Rumor: Chinese automaker Geely to buy US flying car start-up Terrafugia

July 6, 2017

It's been a minute since we've heard from the flying car company known as Terrafugia. What have the staff been doing the past couple of years? Apparently, negotiating a buyout with major Chinese automaker Geely. 

A source familiar with the discussions says that talks between the U.S. start-up and the Hangzhou-based car giant have been underway since 2016. Terrafugia's pricetag, however, wasn't disclosed. 

Why would Geely want to get into the decidedly iffy, far-from-proven business of flying cars? There could be a couple of reasons. 

First, Geely has proven itself a planner, with its sights set on long-term growth. For example, Geely bought Volvo from Ford in 2010, and this May, it bought a controlling stake in the U.K.-based sportscar manufacturer, Lotus. Though neither of those are strong, mass-market brands, they're well known and respected. With proper management, they could be steady sources of gains in the coming years. 

Don't misunderstand: Terrafugia is a far, far cry from Volvo. However, analysts believe that Geely may want to become an early player in the flying car market--a market that, like the products it wants to sell, has yet to get off the ground.

A second reason that Geely may be considering a buyout of Terrafugia is because of China's extraordinarily crowded cities. Throughout China, traffic congestion is a chronic problem--so bad that well-off commuters often travel by helicopter.

Geely may feel that there's an opportunity for flying cars to become extraordinarily popular in its home country as China's urban population boom continues. And of course, Geely would want to beat competitors to the punch--competitors like Uber, which has announced plans to launch its own fleet of flying, autonomous vehicles in key global markets within ten years. 

That said, if the deal goes through, Geely may need to take a more hands-on-approach to Terrafugia's vehicles. The company's first flying car, the Transition, is more collapsible plane than helicopter, meaning that it needs a runway to get off the ground. In crowded cities, runways will be very hard to come by. Geely may need to put other models, like Terrafugia's XF-T concept, on the front burner if it aims to become a player in the field. 

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