What happened

Shares of aerospace start-up Lilium (LILM -0.23%) fell as much as 13% for the week, according to data provided by S&P Global Market Intelligence, after a rival warned that regulatory approval for its so-called "flying car" aircraft would take longer than it had hoped. This is a brand-new industry, and no company is likely to get a free pass, causing concerns about Lilium's somewhat fragile balance sheet.

So what

Lilium is one of several companies working to design and roll out electric-powered vertical takeoff and landing (eVTOL) aircraft. These planes would not replace the jumbo jets that take us across the oceans today, but rather would fill jobs currently performed by helicopters and automobiles transporting a small number of passengers around a region.

There's great potential for the technology, and a number of major airlines have partnered with various eVTOL vendors to try to commercialize the technology, but also at great risk. Investors got a reminder of the risk when Joby Aviation, one of Lilium's rivals, said that Federal Aviation Administration certification would not occur until late 2024, later than the company had originally hoped.

Joby is seen as leading the pack, and if it is unlikely to have aircraft flying commercially until 2025, it means others are unlikely to get there, too. Barclays analyst David Zazula lowered his price target on Lilium shares to $2, from $5, on the news, warning that with such a long period of uncertainty, investors are likely to look hard at cash balances and burn rates.

Lilium is likely to have less than 200 million euros ($207.25 million) worth of total liquidity by year's end, meaning the company could need to raise capital in early 2023. At its current stock price, an equity raise would be substantially dilutive to the stock, and with interest rates soaring, it is a tricky time to raise debt.

Now what

It seems likely that these eVTOL aircraft will one day dot the skies of cities, but much less certain whose planes will be airborne. This isn't a winner-take-all race, but there is a real risk that, of the more than one dozen companies currently developing similar aircraft, only a handful will survive.

Lilium can still be one of the survivors, but there are clear headwinds in its path. Investors are focused on those headwinds following Joby's timetable shift, causing the stock to lose altitude this week.