Adaptation of the Make-or-Buy Analysis for Air Taxi Start-Ups using the Example of Electric Machines

More power-dense batteries, innovative aircraft concepts, and the demand for faster point-to-point connections open up a new market for advanced air mobility. This market can be segmented by the average mission length into Urban Air Mobility [1] (intra-city-connections, UAM) and Regional Air Mobility [2] (inter-city-connections, RAM). Both market segments are mostly addressed by start-ups, trying to develop new types of small aircraft - so-called air taxis - which answer the demand for faster transportation in an environment-friendly manner [3]. Market forecasts expect air taxis to be produced in - for the aviation industry - large numbers of up to several 1,000 air taxis per year [4]. Consequently, the engaged companies have to realize a commercial series production mirroring the high certification standards of aircraft. Unlike large companies such as Airbus, start-up’s often face high financial challenges and have to set-up their entire production from scratch. Hence, they have to understand clearly which components can be provided by suppliers (“buy”) and which components should be manufactured in-house (“make”). This strategic decision can be supported by the make-or-buy analysis if appropriately adapted to the aviation sector. The goal of this paper is to demonstrate the application of a make-or-buy analysis for an air taxi start-up targeting the RAMmarket. The analysis is illustrated for the electric machine of a hybrid-electric powertrain. In the first step, specific requirements of the air taxi’s electric machine are defined and technical specifications of the drive train’s components are discussed. Moreover, it is evaluated, which aspects of the start-up’s strategy need to be considered for the analysis. In the next step, the manufacturing processes of the respective drive train components are described and analysed, based on their advantages and disadvantages, suitability for unit quantities, and used materials. In particular, the quality requirements spectra and testing efforts resulting from the different performance requirements for the electric machine are presented in more detail. Based on this analysis, the manufacturing costs of the components are calculated (“make”) and compared to supplier prices (“buy”). By analysing the cost functions, a break-even point is determined depending on the number of production units. Finally, the make-or-buy decision is of course also influenced by strategic aspects which have to be reflected in the analysis, e.g. desired production depth of the start-up. All in all, this paper provides an adaptation of the make-or-buy analysis to the special requirements of start-ups focused on the air taxi market. The process is described here by using the example of the electric propulsion machine but can be applied to all components of the drive train and transferred to further main components of air taxis.