LOS ANGELES (CN) — Investors hit Germany-based Lilium, developer of electric aircraft capable of taking off and landing vertically, with a securities class action following the release of a research report that questioned the company's technology and sent its stock plummeting 34%.
According to the complaint filed Monday in Los Angeles, Lilium's management misled investors last year about the capacity of the seven-seat jet the company is developing and about when the aircraft will be ready for commercial production.
Lilium is one of a number of start-ups and established aerospace companies developing electric vertical takeoff and landing, or eVTOL, aircraft. The battery-powered aircraft are expected to meet an anticipated demand for air taxis in urban areas, among other uses. Lilium, like other eVTOL startups, went public last year through a merger with a special purpose acquisition company, or "blank-check" company, that raises money from investors to acquire a promising private business.
A report last month by Iceberg Research, a short-seller angling to profit when a company's shares go down, claimed that Lilium was the "losing horse" in the eVTOL race. According to the Iceberg report, Lilium's aircraft haven't flown for more than three minutes in tests after seven years of development. Lilium projects its jets will be able to fly as far as 155 miles.
By contrast, Joby Aviation, a California-based eVTOL aircraft developer that acquired Uber's Elevate project in 2020, has flown farther and faster than anyone else, according to the Iceberg report. Joby's plane flew over 150 miles on the longest eVTOL test flight to date in July 2021, and the company set another record after its plane hit speeds of 205 mph during a test flight earlier this year, according to the report.
The problem with Lilium's "power-hungry" design, according to the Iceberg report cited in the shareholders' complaint, is that it has 36 fan-like engines on its wing flaps, whereas most of its competitors use regular propellers that spin in the open air.
Representatives of Lilium didn't immediately respond to an email seeking comment on the lawsuit.
The company's stock fell 34% on the Nasdaq after the Iceberg Research report came out March 14. They have since bounced back to some extent but remain volatile.
The lawsuit seeks class certification and damages on claims securities law violations. Attorney Laurence Rosen of the Rosen Law Firm in Los Angeles represents the putative class.