Invest in Joby Aviation via RTP

Try imagining life just 5 years ago. Back then, what’s your view on electrical vehicles and Tesla? Did you have a sense of skepticism that electric vehicles (EVs) will never take off? You might had doubts if the charging infrastructure can catch up. Or if companies would really be able to secure safety certifications on batteries (not catching fire when charging) or autonomous driving. Would be nice to shake off that skepticism back then and invest in Tesla (TSLA). If you had invested in Tesla then (back in 2016), you would had made a whooping 20x gain (that’s 2,000%). This article focuses on the next brewing EV – electric Vertical TakeOff and Landing (eVTOL) aircraft and whether you should invest in Joby Aviation via RTP (Reinvent Technology Partners).

What and why eVTOL

We have all seen VTOL in real life and movies. From the traditional helicopter to the really exciting ones used in the military. Think Harrier jet, (think Arnold Schwarzenegger in the movie True Lies), V-22 Osprey (looks like a blend between helicopter and a turboprop) or the latest one: F35b Lightning II. There’s certainly good uses for VTOL, which allows flexibility in both military conflicts and humanitarian aid.

When looking at Joby, we are primarily looking at commercial usage. And there is a need to also contrast Joby’s eVTOL aircraft against a traditional helicopter to see if it makes commercial sense, as well as Joby’s competitors.

Volocopter 2X at IAA 2017.Electric ultralight VTOL (vertical take-off and landing) rotary wing aircraft. Certification as “light sport multicopter”.
Spielvogel, CC BY-SA 4.0, via Wikimedia Commons

Here are a few reasons why Joby’s eVTOL aircraft might really take off:

  1. Certainly more environmental friendly compared to a helicopter. It is fully electric.
  2. More “nimble”. Potentially requires less clearance space and hence lower barrier to entry.
  3. Quiet – way more quiet than a helicopter. Based on Joby’s website – it is stated that their electric aircraft is “Quiet as a Conversation”. In essence, this means “quiet enough that neighbours will not complain and hence we can fly them in more places”.
  4. Potentially cheaper – it is projected that once production is at scale, each aircraft will cost less than a million dollar. A helicopter typically cost upwards of $1.2million.
  5. Demand – Demand! It’s like trying to cover off the last mile travel making your way to the airport. Think “busy highway”, “Uber surge charges”, “wrong route taken” all adding stress to the possibility of missing your flight. Would you consider paying a premium say $100 for the ride? Maybe.. Of course, there is no cost catalogue for that yet so this point is up in the air at the moment.

Additional considerations

While the future looks exciting, there are other considerations if you should invest in Joby Aviation via RTP (Reinvent Technology Partners).

The Negatives (first)

  1. Competition – this space is really is heating up. There are plenty of competitors trying to get in front. This includes  Archer Aviation (to be listed via another SPAC – Atlas Crest Investment Corp – ACIC), Volocopter and Lilium.

2. Timeline – There is still a good 3 years till Joby aims to operate commercial flights. The company’s goal is to start operating eVTOL aircrafts in 2024. Many things can happen within 3 years – including new regulations to comply with.

The Positives

  1. It’s really believable. It’s not some fancy technology glossed over by good marketing. The core product and engineering looks credible. In fact, Joby’s test aircrafts have already performed more than 1,000 test flights, putting in ahead of some competitors who might still be at the conceptual (i.e. only paper drawings) stage.
  2. Strong backers. Joby is backed by Toyota and Uber. Besides financial support, I believe it provides good synergy. Toyota might offer some coverage or expertise on technology while Uber might offer platform support (imagine booking a eVTOL aircraft on Uber 5 years from now).

Conclusion – Invest in Joby Aviation via RTP?

It is expected that within 2 months, Joby Aviation will merge with Reinvent Technology Partners (RTP) and list under the ticker “JOBY”. While there has been some recent scrutiny and doubts on SPAC play, I feel that Joby Aviation has a credible growth story.

With a post merger valuation of $6.6 billion – putting money into a company that has not started operations nor generated a stable revenue stream sounds risky. But I’ll keep a close watch on this company and may pick it up when there’s more clarity the 2024 milestone is on track. The share price might go higher by then but it’s the risk vs. rewards that I am trying to balance. Might miss the boat in this process and if that happens, I’ll just have to make do with taking Joby’s commercial flight in the future instead.

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