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Eve Co-CEO details ‘the four pillars’ for eVTOL market viability

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Eve Co-CEO Jerry DeMuro talks to Yahoo Finance Live about the future of air mobility and how the eVTOL startup differentiates itself from competitors as it prepares to go public via a SPAC merger.

Video transcript

BRIAN SOZZI: Another electric Vertical Takeoff and Landing Aircraft, also known as an eVTOL, will soon debut in public markets. Eve is being spun out of Brazilian aircraft maker Embraer and will merge with a SPAC dubbed Zanite. The deal, which is expected to close in the second quarter of next year, assigns an enterprise value on Eve of about $2.4 billion.

Joining us now is Eve's co-CEO Jerry DeMuro. Jerry, good to see you here. Thanks for hopping on. Very interesting stuff. We see the photos there on the screen.

Do you have one of these in production yet? Have you have you built that initial model?

JERRY DEMURO: Sure. As you saw-- Brian, thank you first, you and Julie, for having me this morning. It's an exciting time for us. As you said, we recently announced the deal with Zanite and expect to close in the second quarter.

To answer your question, yeah, we've had a number of subscale model flights, as you saw on the display there, proof-of-concept vehicles as we validate the subsystems and ensure that they're fully vetted before we move forward to the complete and final design.

JULIE HYMAN: And, Jerry, Julie here. So what does the business then eventually look like? We're looking at the vehicle-delivery forecast. You guys are forecasting-- I mean, you're still a few years out from sort of scale production and sales of these vehicles. So do you-- how do you see them being used, and who do you see being sort of the operators of these vehicles?

JERRY DEMURO: Sure. Julie, as you mentioned, we are prerevenue, like all of the other participants in this space right now. And we are planning for type certification in 2025, and that will include probably the more complex item than type certification, which is actually production certification, which is required to meet the steps that you're talking about and entry into service.

You mentioned the vision for the business. We're actually addressing the entire ecosystem. There's really four pillars that you need to be viable or for the market itself to be viable and any participant to be viable. Number one, you've got to have a great aircraft that meets the needs of customers at a price point that works for both operators and customers. Number two, you have to be able to support these aircraft. We have to be able to train pilots. You have to be able to sustain the aircraft, repair it, maintain it, upgrade it as technology advances.

Number three, you need to operate it. So you need to understand customer-facing activities, managing routes at scale, the operation, ground operations, et cetera, for the aircraft itself.

And probably one of the most strategic elements is the fourth pillar that people often overlook. We need to be able to control these things in the air-traffic environment today that we have. We address commercial aircraft, business aircraft, private aviation, but we really don't address eVTOLs or even drones. And we're currently working on a system with a subsidiary of Embraer, Atech, developing a bespoke solution that will enable air-traffic controllers to address all of those elements. So I think one of the things that we are unique, aside from the backing of Embraer, one of the preeminent OEMs in this space, is that we're addressing all four elements of the ecosystem today.

As to who will operate it, there are different models moving forward. Our particular model we think is much more capital efficient than some of the other entrants into the space. We will be moving partner by partner. We've already signed up 18 global partners as operators, fixed-wing operators such as Sky West and Republic, two of the largest regional airlines in the world. We've signed up helicopter operators on virtually every continent, and we're also participating with a lot of rideshare organizations, organizations like Blade and others that you know.

So our model is to leverage the expertise and the core competencies of those operators, combine them with our skill set, and that's how we will operate partner by partner, city by city. We're also partnering with infrastructure providers, vertiport providers, power companies, et cetera. So we're trying to address the entire ecosystem in terms of operating.

In our model, we will not be competing with our own customers, the airlines. We're not trying to be the airline ourselves. As I said, we're going to be very capital efficient. We're not going to have to invest in all of that infrastructure. Our partners will bring that. There may be opportunities for investment, but that's not our primary mode.

And then secondly, we're not going to have to keep these aircraft on our balance sheet and consume that capital. We're going to be selling them to the operators as well as some leasing companies. As you know, 40% to 50% of the aircraft-- commercial aircraft out there today are actually owned by lessors who not only lease-- purchase and then lease back to the operators but also sometimes the maintenance. So our model is a little differentiated there.

BRIAN SOZZI: Jerry, you definitely had me fooled. I actually thought you were sitting in one of these planes. That is an amazing virtual backdrop. I really dig that.

I want to ask you about this. In fine print on the investor presentation, it is noted that you see a path to autonomous flying by 2030. What does that even look like?

JERRY DEMURO: Well, the aircraft today is being designed with autonomy in mind. And at some point, regulators and customers will get comfortable with autonomous operation, but we're allowing for that today, advancements in AI. As you know, aircraft can be flown autonomously today, and over time, what we see is an evolution of some of the responsibilities of the pilot, the workload on the pilot being lifted, and gradually moving to maybe operation on the ground-- operated from the ground, as you might with drones today used by the military, and then eventually to full autonomous operation.

But in today's market, we see it as a fully piloted aircraft.

BRIAN SOZZI: Well, I will say that is good. I need to see a pilot in my aircraft perhaps for the rest of my life, but I wish you well on your journey. Eve co-CEO Jerry DeMuro, look forward to talking soon. Happy New Year.

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