Before ChatGPT exploded onto the scene in 2022, most investors would have written off the idea of a capable artificial intelligence tool that could help summarize information, write copy, generate images, and play the role of a general-purpose information agent.
Sure, we had Amazon’s Alexa and Apple’s Siri, but those were novelties we used to play music on our Echo Dots or set kitchen timers.
For all its shortcomings, OpenAI’s ChatGPT allowed most of us to bridge the gap between what seemed like science fiction and something that could become fact. It also became the trendiest trade in 2023, throwing the S&P 500 entirely out of whack in the process.
That context begs the question of what next great technological leap may be just around the corner (or, if not just around the corner, close enough to seize the public consciousness as effectively as AI).
Allow me to introduce you to flying cars.
They may not resemble the wheel-less, energy-driven flying cars of The Jetsons (they’re mostly industrial-sized drones with a passenger compartment), but there are a lot of companies putting billions of dollars to work to bring some version of the flying car to market.
And these aren’t just “crackpot” inventors, or over-capitalized hobbyists; these companies have investments from major auto manufacturers, partnerships with airlines, regulatory approvals (of varying stripes) and enough potential (projected 58% CAGR through 2030) that it warrants asking whether we should buy the hype.
It is worth keeping in mind that, with new technology, we often don’t get exactly what we image but fortunes have been made getting “close enough.” We don’t have fancy sci-fi pills for dinner, but we do have a miracle weight-loss injectable GLP-1; no Rosey the Robot, but we do have Roomba; no Her (yet), but ChatGPT was the story of 2023; and Alphabet (GOOGL), one of the most dominant tech companies on the planet, still wants to turn search into the Star Trek computer.
So, let’s take a look at a handful of companies trying to revolutionize transportation and see which, if any, of the flying car stocks might be worth investing in.
Each of these companies is working on electric vertical take-off and landing (eVTOL) vehicles that are only possible now because of advances in battery technology. These vehicles are essentially scaled-up versions of rotor-based drones that are intended to move one or a few people autonomously or under manual control.
Xpeng’s (XPEV) X2 is a good example, and it’s already received special permitting to allow it to operate on a limited basis in China and the UAE. Per the company, the X2 “will be suitable for future low-altitude city flights and is perfect for short-distance city journeys such as sightseeing and medical transportation.” The vehicle itself weighs just over 1,000 lbs., can fly for 35 minutes, and reaches a top speed of about 80 mph.
The vehicle is expected to cost about $150,000 and begin production this year, with a target of mass production by the end of 2025. The company also recently unveiled a modular flying car in October.
Closer to home, both Archer Aviation (ACHR) and Joby Aviation (JOBY) are among a handful of flying car companies working on similar vehicles.
Archer’s Midnight eVOTL is aiming for FAA testing this year with the hopes that it’ll be deployed as an air taxi service in 2025, with the express goal of turning a 60- or 90-minute cab ride into a 10- or 20-minute air taxi ride.
Rapid commercialization is at the forefront for Archer, as they’re envisioning a service more than a product. Midnight boasts a range of up to 100 miles, with rapid charging between flights or as needed, and with top speeds of up to 150 mph. United Airlines is their largest corporate partner, and Midnight is likely to be an extension of air travel, ferrying passengers to and from airports, and potentially cutting down on time spent in TSA lines and the like.
Last year, the companies announced plans to shuttle passengers between Chicago’s O’Hare and Vertiport Chicago (the Archer “hub,” as it were), which is likely a solid test case for the business proposition as a whole.
Joby Aviation is also working on an air taxi service (for JFK airport) and is undergoing FAA testing for certification. The firm also received a $131 million contract from the Department of Defense. The Agility Prime DoD contract is targeting delivery of up to nine aircraft to the U.S. Air Force and other federal agencies, with the first vehicle delivered in September of last year.
Toyota is a key business partner, having invested roughly $400 million in the company, and Joby is looking beyond airport transfers. Management hopes to eventually save one billion people one hour per day, becoming something of the Uber of the skies.
Each of these companies is still in the early innings, but the idea of investing in flying car stocks is likely to gain traction later this year when the privately held Volocopter begins shuttling attendees around the Paris Olympics in their VoloCity aircraft in the summer.
Investing in any of the three of these flying car stocks is a highly speculative prospect due to the company-specific risks. An accident or failure to secure FAA certification could easily be a death blow for a company, or even the industry as a whole. So, in the interest of diversifying away from any one company in particular, we’ve identified two ETFs with the most exposure to flying car stocks.
ARK Autonomous Technology & Robotics (ARKQ) and ARK Space Exploration & Innovation (ARKX) ETFs each have exposure to Archer and Joby (as well as firms like Blade, but none to Xpeng), but only about 10% of either fund would meet the flying car criteria.
Personally, I can’t imagine flying cars being ubiquitous, and Xpeng’s offerings seem more likely to become toys of the wealthy than common sights in the skies. Archer’s and Joby’s plans, on the other hand, seem feasible at least, assuming travelers are willing to get on board. Given the limited exposure you’d get from a (more responsible) investment in either of the two funds above, a small stake in a firm like Joby seems like a reasonable way to invest in flying cars, especially given their big-picture goals.
