Tencent co-founder joins funding for Chinese air taxi startup

CHINESE electric aircraft startup TCab Tech raised 100 million yuan (S$19.5 million) in funding as it works on a prototype air taxi, seeking to take on more established rivals in the burgeoning market.

The pre-Series A round was led by Grand Flight Investment, with Decent Capital, the family office of Tencent Holdings co-founder Jason Zeng, and existing investor BlueRun Ventures China participating, the Shanghai-based startup said in a statement on Wednesday (Feb 8).

Founded just under two years ago, TCab will use the money to develop and build its contender for the electric vertical takeoff and landing aircraft, or eVTOL, market. The small aircraft that carry a few passengers over relatively short distances are attracting attention as investors and entrepreneurs race to stake out the future of mobility.

“We’ll focus on commercialisation of manned eVTOLs to help develop a comprehensive three-dimensional transportation system in China,” said TCab’s Malaysian founder Yon Wui Ng, a former head of engineering for Airbus’ China business.

TCab plans a maiden flight for its prototype in 2023, though the company may take a further two years to generate revenue, he said.

The pursuit of eVTOLs dates back at least a decade, though few air taxi services have reached fruition. With the advancement of battery technologies, many investors expect eVTOLs to be safer, quieter and more environment-friendly than traditional aircraft with simpler mechanics and relatively low manufacturing, operation and maintenance costs. This creates a market that could be worth US$1 trillion by 2040, according to Morgan Stanley analysts.

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Though there have been setbacks — more established US contenders Lilium, Joby Aviation and Archer Aviation are trading near historic lows — Chinese firms including Xpeng Aeroht, Volant Aerotech and TCab have joined the race. They are trying to replicate the success China’s had with EVs, employing many of the same advantages: an extensive supply chain, vast pool of skilled labour and a giant domestic market.

The sector is still at an early stage and will takes years to boom, said Ryan Pei, a partner at Grand Flight.

“More advanced transportation has always been a sector for countries to compete for,” he said. “The best examples are China’s vigorous development of new energy vehicles, autonomous driving technologies as well as the efforts to manufacture large aircrafts.” BLOOMBERG