Joby Aviation: An In-Depth Look at the eVTOL Revolution and Investment Potential

Joby Aviation: Pioneering the Electric Air Taxi Market

Joby Aviation (JOBY 13.40%) is an aerospace company with an ambitious vision: to transport people above traffic congestion using quiet, electric-powered aircraft. These electric vertical takeoff and landing (eVTOL) vehicles promise to revolutionize urban mobility, potentially functioning as an 'Uber of the skies' for passengers seeking alternatives to congested roadways.

While eVTOLs once seemed relegated to science fiction, the past five years, and particularly the last eight months, have seen a significant shift. The prospect of eVTOLs becoming a reality in our urban landscapes is increasingly plausible.

Governments and airlines are actively supporting eVTOL development through policy and investment, and infrastructure designs are gaining traction. This support has been a major driver behind Joby Aviation's market valuation, which currently stands at approximately $12 billion, despite being a pre-revenue company.

Joby appears to be on the verge of a transportation breakthrough. Here are three key reasons why investors might consider adding Joby to their portfolios:

1. Leading the FAA Certification Race

Federal Aviation Administration (FAA) certification is crucial for eVTOL companies, representing a critical milestone for commercial viability. Joby is currently ahead of its competitors in this rigorous process. The certification process involves five stages. As of August 4th, Joby had completed 70% of its responsibilities in the fourth stage, while the FAA had completed over 50% of its review.

Joby is actively preparing an FAA-conforming aircraft for testing, a step that will lead to the final certification stage. The company anticipates that FAA pilots will begin flight testing as early as next year.

In comparison, Archer Aviation, another prominent eVTOL startup, stated in its first-quarter shareholder letter that it was "focused on the fourth and final phase of the certification program" and had "received FAA approval for [about] 15% of the compliance verification documents." This statement was reiterated almost verbatim in their second-quarter earnings call.

The White House's new eVTOL Integration Pilot Program (eIPP) has the potential to expedite the final stages of certification for both companies. While the program's specific impact on Joby's FAA Type Certification timeline remains uncertain, the increased urgency in Washington is a positive sign.

2. Strategic Partnerships and Investments

Despite being pre-revenue, Joby isn't idle. The company is actively forging strategic partnerships and attracting investments from established industrial leaders.

In early August, Joby announced a collaboration with defense contractor L3Harris Technologies to develop a hybrid (gas turbine-powered) eVTOL variant for defense applications. This could generate revenue for Joby before its commercial eVTOLs become operational.

Later that month, Joby finalized its acquisition of Blade Air Mobility, a strategic move to secure infrastructure access in key urban markets like New York City in anticipation of eVTOL certification.

Earlier in the summer, Joby signed a memorandum of understanding (MoU) with Saudi Arabian-owned Abdul Latif Jameel to explore a distribution agreement for up to 200 Joby aircraft, valued at approximately $1 billion.

Furthermore, Toyota Motor plans to invest $500 million in Joby (with $250 million already committed), and Delta Airlines has invested in Joby and intends to integrate its air taxi service into its network.

3. Strong Financial Position

Joby's balance sheet reveals a solid financial foundation. As of the end of June, the company held approximately $991 million in cash and short-term investments. Factoring in the remaining $250 million from Toyota, Joby has access to $1.24 billion. With an average annual cash burn rate of approximately $500 million, Joby possesses a financial runway of approximately two years before requiring additional funding.

Investment Considerations

Every disruptive technology reaches a point where theoretical applications begin to materialize. Joby Aviation appears to be rapidly approaching this pivotal moment. While challenges remain – including the fact that Joby is currently pre-revenue – momentum seems to be shifting in the company's favor.

For investors who are optimistic about the potential of eVTOL technology to transform urban transportation, now might be an opportune time to consider investing in Joby Aviation.