For decades, flying vehicles have been an idea out of science fiction. However, with recent developments in battery technology, flying taxis could soon become a reality, and Archer Aviation (ACHR 20.27%) is one company leading the way.
Archer is developing electric vertical takeoff and landing aircraft (eVTOL) that promise efficiency as well as a quieter and more eco-friendly alternative for urban travel. In 2024, Archer Aviation stock experienced a remarkable 68% surge, underscoring its significant advancements.
While there's still work to be done, momentum is building, and the first commercial flights could come as soon as this year. Here's what 2025 could have in store for Archer Aviation.
Flying taxis could change urban transportation as we know it
Founded in 2018, Archer Aviation has made serious headway in developing eVTOL aircraft. These aircraft combine the vertical takeoff and landing capability of helicopters with the electric power of modern electric vehicles, making them ideal for urban environments.
Their ability to take off and land vertically eliminates the need for long runways. Instead, these vehicles can operate from rooftops, parking lots, or other confined spaces often found in cities. Not only that, but these electric-powered vehicles produce no emissions, helping to provide cleaner travel with a smaller carbon footprint compared with other modes of transportation.
Laying the foundation for commercial operations
Archer Aviation has made significant progress in developing its aircraft and is inching closer to commercial operations. Last year, its flagship Midnight aircraft successfully performed a transition flight, where it took off vertically, shifted from hover to wing-borne flight, and achieved speeds of over 100 miles per hour before returning to a smooth vertical landing.
This was an important milestone for Archer Aviation as it seeks to achieve FAA Type Certification. This certification process ensures that Archer's aircraft meets the required safety and airworthiness standards and is a crucial step in achieving widespread commercial operations. Archer is three-quarters of the way to completing its certification and expects to receive it by late 2025.
Image source: Archer Aviation.
eVTOL developers got more positive news in October when the Federal Aviation Administration (FAA) unveiled its final Special Federal Aviation Regulation (SFAR) specifically tailored for powered-lift pilot certification and operations.
With training and pilot certification protocols now in place, the FAA is setting the stage for these innovative aircraft. Analysts at Canaccord viewed the decision to provide final regulations as broadly positive for the air taxi industry, laying the foundation for commercial operations.
What does 2025 have in store for Archer Aviation?
Last month, Archer completed construction on its high-volume, 400,000-square-foot aircraft manufacturing facility in Covington, Georgia. This year, its focus is on building piloted type-design aircraft for use in testing and early commercial deployment. The company plans on starting production early this year and expects to ramp up production to two aircraft per month by the end of 2025.
Also last month, Archer announced it had entered into a multiparty collaboration agreement with key entities in the United Arab Emirates and Abu Dhabi to establish air taxi operations. The Abu Dhabi Investment Office (ADIO) will help facilitate the safe launch of commercial eVTOL operations in Abu Dhabi as soon as possible. The company hopes to launch air taxi services in the UAE as early as the fourth quarter of 2025.
Finally, Archer announced a partnership with Anduril to jointly develop a hybrid-propulsion VTOL aircraft for next-generation defense applications. This will be part of the company's new Archer Defense program and target a potential program of record from the Department of Defense. According to analysts at Deutsche Bank, this new program could be worth several billion dollars, "significantly boosting Archer's growth potential."
Is Archer Aviation stock right for you?
Archer Aviation is an exciting company developing a new form of transportation that could revolutionize travel. The market potential is massive, with Morgan Stanley projecting that the urban air mobility market could reach $1 trillion by 2040.
The company is still in the early stages of its growth story, pre-revenue and pre-commercial operations, and execution risk remains. For example, any hiccups in testing or manufacturing could affect its timeline, push back deliveries, delay revenue generation, and potentially increase costs.
Archer Aviation will look to make meaningful progress toward commercial operations this year, but it remains a story-driven stock for now. For this reason, the stock is vulnerable to elevated volatility, making it best left for investors with a high tolerance for risk and a long-term investing horizon.
