Joby Aviation (JOBY 4.90%) is out with better-than-expected quarterly results and progress bringing its revolutionary new airplane to market, and rival Lilium (LILM 4.28%) has its own update on the steps it is taking. The excitement is drawing investors into the entire sector.

Shares of Joby traded as high as 24% on Thursday morning, and were up 20% as of 1 p.m. ET. Shares of Lilium topped out at 22% higher and Archer Aviation (ACHR 1.00%) was up as much as 10.4% -- they were up 7.5% and 8.9%, respectively, in early afternoon trading. Another rival, Vertical Aerospace (EVTL 3.49%), traded as high as up 12.4% before settling back to up 4.6%.

The air taxi sector is preparing for takeoff

These companies are part of a generation of so-called "flying car" stocks racing to develop small electric aircraft capable of vertical takeoffs and landings, or eVTOLs. Advocates see eVTOLs as a way for passengers to fly over city traffic jams and believe they will one day connect major airports to nearby suburbs.

New aircraft types require significant testing and approvals, but Joby's latest results indicate that industry leaders are well on their way to getting airborne. Joby was breakeven for the quarter, which is considerably better than the $0.18-per-share loss Wall Street had expected. The company also ended the quarter with $1.1 billion in the bank.

Joby said the certification process is progressing, with the Federal Aviation Administration having accepted a significant portion of its application. A Joby aircraft also became the first electric air taxi to be delivered to the U.S. Air Force as part of a $131 million contract with the government.

Lilium did not release earnings Thursday, but the company did host a webinar to discuss new test data, demand for its plane, and how the company intends to ramp up operations. The progress ignited a rally in the entire sector, with Archer and Vertical trading up despite little news from either company.

Is now the time to buy eVOTL stocks?

As recently as a few years ago, these eVTOL designs looked more like something out of The Jetsons than they did real business opportunities. But as the engineering and certification work has continued it now appears we could be seeing these aircraft in the sky within a few years. Airlines and other large customers have bought in, investing in various start-ups and announcing plans to integrate eVTOL routes into their schedule.

But for all the promise, there is still a lot of investor risk here. This is suddenly a crowded category, with entries from these four start-ups as well as from larger commercial aerospace titans including Embraer. Even if eVTOLs are the future that doesn't mean every manufacturer will be a success, and given the number of players there is likely to be consolidation or even failures up ahead.

For now, Joby and Archer appear to be leading the race to certification, which would make them the least risky picks in a sector fraught with a lot of risk. It's not too late for investors who are excited about the potential of these companies to buy in, but for now these stocks are best limited to a small piece of a well-diversified portfolio.