Somewhere in Brazil, a tiny aircraft has recently been test-flying over vast areas of agricultural land. It’s not just ‘an aircraft’, it’s an autonomously flying, full-electric crop duster that can do the job on its own. Called the Pelican, the plane has been developed by US start-up Pyka since February 2017. Since last year, Pyka is supported by Embraer through its Embraer X accelerator program, which could result in new opportunities for both companies. How an autonomous crop duster gets Embraer X attention. Yes, Embraer has been known for 53 years for its families of commercial, executive, and military aircraft, but investing in potentially disrupting technologies and projects has become part of the core strategy since 2016. The most visible product of that strategy is the Urban Air Mobility project Eve, which was launched in 2017. Last December, it was spun off from Embraer, acquired by Zanite corporation, and has been listed on the New York Stock Exchange since May 10. While Eve still has to prove its merits, Embraer’s engineering teams fully back the project to get to certification and entry into service in or around 2026. During the recent Media Days in Brazil, Embraer X President and CEO, Daniel Moczydlower, shared the unit's vision and strategy with journalists. Embraer X is the follow-on to three Horizon programs, from which the E2-family, the KC-390 multirole transporter and tanker, the small executive jets, Eve, and defense technology programs have all emerged. “Back in 2016, we realized that we were doing too little when it came to the Horizon 3 program. We said: "Let’s force ourselves to do more and ensure that these high-risk investments get attention from top management,” said Moczydlower. Embraer has an integrated team of some 4.000 engineers under the supervision of Senior Vice President of Engineering, Luis Carlos Affonso, which in a matrix organization work on various technology projects. It’s Embraer’s ‘crown jewel’, if you like, and the main reason why Boeing was so keen to do a joint-venture with the Brazilians in 2018, before back-tracking in early 2020 again. A slide showing Embraer's eight Innovation Verticals, which are the foundations of its future strategy. (Embraer) Eight Innovation Verticals Affonso and Moczydlower identified the eight ‘Innovation Verticals’ or priorities that are leading Embraer’s technology investments, human resources allocation, and programs that are reviewed every year. “These are areas that will transform the future and these are the areas that we need to be competitive on as an OEM”, said Affonso. At the very top of priorities is zero-emission, which is reflected in the Energia program that was announced last year. Energia targets the development of electric, hybrid-electric, and hydrogen aircraft between nine and forty seats for entry into service between 2030 and 2040, but also sustainable aviation fuels (SAF) on a shorter timescale. In late May, sixteen organizations came to Brazil to pitch technologies that could be used on Energia. Embraer will down-select the first initiatives in the third quarter of this year. Launched in 2021, Energia is just a concept project within Embraer, but the technology should enter service between 2030 and 2040. (Embraer) Number 2 on the Innovation Verticals is autonomous flight, “which encompasses also single-pilot operations, pilot-assisting operations”, said Moczydlower. “In the future, we see this as a natural evolution that may start with cargo and logistic operations, but eventually, this will happen to passenger transportation as well which is guaranteeing a higher level of safety without the pilot on board. It’s a big challenge from both a technological and regulatory perspective, from social acceptance, but that is the future that we envision.” “Autonomous operations could dramatically change the economics of the industry but also allow the industry to grow because there is a shortage of pilots today”, said Affonso in a separate presentation. Pyka autonomous crop duster This is where the interest in California-based Pyka comes in. “The Pelican is an autonomous crop duster that can raise the level of productivity of the crops. We have just started the first tests in Brazil in the state of Sao Paulo with an experimental authorization with full-autonomous take-offs and landings. We are working together to create a roadmap in the coming months toward a potential certification of this product in Brazil. We could then potentially open up the Brazilian agricultural market, which is one of the top in the world,” explains Daniel Moczydlower. He didn’t rule out that Embraer might enter another kind of partnership with Pyka in the future that goes beyond the current technology cooperation program. He added that Pyka is already operating the Pelican elsewhere in Latin America under local regulations. The Pelican could be a nice addition to Embraer’s own Ipanema crop duster, which is larger and can cover larger areas. An electric version of the Ipanema has been test-flying since last year and a hydrogen-based version should be ready for tests in 2026. Daniel Moczydlower, President and CEO of Embraer X (Embraer) The other Innovation Verticals are Artificial Intelligence & Data Science, Industry 4.0, Airframe Competitiveness (also of current models), Platform-based Business, Cybersecurity, and last but not least, Passenger Experience. One of the Industry 4.0 projects is related to the 3D printing of plastic, non-structural parts. From the experimental phase, this has evolved already in the use in the actual production process of parts that can be found in Embraer aircraft. “More recently, we acquired our first metallic 3D printer that still doesn’t do structural parts. But we are discussing with the authorities to certify these parts and have them embedded in our designs and products.” Industry 4.0 also looks at the application of robots that can work together with humans in