ACHR - Archer Aviation: Upgrading As Commercialization Approaches
2024-03-21 19:27:21 ET
Summary
- Morgan Stanley predicts the eVTOL market to be worth $1.5 trillion by 2040.
- Archer may have developed a significant competitive advantage in manufacturing through its relationship with Stellantis.
- Archer intends to capture a larger share of the eVTOL market with a hybrid business model that brings added risks as well as rewards.
Introduction
Morgan Stanley published a paper suggesting that the eVTOL market could be worth $1.5 trillion by 2040 from almost zero today. Archer Aviation Inc. ( ACHR ), along with five other publicly traded startups, countless private companies, and just about every large-scale Aircraft company, are chasing a piece of this market. Some of these companies will be tremendous success stories and make significant returns for early investors. I have been writing about the sector since 2021 and have published over ten articles. So far, I have been successful, making excellent money on EHang Holdings Limited ( EH ), buying at $5 and selling for over $20 . I avoided an 80% fall in Vertical Aerospace Ltd. ( EVTL ), a drop in Lilium N.V. ( LILM ), and a 50% drop in Archer.
This will be my third article on Archer; initially, in 2022, I said sell, then in 2023, I upgraded to hold, and now I am upgrading to buy. The reason for this upgrade is the manufacturing deal with Stellantis N.V. ( STLA ), it gives Archer a significant and sustainable competitive advantage over its competitors.
The industry structure is becoming clear as we approach commercial operations and aircraft certification. The six startups I track are all moving towards commercial operations, but their business models and aircraft mean they will not all be direct competitors. EHang Holdings Limited ((EH)) has partial certification in China and has begun shipments of their two-seater autonomous aircraft for use in the tourist industry. Joby Aviation, Inc. ( JOBY ) will be certified next with its five-seater piloted machine. It has already delivered a plane to the US Air Force and is working quickly through the US certification process. JOBY intends to be an air taxi company and will likely begin operations in 2026. Lilium is building its first commercial aircraft, aiming to be more of a regional jet.
That leaves three companies pursuing the same market with similar strategies: Archer, Eve Holding, Inc. ( EVEX ), and Vertical Aerospace Ltd. ((EVTL)), which intend to be aircraft manufacturers selling machines to aircraft operators to be used as air taxis....
Archer Aviation: Upgrading As Commercialization Approaches