Imagine soaring above the bustling streets of a city, gliding through the sky to your destination. This innovative mode of transportation, known as eVTOL (electric vertical take-off and landing), has the potential to revolutionize urban mobility.
These futuristic vehicles use modern battery technology, which allows for quiet operation and supports nimble vertical take-offs and landings. This makes them suited for navigating urban landscapes. With the Federal Aviation Administration (FAA) recently introducing regulations to facilitate this emerging technology, the dream of soaring above the gridlock is edging closer to reality.
Joby Aviation(NYSE: JOBY) is one company leading the way in this exciting technology. The stock has surged 60% since November, although it has recently come off its highs. If you’re looking to invest in this innovative company, you should know a few things first.
Joby Aviation’s S4 aircraft is designed to carry four passengers over a range of 150 miles per charge. This has made the company an appealing investment opportunity for major players across the transportation sector. Some of Joby’s key partnerships include industry giants Toyota Motor, Delta Air Lines, and Uber Technologies.
Toyota is a major investor in Joby and has helped support its manufacturing and technology development. Last October, the automaker invested $500 million to support the certification and commercial production of its air taxi, bringing its total investment in Joby to $894 million.
Toyota will play an important role in helping Joby manufacture and commercialize its product, which is vital for Joby’s success while it is still in its pre-commercial, pre-revenue stage.
Image source: Joby Aviation. The Joby S4 eVTOL.
One of Joby’s biggest competitors is Archer Aviation, although the two companies take different approaches. Archer relies on legacy aerospace suppliers; Joby embraces a vertically integrated model, developing its components and systems in-house.
This approach could enable Joby to engineer a higher-performing eVTOL capable of extended ranges. But it’s worth noting that this capital-intensive strategy may introduce challenges to the company’s speed to market compared to Archer’s outsourced approach.
The movement to commercialize flying taxis is gaining momentum. In October, the FAA made a big step for advanced air mobility (AAM) by releasing its final Special Federal Aviation Regulation (SFAR) concerning powered-lift pilot certification and operation. This new rule facilitates the widespread use of air taxis and has been described as “broadly positive” by the investment bank Canaccord.
Joby plans to launch its commercial operations in Dubai by late 2025. It is constructing its first vertiport (as its flight operations center is called) at Dubai International Airport, featuring two take-off and landing stands equipped with rapid charging capabilities for use between flights.
From there, Joby plans to develop other vertiports in the emirate in Palm Jumeirah, downtown Dubai, and Dubai Marina.
Joby aims to begin commercial operations in the U.S. by 2026. The company intends to launch its air taxi service in high-density markets, starting with Los Angeles and New York City.
Image source: Joby Aviation. A Joby eVTOL with the Statue of Liberty in the background.
Before that can occur, Joby needs to obtain FAA Type Certification. This process ensures that Joby’s flying vehicles meet the necessary safety and airworthiness standards, which will be crucial for its timeline to achieve commercial operations.
Joby has completed three of the five stages required to achieve certification. In its third-quarter presentation to shareholders, the company said that it is currently in the testing and analysis phase and has submitted several documents to the FAA regarding various components, including propeller systems, electric models, and flight controls.
Joby is looking to ramp up commercial operations this year, but the company will continue to burn cash as it works toward certifications, greater production, and the start of commercial operations. After its investment from Toyota, it had $1.4 billion in cash and investments, and analysts project the company will continue to burn cash for the next several years as it grows.
The eVTOL technology is exciting, but hurdles remain before it becomes a commercial success. Even if the company starts operations as soon as this year, it could take the public time to grow comfortable with air taxis and for the service to develop into a large-scale commercial market.
Joby may be for you if you’re aggressive, don’t mind the volatile swings, and size your investment appropriately. However, for now, the company still has a lot to do. I think it’s a sell, but I will keep it on a watch list and monitor its progress toward certification and production. Future breakthroughs could be a chance to buy, but I still think it’s too early for investors to own this stock today.
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Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.
Joby Aviation: Buy, Sell, or Hold? was originally published by The Motley Fool
