Joby Aviation Faces Risks and Rewards in eVTOL Market

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Joby Aviation, an electric vertical takeoff and landing (eVTOL) company, has both huge upside potential and significant downside risks in the emerging eVTOL market. While Joby is ahead in the FAA certification process compared to rivals like Archer Aviation, it faces challenges such as the need for substantial investment to build manufacturing capacity and an operational fleet before generating revenue. Additionally, Joby's vertically integrated business model, where it aims to make, own, and operate its own aircraft, creates additional risk beyond the typical FAA certification hurdles. The company also faces a long-term threat from Boeing's autonomous eVTOL subsidiary Wisk, which could potentially undercut Joby on pricing.

Why it matters

The eVTOL market offers significant growth potential, but also carries major risks for companies like Joby Aviation that are pioneering this new transportation technology. Joby's vertically integrated approach sets it apart from rivals, but also exposes it to additional challenges around manufacturing, operations, and future competition from autonomous eVTOLs. Understanding these risks and rewards is crucial for investors considering Joby's stock.

The details

Joby Aviation is focused on creating a vertically integrated transportation services company, making, owning, and operating its own eVTOL aircraft. This is different from rivals like Archer Aviation, which is more focused on being an original equipment manufacturer (OEM) and selling eVTOL aircraft to third parties. Joby's approach creates additional risk on top of the typical FAA certification hurdles all eVTOL companies face. While Joby is ahead in the certification process, there is no guarantee it will receive final approval. The company also needs to invest heavily in ramping up manufacturing capacity and building out its operational fleet and vertiport network before generating revenue, which could significantly dilute existing shareholders. Additionally, Joby faces a long-term threat from Boeing's autonomous eVTOL subsidiary Wisk, which could potentially offer a cheaper service by not requiring a human pilot.

• Joby is currently in the final stage of FAA certification, during which pilots test the aircraft and the FAA assesses reliability and operational readiness.
• Wall Street consensus indicates Joby will likely need to raise cash in 2026, likely through an equity raise, as it is projected to burn through $646 million that year.

What’s next

The judge in Joby's FAA certification process will make a decision on whether the company receives final approval, which is a key milestone for the company's future.