A unique player in the electric vertical takeoff and landing (eVTOL) aircraft manufacturing industry, Lilium (NASDAQ:LILM) has been attracting media attention with a pair of key developments. Aimed at bolstering the effectiveness of the underlying air mobility platform, investors are hoping that, over the long run, the news may bolster LILM stock. Still, it faces challenges that shouldn’t be ignored.
First, on Thursday, Lilium announced that it signed an agreement with Michelin (OTCMKTS:MGDDY) for the design and serial production of tires for the Lilium eVTOL jet. Per the accompanying press release, the two enterprises have been collaborating for more than a year to develop and produce custom tires for the Lilium Jet.
Leveraging Michelin’s century-plus experience working with the aeronautical industry, it was able to deliver an innovative tire solution for the eVTOL aircraft maker that met safety, weight and reliability requirements. Further, the first tires should be delivered to Lilium facilities later this month.
Second, the air mobility specialist extended an existing partnership with InoBat, which researches, develops and manufactures premium innovative electric batteries. Under the terms of the agreement, InoBat will provide high-volume production of the Lilium Jet’s advanced battery cells. In part, the deal ensures securing a healthy supply flow of the power unit.
LILM Stock Offers a Unique eVTOL Angle
Following the Michelin announcement, Lilium CEO Klaus Roewe remarked that this critical component “will help to mobilize and operate our jet at our required specifications and performance levels…” As for the battery cells, management emphasized the energy capacity, power and cycle life of the InoBat platform as catalysts.
Moving forward, despite the intense competition in the eVTOL space, LILM stock potentially benefits from the underlying uniqueness. Per Lilium’s website, its aircraft represents the first jet that can take off and land vertically. That’s a massive advantage in terms of capacity, noise control and integration, as helipads and short runways likely won’t have to be extended.
Contrary to standard eVTOL craft — which primarily represents an evolution of the helicopter — the Lilium Jet is exactly that: a small jet but infused with the conveniences of a helicopter. It achieves this remarkable flexibility through a 30-fan design across the aircraft. Not only does this provide redundancy for safety reasons, but the architecture can tilt vertically, providing lift when necessary.
Once in flight, the Lilium Jet operates much like a traditional jet.
Still, investors remain largely skeptical about LILM stock. While Lilium aims for the premium market first, rising economic uncertainties may pose challenges regardless. Since making its public market debut, shares have fallen around 93%.
Why It Matters
At the moment, analysts rate LILM stock as a moderate buy. However, this assessment is split between only one buy and one hold, reflecting broader pensiveness. That said, the average price target stands at $2.05, implying 159% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
