Terrafugia, a Boston-area company that has been working on flying cars since 2006, is being acquired by Zhejiang Geely Holding Group, an automotive manufacturer based in Hangzhou, China. Terms of the deal have not been disclosed.
The news was first reported by the South China Morning Post, but Xconomy has independently been tracking rumors about the acquisition. According to a source with knowledge of the deal, the transaction size is modest, but Geely plans to invest in flying-car technologies and put its automaker resources behind Terrafugia’s approach.
Terrafugia co-founder and CEO Carl Dietrich (pictured above in 2013) and board member Semyon Dukach both declined to comment on the news.
Geely (pronounced Jee-lee) is a 30-year-old multinational company that owns brands such as Volvo and The London Taxi Company. It also owns a majority stake in Lotus Cars.
There is always strong interest in flying cars, but the past year has seen some major developments. Google co-founder Larry Page was outed as having started not one, but two companies working on flying-car technologies—Zee.Aero and Kitty Hawk. (Elon Musk and Jeff Bezos can’t be far behind.) Kitty Hawk recruited self-driving car pioneer Sebastian Thrun to serve as its CEO.
Terrafugia’s founding team of MIT grads originally set out to build a “roadable aircraft”—a flying vehicle for private pilots that could land on a runway, quickly fold up its wings, and drive on public roads. The company’s first product, called Transition, has been flight- and road-tested; it has a long list of customer pre-orders but hasn’t shipped yet (list price $279,000). More recently, the company has been working on a next-generation product called TF-X, a hybrid-electric flying car with vertical takeoff and landing capabilities—as well as autonomous flying features.
As of 2013, Woburn, MA-based Terrafugia had raised a little over $10 million in financing from angel investors and $1.25 million in U.S. defense contracts. The company has raised more money since then, but the amount wasn’t disclosed; New York-based Transcendent Holdings and Beijing-based Haiyin Capital are also investors in the company. (Dietrich and Terrafugia participated in a Boston-area event organized by Haiyin Capital in the fall of 2015.)
As a small company, Terrafugia has taken a long time to get its product to market. Then again, no one else has successfully sold a flying car yet. It sounds like Geely’s backing and car-manufacturing facilities could greatly advance Terrafugia’s vision—if the integration and cultural issues can be sorted out.
One question is whether China’s regulatory environment might be more conducive to flying cars and other transportation technologies than that of the United States. Terrafugia has made good progress with the U.S. Federal Aviation Administration in recent years, but Chinese cities and roadways have unique issues (you think your commute is bad).
Another thread here is increasing competition between Chinese and U.S. technology companies—particularly in areas like artificial intelligence, robotics, and hardware—even as more U.S. firms are looking to China for investors and partners. If the balance of power is shifting, Terrafugia’s sale to Geely is one more data point.