Uber Technologies (UBER +0.49%) and Joby Aviation (JOBY 0.41%) recently announced the launch of Uber Air, which allows passengers to book a Joby electric vertical takeoff and landing (eVTOL) flight as part of their travel plans. The first flights are planned to begin in Dubai later this year, and Joby continues to work toward Federal Aviation Administration (FAA) certification in 2026, with the ultimate aim to expand its air taxi service to key markets, including New York, Los Angeles, the U.K., and Japan.
The announcement highlights Joby's business model differentiation
Given the recent military actions in the Persian Gulf, the timing of the announcement couldn't possibly have been worse. It's unfortunate, but it shouldn't detract from one key point. It reinforces the point that Joby aims to become a vertically integrated transportation-as-a-service (TaaS) company rather than an original equipment manufacturer (OEM) of eVTOL to sell to third parties, as Archer Aviation does. This is a key distinction that influences how investors should think about the stock, not least
Image source: Joby Aviation.
Joby is outperforming expectations
In this regard, the company is arguably outperforming expectations and its peer Archer Aviation. Joby is developing and manufacturing its own eVTOL, while Archer is heavily leaning into aerospace technology partners for components like Honeywell and Safran.
The use of such leading aerospace partners is supposed to give Archer an edge in the certification race, particularly when compared to Joby's approach of designing its own technology. However, the reality is that Joby is widely considered to be ahead in the FAA certification race.
Joby's first-mover advantage could prove critical
While Archer aims to sell its OEM eVTOL to third parties, Joby faces a potential threat to its TaaS model from Boeing's subsidiary Wisk. Like Joby, Wisk aims to become a TaaS company, but its eVTOL will be autonomous. While autonomous eVTOLs face a longer and more arduous certification pathway, they pose a significant threat to piloted eVTOL as they could significantly undercut them due to the lack of a pilot.
NYSE: JOBY
Key Data Points
However, Joby is well aware of the threat, and it's teaming up with Nvidia to develop autonomous functions to aid piloted flight with a view to moving to autonomous flight itself. In other words, Joby could also develop autonomous flight, but since it could already have a TaaS business in operation, it will have stolen a march on Wisk and others.
For example, Joby will likely have developed commercial relationships (such as its deal with and investment from Delta Air Lines), built customer recognition, and gained access to vertiports before competitors can build scale/
Joby may commence commercial operations before FAA certification
As noted earlier, the latest update focuses on the first commercial operations in Dubai, and while that's not likely until the region stabilizes, there's still a chance Joby could begin flights before FAA certification. While FAA certification is seen as the litmus test of verification and testing, and Joby can leverage the work with the FAA to gain regulatory approval, the United Arab Emirates (UAE) aviation authority has a fast-track regulatory program in place.
As such, Dubai could have commercial eVTOL flights before the U.S.
Image source: Getty Images.
What it means to investors
The announcement reinforces the investment case for the stock and somewhat derisks it, as the sooner Joby can open commercial operations, the greater its first-mover advantage will be and the more customers will become accustomed to its TaaS model.
The really interesting thing about Joby is that it's, correctly in my view, often seen as having a higher-risk/higher-reward profile than, say, Archer Aviation, due to its business model, as it's likely to take more time to generate meaningful transportation than it will take to sell OEM eVTOL as Archer wants to do. In addition, as noted above, in theory, it should be behind Archer in the certification process.
However, its certification leadership, investment and partnerships with Delta and Toyota Motor (helping with manufacturing expertise), and investment from and TaaS development with Uber are lowering risk while the reward potential remains. That's making the stock more attractive.