various production processes. One area where Embraer seems to be ahead of other OEMs is the use of robots in aircraft painting. Embraer X launched in 2017 These innovations came all from the moment in 2016 when Embraer realized that it had to step up if it wanted to get in a leading position. Instrumental was a visit to Silicon Valley to understand the innovation system and what to learn from that. “We came back to Brazil shocked with what we saw and learned. It kind of confirmed our suspicion that we needed to do something different if we wanted to keep pace with everything that was happening in the innovation world”, Moczydlower said. The result was Embraer X that as an incubator and market accelerator would totally focus on disruptive ideas and transform thoughts on mobility. One of the first partners was Uber Elevate to develop what has later become Eve and the Urban Air Mobility Traffic Management (UATM) to manage this whole new mobility platform. “Back in 2016 or 2017, few would have imagined that a few years later, we would have launched something like Eve UAM and spun it off on the market.” Beacon is Embraer's digital business platform that helps airlines better coordinate maintenance. (Embraer) Beacon another Embraer X product Then there is Beacon, another initiative that has its roots within Embraer X. Beacon is a digital business platform used for aircraft maintenance with which Embraer wants to disrupt the aviation service market. “We want to bring digital transformation to aviation maintenance. It is built on top of a disruptive idea for a highly-regulated market, but we believe that we can ensure the same levels of safety and quality, and comply with all the regulations. It removes a lot of hurdles in the return to service of operations.” The system also works for aircraft from other manufacturers, including helicopters. Republic Airways is one of some ten airlines that use the Beacon software that helps them to streamline operations. According to Embraer, Beacon helped airlines to identify and respond to 65.000 unplanned interruption cases last year in 2.400 aircraft at over 190 airports. Thanks to the system, technicians have been able to coordinate the logistics of maintenance activities much smoother and faster, reducing the delays that come from technical issues. “Through Beacon, an airline which is confronted with an unscheduled problem in an outback station can post a job to find an authorized maintenance provider or mechanic that is in the nearby region who is able to do the job.” Beacon can connect to an airline’s predictive maintenance applications, but that is the choice of the customer. Venture Capital To finance its initiatives, Embraer X has Fundo Aerospacial or Corporate Venture Capital as an investment vehicle. It is supported by the Brazilian Development Bank BNDES, the innovation agency FINEP, and the State of Sao Paulo. The fund now includes twelve partners that invest in high-tech companies. Moczydlower highlighted the investment in Tempest Security, the largest Brazilian cybersecurity company that secures the systems of all the country’s top private banks and the Sao Paulo Stock Exchange. Originally only party-owned by Embraer, the airframer has now regained full control again of Tempest and has positioned it within Embraer Defense & Security with the plan to offer services to international customers. The Catapult Fund is another corporate venture fund and part of the Embraer Venture Fund, but it is based in Silicon Valley in the US. Catapult specifically invests in some eighteen companies that focus on artificial intelligence, automation, and robotics. Like Elroy Air, which is developing an autonomous cargo drone for civil and defense purposes. The investment in Pyka also is done through Catapult. In 2021, innovation initiatives developed in the previous five years contributed to Embraer's revenues by 51 percent. (Embraer) Behind every investment by Embraer X, there is always the question: what is in it for Embraer? “We are a company that is allowed to take higher risks than Embraer, but we are always looking for a connection. Everything that Embraer X is looking at must involve a big market opportunity, a big disruption opportunity, but there has got to be some value that Embraer from our 50+ years of experience can add to the opportunity. We are looking at opportunities where the know-how, the experience, the expertise, the structure of Embraer, and the footprint of Embraer can be somehow used as leverage to make something happen more effectively, with a higher chance of success. The UAM market is a very good example. We were looking at a market that many analysts value to be around a trillion dollars in 2035 in which we believe our experience in designing, certifying, manufacturing, and servicing can be a big game-changer. This is the overlap that we are looking at Embraer X.” “Pyka is another example. It is a small company with very talented, brilliant founders and team members, but they are a young company. When they team up with Embraer, we believe we can speed up their plans and processes when it comes to scaling up and manufacturing. That would be a good combination where two companies come together to create something with a chance of high success in the market. But before we invest, we will check out Innovation Verticals to see if there is a connection to Embraer’s priorities.” Return on investment Even during the pandemic, Embraer maintained a six percent investment of annual revenues in innovation and development, which it tries to leverage with partnerships, grants, and investments from others. And it pays off, as Moczydlower showed with a slide to demonstrate how Embraer has benefitted from investing in innovations. In 2021, 51 percent of its revenues came from innovations that it took in the past five years. The trend since 2011, when Horizon was followed by Embraer X, shows the relevance of this strategy.
