Archer Aviation (ACHR -2.63%) has built and is testing a new aircraft that it calls Midnight. Before it can be used in the U.S. market, it must get clearance from the FAA. There are a couple of problems here -- from the inherent, and appropriate, difficulty of getting FAA approvals, to the fact that Midnight is an entirely new type of aircraft.
But I think FAA approval could be closer than most investors think. Here's why.
What does Archer Aviation do?
Archer Aviation builds an electric vertical takeoff and landing (eVTOL) aircraft that is meant to be used over short distances, and it can only carry a few passengers. Effectively, it is an air taxi that can fly over congested city streets. In 2025, the company hopes to build as many as 10 of its Midnight eVTOLs in the near future.
Image source: Getty Images.
The problem here is that Archer Aviation's Midnight eVTOLs are still in the testing phase of development. It is still attempting to get regulatory approval to use it with commercial customers. The FAA approval process is long and difficult, given the risks involved with airplane accidents.
This is why, when Archer Aviation reported first-quarter results, it wasn't surprising to hear that the company has only "received FAA approval for ~15% of the compliance verification documents." That's up a whole two percentage points from the end of 2024.
That seems like a pretty small number and very little progress, hinting that it could be a very long time before Archer Aviation can fly its Midnight aircraft commercially in the highly important U.S. market. It is gearing up with partners to fly in foreign markets, but the U.S. is really the big target. In fact, the company already has plans for air taxi services in California and New York. But those services can't start until FAA approval is received.
Air taxis are a different type of aircraft
One of the biggest problems facing Archer Aviation when it comes to FAA approval is that air taxis are basically a new way of flying. The technology just didn't exist until now, so the FAA has had to rethink its approval process.
A note in the company's first-quarter 2025 earnings release is telling. Archer Aviation explains, "The FAA has now aligned industry standards addressing total propulsion loss [AM1.2105(g)], and these clarified standards were as we expected and do not result in any necessary modifications to Midnight's design."
In 2024, Archer Aviation proved that it could lose one of its multiple propellers, some of which tilt and some of which don't, and continue to be operated safely. While successful, the bigger issue appears to be the way in which the FAA viewed the loss of a propeller for the new style of aircraft. With the updated view, more appropriate to the style of aircraft being tested, the FAA and Archer Aviation are more lined up on what comes next.
And that has led Archer Aviation to suggest, "As we transition into piloted flight and prepare for formal TIA testing, expect a marked acceleration of compliance validation with both the FAA and GCAA regulatory bodies." So while going from 13% complete to 15% complete in a quarter sounds like it will take decades to get Midnight approved, that snail's pace isn't likely to be what investors see in the future.
Archer Aviation is still a high-risk start-up
Archer Aviation is not for the faint of heart, with most investors probably better off on the sidelines than owning this early-stage company. However, more aggressive investors who are looking at the upstart air taxi company should be ready to see more rapid movement on the FAA approval process very soon.
There is no way to tell exactly how long final approval will take, but it is likely to be years, not decades. That means that the rubber will hit the road (or the props will hit the air) much sooner than it may seem possible right now.
