Amazon And UPS Are Betting This Electric Aircraft Startup Will Change Shipping

Source: Forbes

by Jeremy Bogaisky

When he played minor league hockey in the early 2000s, Kyle Clark says his teammates would spend the long bus rides talking about the drugs they’d taken last night and who’d brought a hooker into their hotel room. Clark, a bruising 6-foot-6 enforcer, would bury his nose in textbooks on how to build airplanes. Pretty nerdy – but he’d even stood out as an engineering egghead in the locker room at Harvard, where his teammates had nicknamed him Beta.

Clark never made the NHL, but 20 years later, his startup Beta Technologies is valued at a billion dollars and is on the cusp of making the major leagues with Alia, a potentially groundbreaking electric aircraft.

Alia, whose gracefully angled 50-foot wingspan Clark says was inspired by the long-flying Arctic tern, is one of a slew of novel electric aircraft that aviation upstarts are building that take off and land vertically like a helicopter. Virtually all of Beta’s competitors, including billionaire Larry Page’s Kitty Hawk and the SPAC cash-rich Joby Aviation, aim to transport people, enabling urbanites to hopscotch over traffic-snarled city streets. But Clark designed Alia primarily as a cargo aircraft, betting that a big market will develop for speeding ecommerce to and from suburban warehouses long before air taxis are considered safe to allow over city streets.

“We’re actually going to win at the passenger game because by the time others are doing passenger missions we will have thousands of aircraft, millions of flight hours and a safe, reliable, vetted design,” says the 41-year-old Clark, whose company is based in his hometown of Burlington, Vermont.

Clark is also spooling up what he thinks will be a lucrative second business: charging stations for electric aircraft of all types that he plans to dot around the country to create the aviation equivalent of Tesla’s supercharger network. There are nine up and running already, in a line from Vermont to Arkansas, with another 51 under construction or in the permitting process. Most will contain banks of used batteries from Alia aircraft, removed when their capacity has declined about 8%, giving them a profitable second life while Beta sells Alia owners replacement packs at about a half a million a pop. Equipping the charging stations with battery storage will avoid the need for expensive upgrades to the local power grid: Clark’s plan is for them to fill slowly at off-peak times, while unneeded power can be sold back at peak to utilities.

“The aircraft is the sexy part but we’re going to make big money off batteries,” says Clark.

Beta investors Fidelity Management and Amazon are hoping the company will repeat the success of another electric vehicle startup they’ve bankrolled whose market cap recently topped $100 billion. “They see a lot of parallels between Beta and Rivian,” says Edward Eppler, a former Goldman Sachs investment banker who joined Beta as CFO after working on its Series A round, which raised $368 million in May at a $1.4 billion valuation. Forbes estimates Beta’s revenue over the past 12 months at $15 million, mostly from U.S. Air Force research contracts.

The cash infusion came a month after Beta won a big endorsement from UPS. Big Brown inked a letter of intent to buy up to 150 Alia aircraft, whose price is expected to fall between $4 million and $5 million apiece. Beta executives are hoping that an order will be forthcoming from Amazon, too, with both the giants looking for ways to make good on pledges to slash carbon emissions from their package delivery operations.

Beta aims to start delivering UPS’ first 10 aircraft in 2024 – assuming it wins safety certification for Alia by then from the Federal Aviation Administration. If not, the U.S. Air Force could end up fielding Alia first: Beta has won contracts worth $43.6 million to test out Alia for military use. In May, Alia became the first electric aircraft to win airworthiness approval from the Air Force for manned flight.

Read more at Forbes.

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