The outlook for flying car stocks continues to be bright. Leading names in the space grew rapidly throughout 2023. Joby Aviation (NYSE:JOBY) doubled in price, while Archer Aviation (NYSE:ACHR) nearly tripled. Some forecasts anticipate 2024 will be as strong or stronger with 55% growth.
Yet, every fledgling industry primed for rapid growth always suffers the same sort of progression whereby entrants come and go rapidly. The two companies mentioned immediately above are focused and have managed to attract the backing of powerful public and private entities. At this point, they appear to be the best investments overall. However, plenty of other flying car companies should be avoided due to substantial issues.
XPeng (XPEV)
XPeng (NYSE:XPEV) is primarily known as an electric vehicle (EV) stock. Yet, the company is also developing flying cars. However, the information released on those vehicles paints a picture of a company that is difficult to trust.
XPEV released impressive-looking videos that portray its modular flying vehicle offering. Rather than impressive, I should say cool. That video shows a 6×6 EV that houses and transports an eVTOL inside. The company is also developing another eVTOL, which is the more likely of the two to be commercialized.
The 100 pre-orders Xpeng received for its modular flying vehicle in December 2023 seem suspicious. Actually, it seems like vaporware. The wording of the release makes it seem as if the pre-orders were made by municipal governments, given they will be used in the “management of transportation areas.”
It would be very easy for the government to cancel those orders should the project never reach fruition. XPeng is an EV company focused on electric cars, not flying cars. The company reported a loss of $530 million in Q3. If it manages to commercialize a flying car, it won’t do anything to positively affect the company’s bigger problems.
Embraer (ERJ)
Embraer (NYSE:ERJ) is another company taking on flying cars as a sort of side project. The Brazilian aerospace corporation makes airplanes. Investors would primarily be investing in an aerospace company and not a flying car company.
Embraer’s investment in its Eve Air Mobility subsidiary has a long way to go until anything substantial materializes. The company is currently deciding on airworthiness criteria for the vehicle, which include public consultation. In other words, any vehicle is far from commercialization. Again, other pure-play firms in the space, like Joby Aviation and Archer Aviation, are much further along in the development process.
Everything is pretty conceptual at this point before either mobility. Take, for example, its concept of operations collaboration with Jeju Air. It’s a little more than a research report on the potential of eVTOLs on the popular island destination in Korea. As with XPeng, flying cars probably won’t do much to move the dial on the stock of the parent company Embraer.
Vertical Aerospace (EVTL)
Vertical Aerospace (NYSE:EVTL) is a smaller flying car company that continues to head rapidly in the wrong direction. Share prices fell from $3.50 at the beginning of 2023 to 50 cents by the end of the year.
The company is simply too far behind at this point. Furthermore, it doesn’t have the funding and partnerships that leading firms in the space benefit from. EVTL intends to demonstrate its prototype vehicle at the Farnborough International Airshow scheduled for July of this year.
At the end of Q3, Vertical Aerospace reported £74 million in cash. The company’s operating loss through the first nine months of 2023 was nearly £58 million. The company founder and CEO committed to investing an additional $50 million into the company. That seems like a man hell-bent on bringing his dream to fruition at any cost but not a company or stock worth investing in.
On the date of publication, Alex Sirois did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
