Imagine commuting in an air taxi, receiving drone-delivered food, or enjoying a low-altitude sightseeing trip in a flying car. These once sci-fi scenarios are becoming increasingly feasible due to the rapid growth of the low-altitude economy.
With low-altitude economy initiatives now included in government reports, 29 Chinese provinces and cities have integrated low-altitude economic plans into their 2024 agendas. The Pearl River Delta and Yangtze River Delta regions are particularly advanced, setting clear short-term development goals for 2025.
Key Competitors and Industry Focus
Regions like Guangdong, Henan, Shandong, and Sichuan, along with Beijing, exhibit strong overall competitiveness in low-altitude economy development. These strengths are attributed to the number of innovative entities, infrastructure, talent cultivation, and certification efforts.
Provinces with robust aviation or electric vehicle industries, such as Guangdong, Shanghai, and Sichuan, are focusing on manufacturing eVTOLs (Electric Vertical Take-Off and Landing vehicles). Other regions are concentrating on building flight infrastructure, expanding flight routes, and exploring application scenarios across sectors like tourism, agriculture, urban management, emergency response, and transportation.
The low-altitude economy encompasses a wide range of activities, including human and cargo transport as well as specialized operations, forming a comprehensive industry chain. The low-altitude airspace typically refers to areas within 1,000 meters above ground, extendable up to 3,000 meters based on regional characteristics and needs.
Market and Growth Projections
The manufacturing and operational services of low-altitude aircraft currently contribute around 55% to the industry. The market for drones, including UAVs and eVTOLs, is expanding rapidly. In 2023, China’s civil drone industry reached a scale of 117.4 billion yuan, with a 32% year-on-year growth, and is projected to surpass 200 billion yuan by 2025.
eVTOLs, known for their ease of takeoff, electrification, low noise, high cruise efficiency, and minimal support requirements, are gaining significant traction. According to the China Low-Altitude Economy Development Report, the eVTOL industry in China grew to 980 million yuan in 2023, with a projected market size of 9.5 billion yuan by 2026.
Investment and Regional Distribution
Venture capital is increasingly flowing into the eVTOL sector. Noteworthy investments include XPeng Heitech’s $500+ million Series A round and EHang’s nearly $200 million in total funding. The Yangtze River Delta and Pearl River Delta regions are emerging as key hubs for eVTOL manufacturing, with Shanghai and Guangzhou hosting several leading companies.
Challenges and Future Directions
Despite the promising outlook, the eVTOL industry still faces challenges, such as the lack of dedicated and scalable production lines. The supply chain for eVTOLs shares 70-80% of its components with the electric vehicle industry, while the remaining parts are high-reliability components typically used in traditional aircraft.
Regional Insights
Guangdong leads the nation in the number of low-altitude economy-related enterprises, followed by Henan and Beijing. Each region plays to its strengths: the Yangtze River Delta leverages its strong aviation industry, while the Pearl River Delta capitalizes on its consumer drone and electric vehicle sectors. Provinces like Sichuan, Shandong, and Hunan are also making significant strides.
Application Scenarios
Low-altitude tourism is currently the most supported application scenario by policymakers, with numerous provinces integrating it into their development plans. The logistics sector is poised for rapid adoption, particularly in the Yangtze and Pearl River Delta regions. Companies like Meituan and SF Express are already pioneering drone delivery services in urban areas.
Urban Air Mobility (UAM) represents the most significant market potential, with forecasts predicting a $2 trillion market in China by 2050. As city-to-city air routes expand, the transformative impact of eVTOLs on urban transportation is becoming evident.
In summary, China’s low-altitude economy is in its nascent stages but shows immense promise. With strong government backing, regional specialization, and robust market interest, the sector is poised for significant growth and innovation.
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