After over a year of negotiations with the German government for a state-backed loan guarantee, electric air taxi startup Lilium now faces significant financial uncertainty following a critical decision by the Bundestag’s budget committee.
Despite broad support from over 650 founders and investors, the German federal government has decided against backing Lilium’s proposed €100 million convertible loan. This decision leaves the Bavarian company’s future in jeopardy as it continues its search for alternative funding sources to avoid insolvency.
Commenting on the decision, Corvin Huber, CEO of fellow German advanced air mobility company Skyroads, told Zag Daily: “The government’s decision not to back Lilium is a critical moment for Germany’s broader ambitions in green technology and deep-tech leadership.
“Germany must find a way to make sure that the private and public resources invested into engineering excellence turn into commercially viable technology. I am critical that we are decoupling ourselves from the global future for all the wrong reasons. Irrespective of the Lilium Jet’s concrete technological merits, there must be a path for the Lilium Team to prove their mettle in a European context!”
Federal Support Denied
The budget committee of the German Bundestag recently declined to approve a €50 million guarantee of a contemplated €100 million convertible loan. The funding was critical for Lilium, as it had already secured a matching €50 million commitment from the State of Bavaria – but only on the condition that federal backing was secured. Without this support, Lilium’s financial strategy has been severely disrupted.
This decision has sent ripples through Germany’s deep-tech community, particularly given the strong backing from industry leaders who had championed Lilium’s role in shaping Germany’s future as a hub for green aviation. The initiative titled “Enable loans for Lilium, strengthen Germany as a deep tech location,” signed by hundreds of influential figures, called on the government to ensure the startup’s survival as a symbol of Germany’s innovation potential.
However, despite these efforts, shares of Lilium fell 12%, dropping to 61 cents, as news of the loan guarantee denial broke. Lilium’s future is now under scrutiny, with Canaccord Genuity downgrading the company’s stock from “Buy” to “Hold” and slashing its price target from $1.85 to $0.70 following the federal government’s decision.
Political Tensions and Market Impact
The rejection has also exposed deeper divisions within the German government. While both Federal Transport Minister Volker Wissing and Chancellor Olaf Scholz had previously voiced support for Lilium, the loan guarantee was blocked by opposition from members of the Green Party within the Bundestag, reflecting ongoing tensions between economic ambitions and fiscal caution.
Key figures within the FDP like Frank Schäffler, a member of the budget committee, had also spoken out against the bailout. Schäffler argues that there is no clear federal interest in promoting air taxis and that the financial risks for taxpayers are too high. “If Bavaria wants to go ahead with this subsidy, it should do so alone. Federal tax money should not be speculated with,” he stated.
This political rift highlights the challenges in balancing Germany’s green technology goals with conservative fiscal policy, particularly as the country seeks to strengthen its position as a global leader in deep-tech innovation.
A Critical Moment for Lilium and German Innovation
Despite the setback at the federal level, Lilium is still holding discussions with the State of Bavaria in hopes of securing at least €50 million in regional funding.
However, the outcome remains uncertain, as Bavarian Minister-President Markus Söder has made remarks that suggest the state may not step in to fully support Lilium on its own.
The decision against the loan guarantee is a critical moment for Germany’s broader ambitions in green technology and deep-tech leadership. Investors and industry leaders alike are now watching closely to see whether the Bavarian government steps in to save one of the country’s most high-profile tech startups.
