What happened

Pre-revenue company Joby Aviation (JOBY -0.66%) lost more money than expected in the most recent quarter, but the bigger news is that the air-taxi pioneer is on course to navigate through the rigorous certification process and has begun final assembly of its aircraft.

Investors are excited about the potential, sending shares of Joby up as much as 16% in morning trading on Thursday.

So what

Joby is one of a number of companies racing to bring so-called "flying cars" to market. The company has developed a small electric aircraft capable of vertical takeoffs and landings, better known as an eVTOL. The plane will never replace the jumbo jets that carry passengers over long distances, but it could be a useful alternative to congested city streets.

Major airlines see the potential to use eVTOLs to connect their large airport hubs with customers in the outer suburbs. Delta Air Lines has invested at least $60 million in Joby and has announced plans to integrate the company's services into its existing networks in New York and Los Angeles, once Joby craft are up and running.

The question for investors has been when that day would come. Wednesday night, Joby provided an update, saying that it has completed the second of five stages required by the Federal Aviation Administration (FAA) to certify its aircraft. Joby also said it has begun final assembly of its first plane at its factory in California.

Now what

The milestones reached are important, but Joby still has a lot of distance to travel before commercial flights. The company said it intends to fly as part of the 2025 World Expo in Osaka, Japan.

Joby appears to be ahead of the competition in the race to bring an eVTOL to market, based on where it stands with the FAA, and its prototype has already logged more than 10,000 miles of flight testing. The company posted an operating loss of $66.9 million in the fourth quarter and will continue to burn cash until the FAA process is complete. But it has $1.1 billion in cash and investments in the bank.

So while there is still a lot of risk here, the company is demonstrating it is moving in the right direction. For those seeking high-risk, high-reward options for a well-diversified portfolio, Joby deserves a look.