Han Solo stepped on a twig in the forest of Endor, alerting an Imperial scout trooper who promptly jumped on a Speeder bike, kicking off one of the most exciting chase sequences in 1983’s Star Wars: Return of the Jedi . Newly created special effects from Industrial Light and Magic showed Luke Skywalker and Princess Leia Organa chasing down the scout troopers at 100mph through the trees on fictional hover bikes. Glued to the silver screen by the chase, a group of engineering students studying drones, a subset in aeronautics, decided to design and build their own. And now they have turned the project into a business. While a “repulsor drive”, the device that enables the bike to float in the air, might be a little tricky to source in downtown Akihabara, advances in domestic drone technology made it possible to create an alternative lifting engine using electrically driven ducted fans made from carbon fibre – a materials market segment in which the Japanese dominate globally. In collaboration with Toray Carbon Magic, they built the airframe, a few high performance electric motors, and lithium batteries. Then, to generate power with a drive-chain, they added a Kawasaki motorbike engine built by Toda Racing. Finally, the hoverbike became a reality. Differentiated as a new form of personal mobility rather than a “flying drone you sit on”, it will hit the market this year as the XTURISMO and can be yours for a ticket price of US$770,000. “Our first major challenge was financing,” CEO Daisuke Katano of Aerial Lab Technologies (A.L.I.) said, one of the former students turned businessman. “With only a few poor engineers, we needed money.” To provide initial funding they found a number of firms including two technology heavyweights, Kyocera and Mitsubishi Electric, as well as the “Drone Fund”. In the second round, private equity funds came in, and the firm is looking to start production of the first 200 units this year. The next major challenge was how to ride the device and make it “float safely”, according to Katano. This was largely trial and error – not unlike SpaceX testing its new rockets, though perhaps a little less dramatic when it went wrong. The machine in its current incarnation is loud and boisterous, presenting another challenge: how to operate it in relatively peaceful Japan where neighbours will readily call the police on you if you have the BBC World Service turned up too loud. Noise reduction is a priority, something the design team will need to improve before the ready acceptance of such a vehicle. The strides the Japanese have made in low altitude aeronautical technology over the past three to four years is quite remarkable. It’s something I have paid close attention to after taking a small group of mainland Chinese and Hong Kong investors on a tour of Japanese drone companies in 2018 following an impressive show of technology at Japan’s International Drone Expo. At the time, China dominated the consumer and commercial drone market with small, and not-so-small, flying machines ranging from DJI consumer drones carrying cameras to an early EHang AAV flying “car” prototype. The latest version from EHang can carry an overlunched businessman for 35km at 130kmh, so as it comes with considerable range anxiety it looks like it will be more fun than practical. In 2018, drones on sale in Japan needed GPS positioning typically used in Chinese flight systems – nearly all from DJI. Japanese technology was heading in a different direction at the time, using optical processing. Or in other words, seeing where they were flying to avoid objects and people. This was done based on US tech from Nvidia products, much the same as autonomous car research does. To fly and navigate the XTURISMO hover bike, the pilot uses augmented reality goggles connected to a cloud-connected edge computing solution that helps the bike get to its destination and not smash into trees – which is how several of the aforementioned Imperial scout troopers went out. The clever image processing and graphics by Nvidia are also responsible for landing the craft safely should you pass out from the thrill of buzzing Tokyo Tower. The coronavirus and various stages of lockdown played havoc with Japan’s industrial expositions. At the same time, the Japanese government aligned itself with the US to block Chinese tech being used in surveying and surveillance. Together, this gave Japanese firms an opportunity to accelerate their capture of the domestic market for low-altitude aviation products with little competition from overseas. As Yuki Okamoto of Skylink, which resells mainly Japanese, German and US machines, told me, “Japan’s government’s policy to remove China from segments of the market was very positive for Japanese suppliers”. Hiroshi Oryu of AeroSense, another growing Japanese supplier of drone technology, observes that “Chinese firms are still dominant globally, but the Japanese drone industry is growing extremely fast now. All the products we sell are made in Japan”. How drones became the new front in the US-China tech war It seems the Chinese have not headed in the direction of a flying bike, but the Americans have been working on rideable flying machines which started off as rather dangerous-looking flying blenders, and are now working on jet-powered machines. A.L.I.’s ducted fan approach hails from the old way in which model aircraft enthusiasts could cheaply “fake” a jet engine with far simpler technology. And with advances in electric motor technologies, this has become even more feasible today. The combination of electric motors, batteries and an internal combustion engine with a generator – the mainstay of hybrid power systems that we see on the road – is also finding its way into aerospace. The XTURISMO bike is one example, but something as small as a 1-2kW engine/generator combination can now power a commercial drone in flight for up to 11½ hours – a technology offered by Japanese model engine manufacturer O.S. Engines Manufacturing. Yet for the bike, which chews through 170kWh, the flight time is limited to 40 minutes. With a maximum speed of 80kmh, it won’t get you that far with physics in the way, yet that is. This new “air mobility” industry is in its very early stages, and has to deal with not just the social implications of personal air transport, but also regulatory implications which may take some solving. And not everyone has US$770,000 to spend on a flying bike. But for some, it may sit alongside the Bugatti or the Lamborghini. In the near term, Japan’s self-defence forces who are call on in an emergency have shown an interest in the flying motorcycle, as have the police. It is a little difficult to see the mass adoption of the flying bike, but as Katano-san tells me, “it is a new category of vehicle that the licencing authorities are considering and working on to accommodate. It’s just a matter of time”. And presumably cost. As for the XTURISMO on display in A.L.I.’s sixth floor offices by Tokyo Tower, I asked if they had flown it in through the window yet. Unfortunately, for the time being it has to come and go in pieces in the lift. Oh well, perhaps one day … Neil Newman is a thematic portfolio strategist focused on pan-Asian equity markets.