Lilium N : 2021 FY Letter to Shareholders

BUSINESS UPDATE FY 2021

FEBRUARY 28, 2022

Letter to Shareholders

Dear Shareholders,

In 2021 we became a public company and had the opportunity to share our vision of creating a radically new, emission-free,high-speed, quiet and affordable form of regional transportation. With your support and that of our suppliers, infrastructure partners and customers, the Lilium team is advancing our aircraft development program.

In this letter, we will give you an update on important developments. Several of the most pertinent are highlighted below:

1. We are pursuing a new supplemental market opportunity to sell our aircraft through private sales and fractional ownership
2. We are announcing our entry into a Memorandum of Understanding with NetJets Inc. for the
   prospective­ sale of up to 150 Lilium jets plus related after-market services
3. Introduction of a premium 4-passenger 'club cabin' configuration for the private and fractional
   market­ as part of our expanded product offering
4. We are implementing modifications to our aircraft based upon the Preliminary Design Review (PDR) process that will simplify the design and reduce technical and certification risk

Cash spending on budget in 2021

Total cash spend for the fiscal year through December 31, 2021, at $217 million, was in line with our planned budget of $221 million 1, reflecting our budgetary discipline and focus on key engineering projects. The total cash spend for Q4 2021 amounted to $72.7 million, higher than in Q3 ($56.5 million). The anticipated increase in the later months of 2021 was mainly driven by the acceleration of the development program, including the planned ramp up in engineering activities and important investments in technology and supply chain. Technology investments were primarily related to battery development, as well as energy and wind tunnel testing facilities. Going forward, we expect the quarterly total cash spend to decrease in Q1 2022, due to lower investments compared to the previous quarters, partly offset by preparations for extended flight testing in Spain and the build of our next demonstrator aircraft, Phoenix 3, as explained later in this letter. Our liquidity at year end 2021 is approximately $400 million 2. Our audited full-year financial statements will be filed with the SEC at the end of March.

1. Excluding transaction-related costs incurred in connection with our completed business combination with Qell, the PIPE Financing, and a minority investment into enabling technology
2. Consists of cash and cash equivalents and other financial assets

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We're closely monitoring the effects of COVID, the conflict in Europe and general economic factors on our business and planning. These factors put pressure on our employee, material and non-recurring supply chain costs (e.g., tooling and engineering services), as well as affecting other stakeholders and regulatory agencies. We will provide a full year financial outlook, together with an update on the program, at our next Business Update in May.

New supplemental private and fractional sales offering

We have received strong interest from the private and business professional segments eager to own or utilize our aircraft and to participate in the advancement of sustainable aviation. They believe the Lilium Jet, with its unique electric-jet propulsion technology, emission-free operation, low noise signature, spacious cabin and outstanding customer experience, is especially well suited to the premium demands of these segments. We therefore will extend our commercial offering to private individuals and business professionals through either direct sales or through a fractional ownership model that we expect to implement through an anticipated collaboration with NetJets.

We believe the private and business professional segments will be highly attractive markets and will drive early adoption of eVTOL aircraft. Importantly, we also see these segments as being a great supplemental business for Lilium, building on our previously announced relationship with Brazilian airline Azul and the planned launch of networks in Florida and Germany.

Lilium's mission is to provide a safe, sustainable product that is widely available across use cases and geog- raphies. We also believe the world is in an environmental crisis and that aerospace must do more to decar- bonize. On a per-passenger basis, it is worth noting that the private jet sector is among the industry's biggest emitters. By addressing this market, our aircraft can have a disproportionate impact on the reduction of carbon emissions in aviation. Meanwhile, as a passenger service, we believe the Lilium Jet can be price-competitive with ground transport alternatives. Our future plans for meaningfully larger aircraft will also allow us to move more people and goods at significantly lower price points.

NetJets Agreement

Lilium has entered into a Memorandum of Understanding ("MOU") with the world's largest private jet company NetJets. Lilium is excited to work with NetJets in expanding our product and commercial offerings. The proposed intent of the parties in the MOU is as follows:

1. NetJets to have the right to order up to 150 Lilium Jets for its fractional ownership program in the US and Europe
2. NetJets to prospectively support Lilium Jet sales to private individuals whose aircraft will then be managed by NetJets or its affiliates
3. NetJets affiliate to prospectively be the flight operations partner for Lilium's Florida network and potentially other networks

The proposed arrangement with NetJets remains subject to the parties finalizing commercial terms and definitive documentation.

