Flying cars and heavy drones fueling China's new low-altitude economy

Bullets:

China is racing to build a zero-to-one economy in 3-D low-altitude space.

They already enjoy near-monopolies on advanced drone technologies and manufacturing, along with electric batteries.

Now China's central government and each of its provinces are pushing ambitious plans to incorporate heavy electric drones into key areas of the Chinese economy, then roll out those technologies across the world.

Ehang and XPeng are just two out of hundreds of companies that are introducing market-ready breakthroughs in technology and application.

Training centers and university programs are bulking up teaching staff to meet the heavy demand from new students.

Report:

A zero-to-one economy is a brand-new industry, where companies are racing to new markets, and introducing new technologies, to create monopolies. And this is what China itself is hoping to achieve in the low-altitude economy, to create monopolies across entire groups of industries, including ones that will develop later, which we cannot even conceive of yet.

Because it’s a zero-to-one, there’s nobody there yet. Industry standards need to be developed as we go along. We don’t know what safety protocols need to be, for big drones operating in major cities, for example. Or what technologies for the drones actually work best, in windy climates, or where they get lots of rain, or fog and the visibility isn’t good a lot of the time. But the first companies that do figure these problems out, and the first country that does so, are going to have deep and durable competitive advantages.

The Chinese government has announced the formation of a new agency to coordinate the development of what they call the “low-altitude economy”, involving electric vertical takeoff and landing aircraft. The e-VTOL’s are electric vertical take-off and landing vehicles, and we’ll refer to these as heavy drones to save time. China believes they already have a huge head start on all this technology—they already make most of the drones in the world, and they have near-monopolies on electric batteries that they will be using to power these drones, and the supply chains to build everything else.

And they have big ambitions for fast growth. In about 3 years, they expect that the air traffic control systems and service facilities will be mostly done, and by 2030 the industry association here believes there may be 100,000 heavy drones in operation. The prices for them will drop, making them more affordable for households, and especially for companies.

Here’s zero-to-one at work, as new industries spawn with tech advances in AI. The drones will be essential tools in logistics, farming, forestry, search and rescue, city planning, utilities, travel and tourism. And they will be especially valuable in developing countries.

The industry expects the size of this new economy to be over $400 billion in 5 years, and there are more than 100 companies and institutes already working together to make it go.

And the companies are already making breakthroughs. Ehang is a publicly traded company here, and they just announced a revolution in battery technology for heavy drones: the first manned flight with solid state batteries, which lasted over 48 minutes. Solid state batteries are ideal for certain conditions, and can make for longer flights, 60-90 percent longer. And that’s a key feature of zero-to-one, as engineers figure out what works best, and when, and why, and develop new parameters around those discoveries.

XPeng is another company that has built a flying car, which they claim is easy to learn how to fly, and they’ve booked orders for over 2,000 of them. It’s called the Land Carrier and they have YouTube videos that are linked, below.

Since all these industries are new, China needs a lot of new people for it. There’s a shortage of drone pilots as of right now, so they need to catch up there. Fortunately, the field of heavy drones is considered a cool place to be, so there are lots of applications for the schools that offer the training. For a top school in Shenzhen, the number of students doubled this year compared to last, and they’re struggling to hire more instructors for them. And that’s a problem we were always bumping up against in the US, in Silicon Valley, where the best opportunities are in the private sector, and it is hard to find good instructors willing to leave private industry for teaching jobs. Same thing is happening here: Demand for qualified operators is ticking higher by companies here in China, who need experienced technicians for drones used in logistics, tourism, and surveying. As of today there’s a shortage of a million skilled workers.

There is another race underway between the different provinces and cities, for talent and investment. As this low-altitude economy develops, the advantages become obvious, and so are the hazards of falling behind, let alone not doing it at all. It’s entire industry chains, and will impact many other industries as well. Consider the depth of the value chains in R&D. Then, there is another deep value chains across the manufacturing of everything for the heavy drones — the airframes, chips, batteries, rotors — then there is another for the maintenance and repair industries, then another involving the schools that teach how to operate them and build them and maintain them. Then, naturally, come the positive impacts on all the industries which can successfully incorporate heavy drones.

So regions in China are competing, and cooperating, to ensure that they have a piece of what’s going on. In the Beijing-Tianjin supercluster of cities, they’ve already approved 33 projects. There are also huge projects in the Shanghai city cluster. But for now, the Guangdong-Shenzhen area is in the lead and will likely remain there, because that’s where so many of the drones are made now. South China has got the manufacturing chains for all that, plus all the electronics. But all the provinces in China — all 31 of them — have announced that the heavy drone economy is a key focus in their economic development, which means they’re providing money and land, and creating university departments and institutes and industrial parks to get new companies going. The industry countrywide is growing at a year-on-year rate of 34 percent.

China’s strategy to build out this zero-to-one industry, the low-altitude economy, should sound familiar to anyone who understands how they’ve been successful in so many other industries. They develop a plan, with benchmarks, organize the industry from Beijing at the national level and on down through the provincial capitals, get universities and private companies involved and put them all in the same place, and throw a lot of money into the problem, and ten years later the world outside China looks up and sees that they’ve completely taken over the industry.

Here they go again.

Resources and links:

Tech Node, China to set up new government department to drive “low-altitude economy”

https://technode.com/2024/11/20/china-to-set-up-new-government-department-to-drive-low-altitude-economy

China to have 100,000 eVTOLs serving families and travelers by 2030, industry body says

https://cnevpost.com/2024/11/27/china-to-have-100000-evtols-serving-families-travelers-2030

South China Morning Post, China urged to fix services ‘weak link’, increase investment in zero-to-one innovation

https://www.scmp.com/economy/china-economy/article/3242330/china-urged-fix-services-weak-link-increase-investment-zero-one-innovation

E-Hang company page, EHang and Inx Achieve Breakthrough in Solid-State Battery Technology: EH216-S Completes World’s First eVTOL Solid-State Battery Flight Test https://ir.ehang.com/news-releases/news-release-details/ehang-and-inx-achieve-breakthrough-solid-state-battery

XPeng Flying Car Can Be Mastered In 3 Hours, Says Company Chairman https://www.benzinga.com/news/24/11/41803756/xpeng-flying-car-can-be-mastered-in-3-hours-says-company-chairman

iOT World, Flying Car Takes First Public Piloted Flight; 2,000 Orders https://www.iotworldtoday.com/flying-vehicles/flying-car-takes-first-public-piloted-flight-2-000-orders

YouTube, XPENG AEROHT’s Flying Car: The Land Aircraft Carrier – A Revolution in Mobility

YouTube, "Land Aircraft Carrier" First Global Public Flight

SCMP, Low-altitude economy’s ambitions collide with lack of drone pilots https://www.scmp.com/economy/china-economy/article/3286763/low-altitude-economys-ambitions-collide-lack-drone-pilots

SCMP, China’s low-altitude economy spreads its wings as struggling locales look skyward

https://www.scmp.com/economy/economic-indicators/article/3275663/chinas-low-altitude-economy-spreads-its-wings-struggling-locales-look-skyward

SCMP, China’s economic powerhouse seeks AI, humanoid robotics, low-altitude economy upgrade

https://www.scmp.com/economy/china-economy/article/3272011/chinas-economic-powerhouse-seeks-ai-humanoid-robotics-low-altitude-economy-upgrade

XPENG AEROHT Modular Flying Car

XPENG flying car takes off