The transportation market has been dominated by old forms of transportation — planes, trains, and automobiles — for decades. Few new technologies have successfully entered the sector. Uber Technologies innovated on a part of this market with its ride-sharing application, but the transportation vehicles used are still mainly automobiles.
Joby Aviation (NYSE: JOBY) aims to bring a true transportation innovation to market for the first time in decades. It is one of the start-ups building electric vertical takeoff and landing vehicles (eVTOLs) with the aim of powering an air taxi network in the United States and other countries around the world. Combining innovations in battery technology and quiet propeller systems, the company believes it will finally bring flying cars to the masses.
But does that make the stock a buy? Let’s take a look at this early-stage business and see where Joby Aviation stock could land 10 years from now.
It may seem like science fiction, but Joby Aviation has developed a vertical takeoff air taxi that is much quieter than a traditional helicopter. The company hopes to solve a major problem in society — the billions of hours we collectively sit in traffic every year — by skipping roads altogether. It aims to do this by operating a taxi network similar to Uber but with eVTOLs. In fact, I bet people will be able to book a Joby ride right on Uber due to the two companies’ long-standing partnership.
People won’t drive these vehicles themselves but ride with pilots trained by the Federal Aviation Administration (FAA). Once commercialized, people will be able to book a ride on a point-to-point network in cities around the world. At least, that is the goal set out by Joby Aviation. The first routes will be from downtown areas to airports. For example, Joby is setting up a route from downtown Manhattan to JFK Airport in New York City, which will turn an hour-long drive into a 7 minute air taxi ride.
The bet is that there will be high demand for these services given the convenience and speed of the flights, with wealthy people willing to pay a pretty penny for a trip. With only a limited supply in its first few years, it is likely that Joby could charge hundreds of dollars if not much more for its airport point-to-point routes. This could help the company scale up its revenue quickly.
An existing friction for the commercialization of Joby’s air taxi network is certification from the FAA. These types of vehicles have never been used commercially before and therefore come with a lot of risks. If there are eventually hundreds or even thousands of these vehicles operating around the globe, there will need to be strict regulations and procedures to prevent deadly crashes. We tragically saw this with the recent helicopter-airplane collision in Washington D.C.
