Is the Vision of Flying Cars Coming True? 3 Stocks to Watch Out

Imagine being able to invest in airlines or aircraft manufacturers before the launch of a single plane or a line connecting two cities or in automakers when horse-drawn carriages dominated the roads. In hindsight, these would have been astute investments. Previously, I discussed the electric vehicle revolution and its potential to increase demand for lithium and steel. Now, a similar opportunity arises with flying cars—or drones or airplanes, as we’ll explore shortly.

Reflecting on science fiction movies from the ’80s and ’90s reveals a mixed record of predictions coming true. Many revolutionary concepts, like smartphones and the Internet, were missed, albeit in minor ways. However, the flying car was a prominent vision in cinema, from ‘Back to the Future’ to ‘The Judge,’ representing a safe bet for futurists. It symbolized the blending of two proven worlds or capabilities from the last century: the car, which transformed human mobility and spurred economic growth, and the airplane, which did the same for long-distance travel. The concept of flying—or flying cars—added a new urban dimension, introducing an aerial layer to everyday and mass private transport.

What does this have to do with investment and finance? The recent era of zero interest rates and quantitative easing encouraged several companies to go public. These companies, still under the radar, are developing their versions of flying cars.

Do We Even Need Flying Cars?

Several reasons justify their development. First, worsening traffic jams in the Western world necessitate alternatives, exacerbated by population growth and positive immigration in desirable locations. Second, significant savings in infrastructure investment could be realized, as endless cars and mass transit systems demand costly and often delayed projects. Third, environmental considerations are paramount, with electrically propelled flying cars poised to reduce emissions significantly. And fourth, potentially reducing traffic accidents, assuming fewer aviation incidents occur, a benefit also attributed to autonomous vehicles.

The concept of electric vertical take-off and landing (eVTOL) is crucial for urban aircraft, eliminating the need for runways. Prominent companies like Boeing and Airbus, alongside initiatives like Uber’s Elevate project, have entered the fray, promising rapid commutes, such as from San Francisco to San Jose in 15 minutes. Despite delays and high costs, the industry’s development signals a tangible step toward making flying cars a reality.

What Wall St. Has to Offer to Investors?

Wall Street’s recent enthusiasm for eVTOL companies, facilitated by SPACs, underscores the financial community’s recognition of this burgeoning sector. Here are several public companies that have made significant strides:

• JOBY: Founded in 2009, it raised over $820 million and went public in 2021. Over the years, it has conducted test flights of more than 5,300 miles, including a 250 km flight without charging. It has also partnered with Toyota and Uber in various collaborations and obtained various approvals on the way to realizing commercial flights. It is estimated that in 2024, the company will begin commercial operation. This bullish look brought the stock to +41% in the last 12 months.
• ACHR: Archer Aviation has completed the second of three phases of development and testing of its drone, aircraft, or flying car. This is an aircraft weighing 1.5 tons with 12 engines (a “light” helicopter weighs about 3.5 tons), electric, of course, reaching a maximum speed of 240 km/h and a particularly low noise level. The company was founded in 2018, raised over $900 million, and went public in 2021 at a valuation of $1.7 billion. Although it went up +101% in the last year, its market cap was valued at $1.62B.
• LILM: The German company was founded in 2015 and is developing an autonomous, electric aircraft based on jet engines. The flying car can transport up to 6 people in maximum configuration, at a maximum speed of 300 km/h, and for a range of up to 300 km. It raised over $800 million and also went public in 2021 through a SPAC. In the last year, the stock lost almost 20%.

The Bottom Line

the vision of flying cars, once the domain of science fiction, is inching closer to reality. Technological advancements in electric propulsion and vertical take-off and landing capabilities have spurred an arms race among companies striving to revolutionize urban and intercity transportation.

Despite current market skepticism reflected in stock prices, this sector represents a potential investment opportunity in a transportation revolution still on the horizon. Is this an opportunity to invest in a revolution before it fully unfolds? Possibly.