Austrian-based Diamond Aircraft has taken over financially troubled eVTOL startup, Volocopter. Diamond has been owned since 2017 by the multi-billion-dollar Chinese company, Wanfeng; a supplier of auto parts, aerospace components, and industrial equipment. The publicly listed company confirmed the purchase in a regulatory filing. Yet significant security concerns remain.
Volocopter from Bruchsal in southwest Germany, was just a few meters away from crossing the finish line to begin commercial flight operations when its futuristic project, an electrically powered vertical take-off and landing aircraft (eVTOL), ran out of money. Its certification by the European Union Aviation Safety Agency (EASA) was repeatedly delayed, despite more than 2,000 successful test flights and an advanced certification process. So, investors lost their patience and were no longer willing to provide additional funding for the company. They included highly solvent enterprises such as the organizer of the Saudi Arabian futuristic city, Neom, Mercedes-Benz, Intel, and the Chinese car manufacturer, Geely. While running out of cash, Volocopter filed a lawsuit with the responsible Karlsruhe District Court on 26DEC24, and has since attempted to tap into new sources of funding to continue developing its eVTOL until it reaches series production. All attempts thus far, however, have not born fruit.
10 million for a startup worth 1.5 billion
At the end of last week, Wanfeng subsidiary, Diamond Aircraft acquired the German newcomer for €10 million. The takeover includes fixed assets such as tools and semi-finished products, patents for aircraft and drone systems, trademark rights, and employee contracts. According to reports, the book value of these assets is approximately €42 million. In a financing round in 2022, the company was valued at €1.5 billion.
The bottom line is that the Volocopter deal arranged by Diamond/Wanfeng is a bargain in terms of its real value.
Well connected to China’s Communist Party
But who is the mastermind of this Chinese company? It is Ailian Chen, one of China’s most influential entrepreneurs. In her youth, she drove tractors; today, the 67-year-old is a billionaire. Her husband, Wu Liangding, founded the Wanfeng Auto Holding Group. Chen helped build the company and turned it into a global player. Her influence extends to the very top of the Chinese Communist Party. Chen herself was a party representative to the 17th National Congress of the Communist Party of China and a deputy to the 12th National People’s Congress. Wanfeng has its own party committee, which is officially committed to strengthening the company’s development and the Chinese Communist Party.
The deal is difficult to stop
Politicians in Berlin should be aware of these connections. The Ministry of Economic Affairs must now review the planned takeover of Volocopter by Wanfeng subsidiary, Diamond Aircraft, to determine if it would give a Chinese company access to advanced European technology. Should there be serious security concerns, the ministry could prohibit the sale. This is questionable, however, because Diamond is the official buyer and though this is a company that belongs to Wanfeng, it is based in EU member state, Austria. Should politicians stop the takeover, Volocopter would bite the dust, which is also not an acceptable solution.
Transfer of technology expected
Hence, the upcoming sale of the startup is one of a series of similar cases. For roughly a decade, Chinese companies have been purposefully acquiring European newcomers operating in the aviation and high-tech sectors, to get hold of their advanced knowhow. Tobias Wahl, insolvency administrator and partner at Anchor law firm, highlighted this aspect in a statement: “Volocopter’s expertise and its highly motivated team have consistently set benchmarks in the eVTOL industry.” He did not mention the threat of technology transfer. Instead, Bin Chen, Chairman of Daimond Aircraft Group, emphasized the European aspect of the takeover probably as a tranquilizer to calm critics: “The future of aviation is shaped by visionaries. Diamond’s broad portfolio is further strengthened by Volocopter, the VoloCity, and future models. Together, we are creating the foundation to further develop sustainable air mobility and strengthen Europe as an innovation hub in aviation.”
Too ambitious, too little money; the concept was ahead of its time
To reassure the remaining employees of the eVTOL company, a statement reads: “The reorganization of Volocopter will broaden its aircraft and business portfolio into the field of electric urban air transportation, while enabling Volocopter to reduce costs, retain a highly motivated and skilled workforce, and focus on achieving its certification milestones by 2025. The VoloCity, along with its next-generation variants and other models, will continue to evolve successfully over the long term, contributing significantly to the sustainable growth of the aviation industry.”
The startup’s VoloCity’s air taxis are conceived to fly emission-free in lower airspace, bypassing traffic jams to connect airports or other transportation hubs with city centers within minutes. This will enable seamless, faster, and more convenient options than those offered by existing transit choices.
Besides transporting people and smaller freight consignments, Volocopter’s future parent company, Diamond Aircraft, also utilizes its aircraft for surveillance purposes to detect forest fires or get an overview of inundations. Various armed forces have purchased Diamond aircraft for reconnaissance missions.
The best-known private owner of a Diamond DA62 is probably the future German Chancellor, Friedrich Merz.
According to an investigation by the newspaper ‘Welt am Sonntag’, Diamond aircraft parts are said to have also reached Russian aircraft manufacturers via China. This would be a criminal offense if finally proven, because aircraft parts stand high on the West’s sanctions list against the Putin regime.
