Consolidation in the sustainable aviation Industry: Lessons from Universal Hydrogen's Failure
As we continue to push towards decarbonising aviation, I wanted to share some insights on the recent challenges faced by Universal Hydrogen, a leading developer of hydrogen propulsion and distribution systems.
While their decision to wind down operations may seem like a setback for the industry, I believe it's actually a classic case of consolidation. In an environment where investment dollars are scarce, startups with more streamlined business models and certification roadmaps are likely to attract more attention from investors.
Case in point: ZeroAvia, which has raised around $200 million compared to Universal's roughly $100 million. American Airlines has even doubled down on its commitment to ZeroAvia by firming up an order for 100 hydrogen-electric engines!
So, what can we learn from this?
Focus matters: ZeroAvia concentrated on developing a series of components including, controlling the fuel, to high-temperature fuel cell, while Universal took a more specific approach with modular hydrogen storage and distribution. Investors seem to prefer the former.
Certification strategy is key: ZeroAvia plans to start with smaller aircraft (9-19 seats) under Part 23 rules, whereas Universal aimed for larger aircraft (70-seat turboprops) under Part 25 rules.
Certification processes add significant workload and costs.
Market environment matters: The investment landscape has become "brutal" in recent years, making it challenging for even the strongest startups to raise funds.
While Universal's failure may be a setback, I believe that hydrogen will still play a crucial role in decarbonising aviation.
We just need to address the remaining challenges and focus on the most promising opportunities.
Let me know your thoughts on this development!
#SustainableAviation #Hydrogen
CEO at LanzaJet | Time 100 Most Influential Companies | Fortune's Most Innovative Companies
3moThanks Shashank for the great chat!