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Lilium Jets for NetJets fractional ownership program

Pursuant to the terms of the MOU, NetJets will have the right to order up to 150 Lilium Jets along with corresponding support services from Lilium for NetJet's fractional aircraft ownership program in the US and Europe. Following last year's announcement of our anticipated strategic collaboration with Azul, this proposed NetJets alliance would represent another step towards building up a diversified order backlog in different markets and segments which will support revenue predictability, industrial planning and supply chain visibility.

Additional new channel for Lilium sales to private individuals

NetJets additionally plans to support Lilium in establishing a separate private sales campaign for individuals to purchase Lilium Jets. As part of this sales campaign, aircraft will be sold by Lilium directly to private individuals. Those aircraft may subsequently be managed on behalf of the owner by NetJets or its affiliates. We have received significant interest from private individuals in the Lilium Jet; the NetJets opportunity also allows us to offer the Lilium Jet to these individuals through an operator known for quality and safety.

Further boost to Lilium's Florida network - NetJets as flight operator

NetJets and Lilium will work together with a view to an affiliate of NetJets Inc. running Lilium's flight operations (with an Air Operator's Certificate) in Florida. As announced last year, Lilium's landing infrastructure in Florida is to be handled by airport operator (and Lilium investor) Ferrovial, in conjunction with the Tavis- tock Development Company. Plans for the Lilium regional air mobility network in Florida therefore continue to progress.

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Importantly, we believe that network routes operated by NetJets will expose a much broader group of private and business travelers to sustainable air mobility through the combination of the Lilium Jet's performance with NetJets' world class service standards.

The Lilium Jet cabin configurations

Our Lilium Jet architecture with its proprietary Ducted Electric Vectored Thrust (DEVT) technology is designed for performance and scalability. Thanks to its generous cabin dimensions, performance, and versatility - as well as the passenger experience these capabilities afford - the Lilium Jet can provide the basis for a range of configurations designed to meet the needs of multiple customer groups and operating models. We expect our aircraft architecture will ultimately allow for: (i) a premium four-passenger 'club cabin' configuration (ii) a six-passenger shuttle cabin configuration; and (iii) a cargo cabin configuration.

Rigorous program review process

As described in our last letter to shareholders, we opened our Preliminary Design Review (PDR) in Q4 2021, an important milestone in traditional aerospace product development. We have been conducting the PDR with highly experienced, external and independent advisors who have led some of the industry's most successful programs. As a result, we expect to release design data to our aerospace supply chain, starting in the second quarter of 2022.

As described in our November blog, the PDR consists of a series of technical reviews to assess whether the aircraft architecture will meet airworthiness requirements, deliver the performance requirements assumed in the business case and be produced at the appropriate quality levels. PDR is important in preparing for the industrialization of the program, selecting the main suppliers identified for aircraft systems and production equipment, and refining make-vs-buy strategies. Completion of PDR gives the green light for engineering to finalize detailed designs and for procurement to ramp up supplier contracting. The PDR process has, equally, helped us to refine and optimize the aircraft's design, as well as to identify and mitigate program and certification risks.

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Design changes for a simpler aircraft and a robust certification path

We continue to assess and, as a result of the PDR process to date, are implementing certain changes to simplify the design and to reduce technical and certification risk. For example:

• Through a slightly larger and more powerful engine design, we will reduce the number of engines from 36 to 30 to (i) reduce part count, weight and system complexity; (ii) improve aerodynamic balance between main wings and canards (front wings); (iii) create potential for lower material and maintenance costs; and (iv) improve design flexibility in the future.
• A flexible cabin architecture enables us to offer a range of configurations over time, including the premium 4-passenger 'club cabin', a 6-passenger shuttle cabin, plus a future cargo cabin. This allows us to pursue more market segments utilizing the same platform for maximum program development efficiency. The cabin configuration we launch at Entry-into-Service will be determined by final cus- tomer needs, regulatory requirements, and the performance characteristics of the certified aircraft.

We continue to evaluate our overall program and launch timeline according to the PDR and will provide an update on the next phase of the program, supply chain, and our full year financial outlook at our next Business Update following the end of Q1 2022.

High-speed flight testing to begin in Spain

Following successful flight testing in southern Germany last year, our 5th generation technology demon- strator, Phoenix 2, has now been moved to the ATLAS Flight Test Center in Villacarrillo, Spain, for the next phase of high-speed testing.

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