based on a U.S. estimated rate of $.12 per kWh is used with an electric powertrain achieving a 92% efficiency and aerodynamic efficiency equating to an L/D of 17 at 150 mph and 13 at 200 mph. The resulting energy costs are modelled to be ~12% of the baseline direct operating costs”.
- “The vehicle load factor determines how many revenue generating passengers occupy the vehicle on average. Large commercial airlines achieve load factors greater than 90% due to their use of a hub and spoke feeder system to get as many passengers as possible into a few locations for vehicle transport. Regional airliners aren’t able to achieve this same packing efficiency and have a more typical load factor of ~70%. Car use has very low load factors with the average car having just a single occupant for the short trips typically taken, with the load factor increasing to 1.6 to 1.7 people per car for longer trips. We assume that VTOL carpooling would allow for a load factor of 67%”.
- “VTOLs will not be door-to-door; they will be supplemented by ground cars for first/last-mile connections. As such, a true door-to-door trip would not, on average, achieve the full 42% benefit of traveling straight-line; NASA estimates that a VTOL trip in the San Francisco Bay Area might receive closer to a 35% benefit over ground trips… We assume a 1.42 reduction in trip miles by VTOL compared to a car ground trip”
- “Due to operations being confined to a small metropolitan area (100 mile diameter around a major city), and through deployment of a sufficiently large fleet size to achieve a uniformity of operations across locations, we assume that 20% of VTOL flights (across all three cases) will be non-revenue repositioning flights”.
Time for CAPEX: Rotorcraft
- “A typical learning curve for aerospace and automotive products is 85%, meaning that for each doubling of aircraft production, the cost decreases by 15%. If everything else was equal (same engine, same components) and only the production volume changed for an aircraft that is built at 12 units/year for $900,000, then fabricating 192 units/year would cost $469,000 each; at 1,536 units/year production the cost would be $288,000; and 6,144 units/year would cost $208,000. For reference, a speciality low volume production car such as the Aston Martin DB-9 has a production of ~1,500 units/year with a price of $238,000”.
- “We evaluate several different VTOL prices: $1.2M for the initial case (12 units per year), $600,000 for the near-term case (~500 units per year) , and $200,000 for the long-term case” (~5,000 units per year). “Achieving such high production volumes would be transformative for the vertical lift industry (even across all of aerospace)”.
And here’s the best part:
- “Such production rates have not been seen with any aircraft since 1946 when ~48,000 small aircraft were produced over a dozen or so model types. This post-WWII high production was a result of industry attempting to repurpose to civil markets, with a large number of pilots suddenly having been introduced to the market place. In the years after 1946 there was a sudden reduction in annual production and manufacturing rates have never again risen to 1946 levels”.
- “We assume a design life of 25-27k hours for the VTOL to permit 13 years of service with the 2080 hour/year utilization. This enables the vehicle to provide 400,000 miles of service each year and about 5 million miles of service life before the aircraft is salvaged at a residual value of 30%”.
- “The useful life of a VTOL as about twenty times greater than a car; however, this assumption may be high… Commercial aircraft and personal cars have average lives of 32 and 10 years, respectively. We project that a $200k autonomous VTOL could fly up to 5 million miles considering an annual overhaul between $90-95k per year. This allows the VTOL a life of 13 years at 2,080 hours per year. On the other hand, a car with a range of 250k miles would have a lifetime of only 3 years”.
- “An urban air transportation network will require a high level of distributed take-off and landing locations. Costs are modeled based on an initial fleet distributed across 3-4 cities and 1,000 VTOLs, with a total of 83 vertiports each capable of supporting up to 12 VTOLs at a time. This type of infrastructure is assumed to be highly similar to the type currently present in New York City with development costs and yearly operating costs all matched to those facilities”.
- “While the initial infrastructure repurposing development cost for these 83 vertiports is large ($121 million), this cost is amortized over a 30 year period. This initial cost relates to building modifications (such as retrofit of parking garage structures to use the top level as a vertiport), along with a combination of 3 high voltage and 9 low voltage chargers (one for each VTOL vertiport parking spot)… The yearly infrastructure cost estimate for the vertiports is estimated at $86K/year per VTOL”
- “Combined, the initial and yearly infrastructure costs account for ~20% of the baseline VTOL direct operating costs”.
- “A fully burdened pilot cost of $50,000 per year is assumed, with 1.5 pilots required for each VTOL… In later years (likely a 10-20 year transition to
autonomous flight), as automation is able to replace the pilot (this assumption is only used in the long-term case), a cost of $60,000 per vehicle is added to account for the upgraded avionics and sensors”.
- “‘Bunker’ ground pilots are also assumed to provide assistance to each vehicle at a rate of one per eight vehicles, with the same cost as a pilot. Piloting costs account for ~36% of the baseline direct operating costs”.
- Maintenance costs per flight hour for electric VTOLs will be comparatively much lower than existing light helicopter maintenance costs, so we model roughly 50% reduction in overall maintenance costs. The reduced maintenance cost hypothesis is based on elimination of all cyclic rotor components… The maintenance and labor costs account for ~22% of the baseline VTOL direct operating costs”.
- “Indirect costs are modeled as an additional ~12% on top of direct operating costs in the baseline case”.
On-demand VTOL transportation more appealing than owning a car
- “On-demand VTOL transportation may very well become more appealing than owning a car… Per-mile car ownership costs will decline somewhat over the next decade due to gains in fuel efficiency, but many of these cost declines will be offset by projected gas price increases. Other components such as depreciation of the vehicle capital expenditure itself will not decrease significantly”
- “Those who do not own a car would save money by using on-demand urban air transportation rather than purchasing an automobile. Of course, economic savings aside, car owners who take a VTOL in place of automobile commutes will save significant amounts of time formerly spent stuck in traffic or looking for parking”.
- “Urban air transportation ecosystem will only be successful with the participation of entrepreneurial vehicle manufacturers, city and national officials from across the globe, regulators, users, and communities who will be keen to interact with one another to understand how the ecosystem can shape the future of on-demand urban air transportation”.
What will be next?