Venture capitalists may lay heavy bets on flying taxis and their startup companies next year.

With potential to alleviate traffic congestion while at the same time providing safer travel with lower emissions, electric air taxis may get record amounts of funding in 2020, according to a PitchBook outlook for emerging technology investments.

“The air taxi industry has the potential to significantly disrupt the landscape of urban mobility,” according to the report written by members of PitchBook’s emerging technology team.

Traffic jams cost the U.S. more than $87 billion last year, according to the INRIX Global Traffic Scorecard. A group of aircraft manufacturers are set to take on helicopter services and ground transportation, which represents a $1.1 trillion market in the U.S. 

The air taxi industry is tied to autonomous driving technology and battery development. Electrical or hybrid power drive down fuel costs, making the air taxis more competitive than conventional helicopters. Flying from Manhattan to JFK airport could cost as little as $60, similar price as a Lyft ride, according to Citigroup estimates cited by PitchBook. 

The energy limits of lithium ion batteries used in the aircraft is a drawback to the mass adoption of air taxis. Guangzhou, China-based Ehang’s aircraft can carry two people for about 20 minutes before needing a recharge of their batteries. 

Meanwhile, hydrogen fuel cells are reported to have greater range and lifting power. Massachusetts-based Alaka’i Technologies has developed a fuel cell-powered, six-rotor air taxi, skai, which can fly up to five people for at least two hours. 

Investments in the air taxi space involves significant cash burn, PitchBook noted. Venture capitalists spent $68.4 million on electronic air taxi companies this year, 88% less than 2018, which was driven by Santa Cruz-based Joby Aviation’s Series $100 million Series B, the only mega deal in the field.

NASA has been promoting the nascent industry by partnering with Uber. Nexus, the hybrid-electric aircraft, is on track to test fly in 2020 and commercialize in 2023.

  • Aviation startup Ehang is seeking to raise $46.4 million on a sale of American Depositary shares, Bloomberg News reported last week.  
  •  Air taxis will face regulatory hurdles before mass adoption, PitchBook said. 
  • The World Economic Forum called for an assessment of aerial mobility’s impact on cutting congestion and creating jobs.